<SUBMISSION>
<ACCESSION-NUMBER>0000950144-03-004609
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>7
<PERIOD>20030507
<FILING-DATE>20030407
<EFFECTIVENESS-DATE>20030407
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CARAUSTAR INDUSTRIES INC
<CIK>0000825692
<ASSIGNED-SIC>2631
<IRS-NUMBER>581388387
<STATE-OF-INCORPORATION>NC
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>000-20646
<FILM-NUMBER>03641101
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>3100 JOE JERKINS BLVD
<CITY>AUSTELL
<STATE>GA
<ZIP>30106
<PHONE>7709483101
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>P O BOX 115
<CITY>AUSTELL
<STATE>GA
<ZIP>30168
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>g81803def14a.htm
<DESCRIPTION>CARAUSTAR INDUSTRIES, INC.
<TEXT>
<HTML>
<HEAD>
<TITLE>Caraustar Industries, Inc.</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV align="center">
<B>SCHEDULE 14A</B>
</DIV>

<DIV align="center">
<B>(RULE 14A-101)</B>
</DIV>

<P align="center">
<B>INFORMATION REQUIRED IN PROXY STATEMENT</B>
<p>
<DIV align="center">
<B>SCHEDULE 14A INFORMATION</B>
</DIV>

<div align="center">
<B>PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES</B></div>

<DIV align="center">
<B>EXCHANGE ACT OF 1934</B>
</DIV>

<P align="left"><FONT SIZE="2">
Filed by the Registrant&nbsp;</FONT> <FONT face="wingdings">&#120;
</FONT>

<P align="left"><FONT SIZE="2">
Filed by a Party other than the Registrant&nbsp;</FONT>
<FONT face="wingdings">&#111;
</FONT>

<P align="left"><FONT SIZE="2">
Check the appropriate box:</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
        <TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD colspan="3" align="left" valign="top">
        <FONT size="2"><FONT face="wingdings">&#111;</FONT>
        &nbsp;&nbsp;Preliminary Proxy Statement
        </FONT></TD>
</TR>

<TR>
        <TD colspan="3" align="left" valign="top">
        <FONT size="2"><FONT face="wingdings">&#111;</FONT>
        &nbsp;&nbsp;Confidential, for Use of the Commission Only (as
        permitted by Rule&nbsp;14a-6(e)(2))
        </FONT></TD>
</TR>

<TR>
        <TD align="left" valign="top">
        <FONT size="2"><FONT face="wingdings">&#120;</FONT>
        &nbsp;&nbsp;Definitive Proxy Statement
        </FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD colspan="3" align="left" valign="top">
        <FONT size="2"><FONT face="wingdings">&#111;</FONT>
        &nbsp;&nbsp;Definitive Additional Materials
        </FONT></TD>
</TR>

<TR>
        <TD colspan="3" align="left" valign="top">
        <FONT size="2"><FONT face="wingdings">&#111;</FONT>
        &nbsp;&nbsp;Soliciting Material Pursuant to Rule 14a-12
        </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT SIZE="3">
CARAUSTAR INDUSTRIES, INC.</FONT>
<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="center">
<FONT size="2">(Name of Registrant as Specified In Its Charter)
</FONT>
</DIV>

<P align="center">


<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="center">
<FONT size="2">(Name of Person(s) Filing Proxy Statement if other
than the Registrant)
</FONT>
</DIV>

<P align="left"><FONT SIZE="2">
Payment of Filing Fee (Check the appropriate box):</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="4%"></TD>
        <TD width="96%"></TD>
</TR>

<TR valign="top">
        <TD><FONT face="wingdings">&#120;</FONT></TD>
        <TD align="left">
<FONT SIZE="2">No fee required.</FONT>
</TD>
</TR>

<TR>
        <TD>&nbsp;</TD>
</TR>

<TR valign="top">
        <TD><FONT face="wingdings">&#111;</FONT></TD>
        <TD align="left">
        <FONT SIZE="2">Fee computed on table below per Exchange Act
        Rules&nbsp;14a-6(i)(1) and 0-11.</FONT>
</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="12%"></TD>
        <TD width="88%"></TD>
</TR>

<TR valign="top">
        <TD><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</FONT>
</TD>
        <TD align="left">
        <FONT SIZE="2">Title of each class of securities to which transaction applies:</FONT>
</TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="87%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="12%"></TD>
        <TD width="88%"></TD>
</TR>

<TR valign="top">
        <TD><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</FONT>
</TD>
        <TD align="left">
        <FONT SIZE="2">Aggregate number of securities to which transaction applies:</FONT>
</TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="87%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="12%"></TD>
        <TD width="88%"></TD>
</TR>

<TR valign="top">
        <TD><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)</FONT>
</TD>
        <TD align="left">
        <FONT SIZE="2">Per unit price or other underlying value of transaction computed
        pursuant to Exchange Act Rule&nbsp;0-11 (set forth the amount on
        which the filing fee is calculated and state how it was
        determined):</FONT>
</TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="87%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="12%"></TD>
        <TD width="88%"></TD>
</TR>

<TR valign="top">
        <TD><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)</FONT>
</TD>
        <TD align="left">
        <FONT SIZE="2">Proposed maximum aggregate value of transaction:</FONT>
</TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="87%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="12%"></TD>
        <TD width="88%"></TD>
</TR>

<TR valign="top">
        <TD><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)</FONT>
</TD>
        <TD align="left">
        <FONT SIZE="2">Total fee paid:</FONT>
</TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="87%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="4%"></TD>
        <TD width="96%"></TD>
</TR>

<TR valign="top">
        <TD><FONT face="wingdings">&#111;</FONT></TD>
        <TD align="left">
        <FONT SIZE="2">Fee paid previously with preliminary materials:</FONT>
</TD>
</TR>

<TR>
        <TD>&nbsp;</TD>
</TR>

<TR valign="top">
        <TD><FONT face="wingdings">&#111;</FONT></TD>
        <TD align="left">
        <FONT SIZE="2">Check box if any part of the fee is offset as provided by
        Exchange Act Rule 0-11(a)(2) and identify the filing for which
        the offsetting fee was paid previously. Identify the previous
        filing by registration statement number, or the Form or Schedule
        and the date of its filing.</FONT>
</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="12%"></TD>
        <TD width="88%"></TD>
</TR>

<TR valign="top">
        <TD><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</FONT>
</TD>
        <TD align="left">
        <FONT SIZE="2">Amount Previously Paid:</FONT>
</TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="87%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="12%"></TD>
        <TD width="88%"></TD>
</TR>

<TR valign="top">
        <TD><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</FONT>
</TD>
        <TD align="left">
        <FONT SIZE="2">Form, Schedule or Registration Statement No.:</FONT>
</TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="87%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="12%"></TD>
        <TD width="88%"></TD>
</TR>

<TR valign="top">
        <TD><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)</FONT>
</TD>
        <TD align="left">
        <FONT SIZE="2">Filing Party:</FONT>
</TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="87%" align="right" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="12%"></TD>
        <TD width="88%"></TD>
</TR>

<TR valign="top">
        <TD><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)</FONT>
</TD>
        <TD align="left">
        <FONT SIZE="2">Date Filed:</FONT>
</TD>
</TR>

</TABLE>

<P align="right">
<HR size="1" width="87%" align="right" noshade>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<IMG src="g81803caralogo.gif" alt="(CARAUSTAR LOGO)">
</DIV>

<P align="right">
April&nbsp;7, 2003

<P align="left">
Dear Shareholder:

<P align="left">
You are cordially invited to attend the Annual Meeting of
Shareholders of Caraustar Industries, Inc. The meeting will be
held on Wednesday, May&nbsp;7, 2003, at 10:00&nbsp;A.M. at the
Marietta Conference Center and Resort, 500 Powder Springs
Street, Marietta, Georgia.

<P align="left">
The primary business of the meeting will be the election of
directors, consideration of a proposal to approve our new
Long-Term Equity Incentive Plan and the ratification of the
selection of our independent public accountants, as more fully
explained in the enclosed proxy statement.

<P align="left">
During the meeting, we will also report to you on the condition
and performance of Caraustar and its subsidiaries, including
developments during the past fiscal year. You will have an
opportunity to question management on matters that affect the
interest of all shareholders.

<P align="left">
We hope to see you on May&nbsp;7, 2003. Whether you plan to
attend or not, please complete, sign, date and return the
enclosed proxy card as soon as possible in the postage-paid
envelope provided. Your vote is important. We appreciate your
continued interest and support of Caraustar.

<P align="left">
Sincerely yours,

<P align="left">
CARAUSTAR INDUSTRIES, INC.

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <IMG src="g81803g8180305.gif" alt="-s- RUSSELL M. ROBINSON"></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <IMG src="g81803g8180306.gif" alt="-s- THOMAS V. BROWN"></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Russell M. Robinson, II
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Thomas V. Brown
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Chairman of the&nbsp;Board
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President and Chief Executive Officer
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<p align="center"><font size="2">PHONE&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
770&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;&nbsp;&nbsp;&nbsp;948&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;
&nbsp;&nbsp;&nbsp;3101</font>
<div align="center"><font size="2">P.O. BOX
115&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
AUSTELL, GA 30168-0115</font></div>

<div align="center"><font size="2">3100 JOE JERKINS
BOULEVARD&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;AUSTELL, GA 30106-3227</font></div>

<p align="center"><font size="2">www.caraustar.com</font>
<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B>NOTICE OF ANNUAL MEETING OF SHAREHOLDERS</B>

<P align="center">
<B>TO BE HELD WEDNESDAY, MAY 7, 2003</B>

<P align="left">
The Annual Meeting of Shareholders of Caraustar Industries, Inc.
(&#147;Caraustar&#148;) will be held on Wednesday, May&nbsp;7,
2003, at 10:00&nbsp;A.M., at the Marietta Conference Center and
Resort, 500 Powder Springs Street, Marietta, Georgia for the
following purposes:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>1.&nbsp;</TD>
    <TD align="left">
    To elect three Class&nbsp;II directors to serve until the 2006
    Annual Meeting of Shareholders.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>2.&nbsp;</TD>
    <TD align="left">
    To consider and act on a proposal to approve a new Long-Term
    Equity Incentive Plan.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>3.&nbsp;</TD>
    <TD align="left">
    To consider and act on a proposal to ratify the selection of
    Deloitte &#38; Touche LLP as independent public accountants to
    audit the books of the Company and its subsidiaries for the year
    ending December&nbsp;31, 2003.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>4.&nbsp;</TD>
    <TD align="left">
    To transact such other business as may properly come before the
    meeting or any adjournments thereof.</TD>
</TR>

</TABLE>

<P align="left">
The Board of Directors has fixed the close of business on
March&nbsp;14, 2003, as the record date for determination of
shareholders entitled to notice of and to vote at the meeting
and any adjournments thereof.
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    By Order of the Board of Directors</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="g81803g8180307.gif" alt="-s- MARINAN R. MAYS"></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Marinan R. Mays</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Corporate Secretary and Manager,</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Administrative Services</TD>
</TR>

</TABLE>

<P align="left">
April&nbsp;7, 2003

<P align="left">
<B>PLEASE COMPLETE AND RETURN THE ENCLOSED APPOINTMENT OF PROXY.
IF YOU ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR
APPOINTMENT OF PROXY AND VOTE YOUR OWN SHARES.</B>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<IMG src="g81803g8180303.gif" alt="(CARAUSTAR LOGO)">
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B>PROXY STATEMENT</B>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following statement, first mailed on or about April&nbsp;7,
2003, is furnished in connection with the solicitation by the
Board of Directors (the &#147;Board&#148;) of Caraustar
Industries, Inc. (the &#147;Company&#148;) of proxy appointment
forms to be used at the Annual Meeting of Shareholders of the
Company (the &#147;Annual Meeting&#148;) to be held on
May&nbsp;7, 2003, at 10:00&nbsp;A.M., at the Marietta Conference
Center and Resort, 500 Powder Springs Street, Marietta, Georgia
and at any adjournment or adjournments thereof.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Please complete, date and sign the accompanying proxy
appointment form and return it to ensure that your shares are
voted at the meeting. You may revoke the appointment of proxy at
any time before it is exercised by submitting to the Secretary
of the Company written notice of revocation or a properly
executed appointment of proxy of a later date, or by attending
the meeting and electing to vote in person. All shares
represented by valid proxy appointment forms received pursuant
to this solicitation, and not revoked before they are exercised,
will be voted in the manner specified therein. If no
specification is made, the proxies will vote in favor of the
election to the Board of Directors of the three Class&nbsp;II
director nominees named in this Proxy Statement, the approval of
our new Long-Term Equity Incentive Plan and the proposal to
ratify action taken by the Board of Directors in selecting
Deloitte &#38; Touche LLP as independent public accountants to
audit the books of the Company and its subsidiaries for the year
ending December&nbsp;31, 2003.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company will bear the entire cost of preparing this Proxy
Statement and of soliciting the enclosed proxy appointment
forms. We have retained Georgeson Shareholder of New York, New
York to assist us in soliciting proxies from shareholders,
including brokers, custodians, nominees and fiduciaries, and
will pay that firm fees estimated at $7,000 for its services,
plus an amount equal to its expenses and disbursements. In
addition to the solicitation of the proxies by mail, the Company
will request banks, brokers and other record holders to send
proxy appointment forms and proxy material to the beneficial
owners of the stock and secure their voting instructions, if
necessary. The Company will reimburse them for their reasonable
expenses in so doing. If necessary, the Company may use several
of its regular employees, who will not be specially compensated,
to solicit proxy appointment forms from shareholders, either
personally or by telephone, telegram or special letter.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
March&nbsp;14, 2003 has been fixed as the record date for
determination of shareholders entitled to notice of and to vote
at the Annual Meeting and, accordingly, only record holders of
shares of the Company&#146;s common stock, $.10 par value (the
&#147;Common Shares&#148;) at the close of business on
March&nbsp;14, 2003 will be entitled to notice of and to vote at
the meeting.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The number of outstanding Common Shares entitled to vote as of
the record date was 27,910,817. Each Common Share is entitled to
one vote. In accordance with North Carolina law and the
Company&#146;s bylaws, a majority of the outstanding Common
Shares represented in person or by proxy will constitute a
quorum for the election of directors, consideration of a new
equity compensation plan and the ratification of the selection
of accountants. Abstentions and broker non-votes, if any, will
be counted for purposes of determining the presence or absence
of a quorum.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
With regard to the election of directors, votes may either be
cast in favor of or withheld, and directors will be elected by a
plurality of the votes cast. Votes that are withheld will be
excluded entirely from the vote and will have no effect on the
outcome of the election. The proposals to consider our new
Long-Term Equity Incentive Plan and to ratify the selection of
auditors will each be approved if the number of votes cast for
the proposal exceeds the number of votes cast against the
proposal. Thus, abstentions and broker non-votes, if any, will
have no effect on the outcome of the vote on any of these three
proposals.

<P align="center">
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B>SHARE OWNERSHIP</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March&nbsp;14, 2003, the only class of voting securities
the Company had issued and outstanding was its Common Shares. On
that date there were 27,910,817 Common Shares outstanding. The
following table sets forth the names of, and the numbers and
percentages of Common Shares beneficially owned as of
March&nbsp;14, 2003 by: (a)&nbsp;each person known to the
Company to own beneficially 5% or more of the Company&#146;s
outstanding Common Shares; (b)&nbsp;each director and nominee;
(c)&nbsp;each executive officer of the Company identified below
in the Summary Compensation Table; and (d)&nbsp;all executive
officers and directors of the Company as a group. A
&#147;beneficial owner&#148; of Common Shares is a person who
has either the voting or investment power, or both, alone or
shared with others, over such Common Shares. Each of the
individuals listed below possesses sole voting and investment
power with respect to the Common Shares listed opposite his or
her name, unless noted otherwise.

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Common Shares</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Beneficially Owned</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="2">Name and Address&#134; of Beneficial Owner</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Number(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Percent</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goldman Sachs Asset Management(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,708,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">32 Old Slip
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">New York, NY 10005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dimensional Fund Advisors Inc.(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,486,885</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1299 Ocean Avenue, 11th Floor
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Santa Monica, CA 90401
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thomas V. Brown(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">243,366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jimmy A.&nbsp;Russell
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">171,121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Russell M. Robinson, II(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ralph M. Holt, Jr.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99,054</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James L.&nbsp;Walden
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John R.&nbsp;Foster
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,536</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Bob M.&nbsp;Prillaman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,148</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">H. Lee Thrash, III(6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael J.&nbsp;Keough(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James H. Hance, Jr.(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,282</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James E.&nbsp;Rogers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,282</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dennis M.&nbsp;Love
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert J.&nbsp;Clanin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Directors and executive officers as a group
    (16&nbsp;persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">937,267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="3%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#134;</TD>
    <TD align="left">
    Addresses are furnished only for each person known to the
    Company to own beneficially 5% or more of the Company&#146;s
    outstanding Common Shares.</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Includes the following shares subject to stock options
    exercisable within 60&nbsp;days after March&nbsp;14, 2003:
    Mr.&nbsp;Brown&nbsp;&#151; 62,902; Mr.&nbsp;Russell&nbsp;&#151;
    39,498; Mr.&nbsp;Robinson&nbsp;&#151; 8,000;
    Mr.&nbsp;Holt&nbsp;&#151; 8,000; Mr.&nbsp;Walden&nbsp;&#151;
    44,000; Mr.&nbsp;Foster&nbsp;&#151; 28,333;
    Mr.&nbsp;Prillaman&nbsp;&#151; 7,875;
    Mr.&nbsp;Thrash&nbsp;&#151; 33,205; Mr.&nbsp;Keough&nbsp;&#151;
    15,000; Mr.&nbsp;Hance&nbsp;&#151; 8,000;
    Mr.&nbsp;Rogers&nbsp;&#151; 8,000; Mr.&nbsp;Love&nbsp;&#151;
    5,000; Mr.&nbsp;Clanin&nbsp;&#151; 3,000; directors and
    executive officers as a group&nbsp;&#151; 293,691.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The amount and nature of shares beneficially owned are based on
    a Schedule&nbsp;13G filed with the Company on or about
    February&nbsp;11, 2003. Goldman Sachs Asset Management is a
    separate business unit of The Goldman Sachs Group, Inc. Of the
    shares reported, Goldman Sachs Asset Management reports sole
    voting power over 1,579,232 shares and sole dispositive power
    over all 1,708,844.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    The amount and nature of shares beneficially owned are based on
    a Schedule&nbsp;13G filed with the Company on or about
    February&nbsp;10, 2003. Dimensional Fund Advisors reports these
    shares based on its</TD>
</TR>

</TABLE>

<P align="center">2

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    role as investment advisor or manager to certain investment
    companies, trusts and accounts, but disclaims beneficial
    ownership of all shares reported.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Includes 29,200 shares registered in the name of
    Mr.&nbsp;Brown&#146;s wife.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    Includes 46,890 shares registered in the name of
    Mr.&nbsp;Robinson&#146;s wife.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Includes 148 shares held in Mr.&nbsp;Thrash&#146;s wife&#146;s
    Individual Retirement Account.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    Includes 10,500 shares held in a family living trust over which
    Mr.&nbsp;Keough has shared voting and investment power.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(8)&nbsp;</TD>
    <TD align="left">
    Includes 2,000 shares held in a family partnership over which
    Mr.&nbsp;Hance has shared voting and investment power.</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*</TD>
    <TD align="left">
    Denotes ownership of less than 1% of the Company&#146;s Common
    Shares.</TD>
</TR>

</TABLE>

<P align="center">
<B>SHAREHOLDER RETURN</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Performance Graph.</I> The following graph compares the
cumulative total shareholder return on the Company&#146;s Common
Shares for the years 1998 through 2002 with (a)&nbsp;the
cumulative total return of the S&#38;P 400 Index and
(b)&nbsp;the cumulative total return of the S&#38;P Paper &#38;
Forest Products Index. All cumulative returns assume the
investment of $100.00 in each of the Company&#146;s Common
Shares, the S&#38;P 400 Index and the S&#38;P Paper &#38; Forest
Products Index on December&nbsp;31, 1997 and assume the
reinvestment of dividends.

<P align="center">
<B>COMPARISON OF CUMULATIVE TOTAL RETURN</B>

<DIV align="center">
<B>AMONG CARAUSTAR INDUSTRIES, INC., S&#38;P 400 INDEX &#38;</B>
</DIV>

<DIV align="center">
<B>S&#38;P PAPER &#38; FOREST PRODUCTS INDEX FOR THE YEARS 1998
THROUGH 2002</B>
</DIV>

<P align="center">
<IMG src="g81803g8180399.gif" alt="(Performance Graph)">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="25"></TD>
</TR>

<TR>
    <TD colspan="25" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">12/31/97</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">12/31/98</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">12/31/99</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">12/31/00</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">12/31/01</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">12/31/02</FONT></B></TD>
</TR>

<TR>
    <TD colspan="25"></TD>
</TR>

<TR>
    <TD colspan="25" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Caraustar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30.64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">S&#38;P&nbsp;400
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117.68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">155.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">152.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">S&#38;P Paper&nbsp;&#38; Forest
    Products&nbsp;Index
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99.61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">136.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90.64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<B>ELECTION OF DIRECTORS</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors currently consists of 9 members and is
divided into 3 classes (I, II and III). Each newly elected class
of directors will serve terms of three years. The term of office
for incumbent Class&nbsp;II

<P align="center">3
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<DIV align="left">
directors will expire at the 2003 Annual Meeting. The incumbent
Class&nbsp;II directors, all of whom are nominated for election
at the Annual Meeting, are Michael J. Keough, Bob M. Prillaman
and Russell M. Robinson, II.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
It is intended that the persons named in the accompanying proxy
appointment form will vote only for the three nominees for
Class&nbsp;II director, except to the extent authority to so
vote is withheld with respect to one or more nominees. Although
the Board does not expect that any of the nominees named will be
unavailable for election, in the event of a vacancy in the slate
of nominees occasioned by death or any other unexpected
occurrence, it is intended that the Common Shares represented by
the accompanying proxy appointment form will be voted for the
election of a substitute nominee selected by the persons named
in the proxy appointment form.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2002 the Board of Directors held 7 meetings and on 1
occasion acted by unanimous written consent.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors maintains an Audit Committee, on which
Messrs. Clanin (chairman), Hance, Holt and Rogers serve. The
Audit Committee reviews the results and scope of the annual
audit of the Company&#146;s financial statements and the
services provided by the Company&#146;s independent accountants
and oversees the Company&#146;s accounting, auditing and
financial reporting process generally on behalf of the Board of
Directors. The Audit Committee met 7 times in 2002. Additional
information regarding the Audit Committee is set forth below
under &#147;Appointment of Independent Public Accountants.&#148;

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors also has a Compensation and Employee
Benefits Committee, on which Messrs.&nbsp;Love, Holt and Rogers
(chairman)&nbsp;serve. The Compensation and Employee Benefits
Committee establishes and reviews the compensation criteria and
policies of the Company, and administers the Company&#146;s
equity compensation plans. The Compensation and Employee
Benefits Committee met 1 time in 2002.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors also has a Nominating and Corporate
Governance Committee, on which Messrs.&nbsp;Robinson (chairman),
Hance and Holt serve. The Nominating and Corporate Governance
Committee recommends nominees for election to the Board of
Directors and advises on other matters of organizational
structure and corporate governance. The Nominating and Corporate
Governance Committee did not meet in 2002.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each director who is not an employee of the Company is being
paid (in quarterly installments) an annual retainer fee of
$20,000 for serving as a director. Our non-executive Chairman of
the Board is paid an annual retainer fee of $55,000. Under the
Company&#146;s 1996 Director Equity Plan, half of these annual
retainers are paid in Common Shares, and each such director
receives an annual grant of options to purchase 1,000 Common
Shares valued at the closing price of such shares on the last
business day preceding the date of grant. The chairmen of the
Audit Committee, Compensation and Employee Benefits Committee,
the Nominating and Corporate Governance Committee and Executive
Committee also receive an annual retainer fee of $3,500.
Additionally, all directors who are not employees of the Company
are paid a fee of $1,500 per meeting for attending meetings of
the Board of Directors, $500 for participation in a telephonic
Board meeting, $1,000 per committee meeting attended and $250
per committee meeting by telephone conference. All directors are
reimbursed for ordinary and necessary out-of-pocket expenses
incurred in attending meetings of the Board of Directors.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon the recommendation of the Nominating and Corporate
Governance Committee, the Board of Directors (with any
management directors abstaining) makes nominations for director
candidates as permitted by the Company&#146;s bylaws. The
Company&#146;s bylaws prescribe the procedure a shareholder must
follow to make nominations for director candidates, as described
below under &#147;Proposals for 2004 Annual Meeting of
Shareholders.&#148;

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each continuing director and nominee&#146;s name, age, current
principal occupation (which has continued for at least five
years unless otherwise indicated) and the name and principal
business of the corporation in which that occupation is carried
on, the year each incumbent was first elected to the Board, all
positions and offices presently held with the Company and
directorships in other publicly held companies are set forth

<P align="center">4

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<DIV align="left">
below. None of the following nominees or directors is related
(as first cousin or closer) by blood, marriage or adoption to
any other nominee, director or person who may be deemed to be an
executive officer of the Company.
</DIV>

<P align="center">
<B>CLASS I DIRECTORS</B>

<P align="center">
(Incumbents to serve until 2005 Annual Meeting)

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>THOMAS V. BROWN (62), President and Chief Executive Officer,
Caraustar Industries, Inc. </B>Mr.&nbsp;Brown has served as
President of the Company since January&nbsp;1991 and as its
Chief Executive Officer since October&nbsp;1991. He has served
as a director since April&nbsp;1991. Prior to joining the
Company, Mr.&nbsp;Brown served as the Vice President and General
Manager, Industrial Packaging Division, of Jefferson Smurfit
Corporation, a packaging company, from October&nbsp;1986 through
December&nbsp;1990.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>RALPH M. HOLT, JR. (71), Chairman and Chief Executive
Officer, Holt Hosiery Mills,</B> Burlington, North Carolina, a
hosiery manufacturer. Mr.&nbsp;Holt has been a director of the
Company since April&nbsp;1986, and has been the Chairman and
Chief Executive Officer of Holt Hosiery Mills since 1967.
Mr.&nbsp;Holt also serves as a director and Vice Chairman of Mid
Carolina Bank in Burlington, North Carolina.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>DENNIS M. LOVE (47), President and Chief Executive Officer,
Printpack Inc.,</B> Atlanta, Georgia, a manufacturer and
converter of flexible packaging materials. Mr.&nbsp;Love was
appointed a director in February 1999. Mr.&nbsp;Love also serves
as a director of AGL Resources Inc.

<P align="center">
<B>CLASS II DIRECTORS</B>

<P align="center">
(Nominees for election to serve until 2006 Annual Meeting)

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>MICHAEL J. KEOUGH (51), Senior Vice President and Chief
Operating Officer, Caraustar Industries, Inc.
</B>Mr.&nbsp;Keough has been employed by the Company since
March&nbsp;4, 2002 and has served as a director since
October&nbsp;2002. Prior to joining the Company, Mr.&nbsp;Keough
served as President and Chief Operating Officer of Gaylord
Container Corporation in Deerfield, Illinois from
April&nbsp;2000 through March&nbsp;1, 2002, and as Vice
President of Container Operations of Gaylord Container from
October&nbsp;1993 through April&nbsp;2000.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>BOB M. PRILLAMAN (70), Senior Vice President (Retired),
Caraustar Industries, Inc. </B>Mr.&nbsp;Prillaman served as
Senior Vice President of the Company from 1980 until his
retirement effective March&nbsp;1, 1998 and has served as a
director since 1980. Mr.&nbsp;Prillaman had been employed by the
Company or its predecessors since 1969. Mr.&nbsp;Prillaman is
also a director of United Community Bank.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>RUSSELL M. ROBINSON, II (71), Attorney at Law, Robinson,
Bradshaw &#38; Hinson, P.A.,</B> Charlotte, North Carolina, a
law firm. Mr.&nbsp;Robinson has been engaged in the private
practice of law since 1956 and is a shareholder and officer of
the firm of Robinson, Bradshaw &#38; Hinson, P.A.
Mr.&nbsp;Robinson has been a director of the Company since
December&nbsp;1992, and has served as Chairman of the Board of
Directors of the Company since April&nbsp;1995.
Mr.&nbsp;Robinson also serves as a director of Cadmus
Communications Corporation. Robinson, Bradshaw &#38; Hinson,
P.A. is the Company&#146;s principal outside legal counsel. The
firm performed legal services for the Company during the last
fiscal year, and it is anticipated that the firm will continue
to do so during the current fiscal year.

<P align="center">
<B>CLASS III DIRECTORS</B>

<P align="center">
(Incumbents to serve until 2004 Annual Meeting)

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>ROBERT J. CLANIN (59), Senior Vice President and Chief
Financial Officer (Retired), United Parcel Service.</B>
Mr.&nbsp;Clanin served as Senior Vice President and Chief
Financial Officer of United Parcel Service from 1994 until his
retirement on January&nbsp;1, 2001. Mr.&nbsp;Clanin has served
as a director of United Parcel Service since 1996.
Mr.&nbsp;Clanin also serves as a director of CP Ships Limited
and the John H. Harland Company, and as Chairman of the Board of
Directors of Overseas Partners Ltd.

<P align="center">5

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>JAMES H. HANCE, JR. (58), Vice Chairman and Chief Financial
Officer, Bank of America Corporation,</B> Charlotte, North
Carolina, a bank holding company. Mr. Hance has served as Vice
Chairman and Chief Financial Officer of Bank of America
Corporation (formerly NationsBank Corporation) since
October&nbsp;1993, and as Chief Financial Officer since
August&nbsp;1988. Prior to joining NationsBank Corporation
(formerly NCNB Corporation) in March&nbsp;1987, Mr.&nbsp;Hance,
a certified public accountant, spent 17&nbsp;years with the
public accounting firm of Price Waterhouse in Philadelphia and
Charlotte. Mr.&nbsp;Hance is also a director of Bank of America
Corporation, EnPro Industries, Inc., Lance, Inc. and Summit
Properties, Inc. Mr.&nbsp;Hance has been a director of the
Company since November 1995.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>JAMES E. ROGERS (57), President, SCI Investors Inc.,</B>
Richmond, Virginia, a private equity investment firm.
Mr.&nbsp;Rogers has been President of SCI Investors Inc. since
April&nbsp;1993. From 1993 to 1996, Mr.&nbsp;Rogers also served
as Chairman of Custom Papers Group, Inc., a paper manufacturing
company. From 1991 to 1993, Mr.&nbsp;Rogers served as President
and Chief Executive Officer of Specialty Coatings International,
Inc., a manufacturer of specialty paper and film products. Prior
to that time, Mr.&nbsp;Rogers was Senior Vice President, Group
Executive of James River Corporation, a paper and packaging
manufacturer. Mr. Rogers has been a director of the Company
since November&nbsp;1993. Mr.&nbsp;Rogers also serves as a
director of Wellman, Inc., Owens &#38; Minor, Inc., Chesapeake
Corporation and Cadmus Communications Corporation.

<P align="center">
<B>SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section&nbsp;16(a) of the Securities Exchange Act of 1934
requires the Company&#146;s directors and executive officers,
and persons who own more than 10% of a registered class of the
Company&#146;s equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Shares and other equity
securities of the Company. Executive officers, directors and
greater than 10% shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they
file. To the Company&#146;s knowledge, based solely on review of
the copies of reports furnished to the Company during the year
ended December&nbsp;31, 2002, all other Section&nbsp;16(a)
filing requirements applicable to its executive officers and
directors and any greater than 10% beneficial owners (the
Company is aware of none) were complied with, except that one
report on Form&nbsp;4 with respect to a disposition of
891&nbsp;Common Shares by Mr.&nbsp;Prillaman was filed late.

<P align="center">
<B>EXECUTIVE COMPENSATION</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Compensation Committee Report.</I> The Company&#146;s
Compensation and Employee Benefits Committee (the
&#147;Compensation Committee&#148;) considers and makes
recommendations to the Board of Directors with respect to the
compensation of the Chief Executive Officer, sets and adjusts
salaries for the Company&#146;s other officers, and administers
the Company&#146;s equity compensation plans. Set forth below is
the Compensation Committee&#146;s report on its actions and
policies with regard to the compensation of Thomas V. Brown, the
Company&#146;s Chief Executive Officer, and the Company&#146;s
executive officers generally.

<P align="left">
<B>Compensation Policies</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Compensation Committee&#146;s policies with regard to senior
officer compensation are (1)&nbsp;to pay appropriate base
salaries based on reviews of base salaries paid to executives in
comparable companies and evaluations of individual
responsibilities and performance, (2)&nbsp;to provide long-term
incentives and encourage investment in the Company&#146;s shares
by granting stock options and other stock-based awards, and
(3)&nbsp;to tie compensation to Company performance through an
annual incentive bonus plan. The Compensation Committee
regularly reviews compensation paid to executives in other
comparable companies and uses surveys produced by Hewitt
Associates and the Forest Products Industry Compensation
Association as its principal resources in this regard.

<P align="center">6

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<P align="left">
<B>Base Salary</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Base salary is a primary component of the Company&#146;s officer
compensation arrangements. Executive officer salaries are
administered by the Compensation Committee to ensure they remain
competitive with those of companies of comparable revenues and
similar industries. Based on the Company&#146;s performance in
2001, the Compensation Committee did not grant any salary
increases in 2002 to any of the Company&#146;s executive
officers, including Mr.&nbsp;Brown.

<P align="left">
<B>Long-Term Incentives</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Compensation Committee believes that share ownership by
executives is important to align the interests of executives
with those of the shareholders. In addition to the
Committee&#146;s discretionary authority to issue stock options,
the Company&#146;s 1998 Key Employee Incentive Compensation Plan
(the &#147;1998 Incentive Plan&#148;) has provided for the grant
of stock option awards contingent upon the attainment of
measurable, pre-established Company performance goals. The 1998
Incentive Plan expires by its terms in 2003 and has been
terminated, but the Committee has approved a new Long-Term
Equity Incentive Plan that will provide for future grants of
stock options, as well as restricted stock, if it is approved by
the shareholders.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A total of 108 key employees were eligible to receive
stock-based awards in 2002 under the 1998 Incentive Plan. The
amount and mix of stock-based awards under the 1998 Incentive
Plan depended on the extent to which the Company achieved
targeted goals for operating profit in 2001. Because the Company
failed to achieve its threshold target goals in 2001, no options
were awarded under this formula. In order to provide a
continuing long-term incentive to the Company&#146;s key
employees, the Committee deemed it appropriate to grant each of
the key employee participants in the 1998 Incentive Plan,
including the executive officers, options priced at 100% of fair
market value on the date of grant. Option grants ranged from
3,000 to 7,000 options per participant. Mr.&nbsp;Brown received
a grant of 7,000 options.

<P align="left">
<B>Annual Bonus</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 1998 Incentive Plan provided for an annual bonus for 2002
contingent on Company performance. Approximately 108 executives
were eligible for a bonus in 2002. Each year the Compensation
Committee establishes a formula pursuant to which the amount of
the bonuses for that year is to be determined, based on some
measure or measures of Company performance. The bonus generally
is payable in cash. For 2002, bonuses depended on the extent to
which the Company achieved certain target levels of operating
profit. Because the Company did not achieve its threshold target
goals for 2002, due largely to unexpected market conditions
beyond the control of management, including raw materials
pricing, no bonuses were payable under the terms of the 1998
Incentive Plan. However, the Compensation Committee also
considered the extent to which the Company achieved critical
business objectives during the year, including increases in
market share, increases in volume and integration of
acquisitions. In balancing these factors, the Compensation
Committee determined that an award of cash bonuses averaging 10%
to key employees (including a 10% bonus award to Mr.&nbsp;Brown)
was appropriate under the circumstances.

<P align="left">
<B>Corporate Tax Considerations</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section&nbsp;162(m) of the Internal Revenue Code prohibits
publicly held corporations from deducting as an expense for tax
purposes the amount by which compensation paid to any of the
Company&#146;s chief executive officer or four other most highly
compensated executive officers exceeds $1,000,000, unless such
compensation qualifies as &#147;performance-based.&#148;
Although the current cash compensation levels of the
Company&#146;s executives generally remain well below the
$1,000,000 limit, the Compensation Committee considers the
implications of Section&nbsp;162(m), as well as other factors,
in connection with the Company&#146;s executive compensation
plans.
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    COMPENSATION COMMITTEE:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    James E. Rogers, Chairman</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Ralph M. Holt, Jr.</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Dennis M. Love</TD>
</TR>

</TABLE>

<P align="center">7

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<P align="left">
<B>Compensation Committee Interlocks and Insider
Participation</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2002, no member of the Compensation and Employee Benefits
Committee was an employee or officer of the Company.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Summary Compensation Table.</I> The following table sets
forth information concerning the compensation for the years
ended December&nbsp;31, 2000, 2001 and 2002 for those persons
who were, at December&nbsp;31, 2002, the chief executive officer
of the Company and the Company&#146;s four other most highly
compensated executive officers, and for the Company&#146;s
former Chief Financial Officer (collectively, the &#147;Named
Officers&#148;).

<P align="center">
<B>Summary Compensation Table</B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Long-Term</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Annual Compensation(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Compensation Awards</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Restricted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">All Other</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="2">Name and</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Salary</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Bonus</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Awards</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Compensation</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="2">Principal Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">(#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">($)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thomas V. Brown,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">600,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,614</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(4)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">President and Chief
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">594,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(4)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Executive&nbsp;Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">567,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,979</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,498</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(6)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,600</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(4)</FONT></TD>
</TR>

<TR>
    <TD colspan="26"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael J. Keough(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">375,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,114</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(8)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior Vice President
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="26"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James L. Walden,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">352,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,239</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,864</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(4)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vice&nbsp;President
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">350,135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,897</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">336,173</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,563</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,966</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
</TR>

<TR>
    <TD colspan="26"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jimmy A. Russell,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">316,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vice&nbsp;President
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">314,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,359</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">299,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,820</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,851</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
</TR>

<TR>
    <TD colspan="26"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John R.&nbsp;Foster,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">242,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,271</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vice&nbsp;President
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">240,787</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,340</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">228,488</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,650</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
</TR>

<TR>
    <TD colspan="26"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">H. Lee Thrash, III(11)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">261,510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">219,613</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">259,434</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,599</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,770</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">246,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,410</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,180</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Certain amounts may have been expended by the Company that may
    have had value as a perquisite or personal benefit to the Named
    Officers. However, the total value of such benefits did not
    exceed the lesser of $50,000 or 10% of the annual salary and
    bonus of any Named Officer for the fiscal year reported.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    As of December&nbsp;31, 2002, Mr.&nbsp;Brown held a total of
    7,307 restricted Common Shares valued at $69,270, and
    Mr.&nbsp;Foster held a total of 947 restricted Common Shares
    valued at $8,978.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    This amount represents traditional options priced at 100% of
    market value on the date of grant.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    The reported amount includes the following employer matching
    contributions under the Company&#146;s 401(k) plan: for
    Mr.&nbsp;Brown, $5,500 in 2002, $5,100 in 2001 and $5,100 in
    2000; for Mr.&nbsp;Walden, $5,500 in 2002. The balance
    represents the portion of term life and travel accident
    insurance premiums paid by the Company for Mr.&nbsp;Brown and
    travel accident insurance premiums paid by the Company for
    Mr.&nbsp;Walden, in each case on terms not otherwise available
    to all salaried employees.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    This amount represents the value of 4,726 shares acquired
    through the exercise of restricted share rights valued at $16.50
    per share.</TD>
</TR>

</TABLE>

<P align="center">8

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    This amount consists of the following: (1)&nbsp;traditional
    options, priced at 100% of market value on date of grant, to
    purchase 6,450 shares; (2) performance options, priced at 120%
    of market value on date of grant, to purchase 6,322 shares;
    (3)&nbsp;restricted share rights to acquire 4,726 shares, which
    were elected in lieu of 50% of the Named Officer&#146;s option
    entitlement; and (4)&nbsp;the right, exercisable for three years
    from the date of grant, to acquire 2,000 unrestricted Common
    Shares in the event that the closing price of the Company&#146;s
    Common Shares equals or exceeds $30.00 for any period of five
    consecutive trading days.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Keough joined the Company as Senior Vice President and
    Chief Operating Officer in March&nbsp;2002.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(8)&nbsp;</TD>
    <TD align="left">
    This amount represents the portion of term life and travel
    accident insurance premiums paid by the Company on terms not
    otherwise available to all salaried employees.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(9)&nbsp;</TD>
    <TD align="left">
    This amount represents employer matching contributions under the
    Company&#146;s 401(k) plan.</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>(10)&nbsp;</TD>
    <TD align="left">
    Based on the extent to which the Company achieved performance
    goals under the 1998 Incentive Plan, 50.5% of the options were
    awarded as traditional options, priced at 100% of market value
    as of the date of grant, and 49.5% were awarded as performance
    options, priced at 120% of market value on the date of grant.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(11)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Thrash served as the Company&#146;s Vice President and
    Chief Financial Officer until October&nbsp;8, 2002, when he
    resigned this position (as well as his seat on the Board).
    Mr.&nbsp;Thrash is expected to remain in the Company&#146;s
    employ until November&nbsp;1, 2003.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Option Grants Table.</I> The following table sets forth
certain information concerning grants of stock options to the
Named Officers during the year ended December&nbsp;31, 2002.

<P align="center">
<B>Option Grants in Last Fiscal Year</B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Potential Realizable</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Value at Assumed</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Annual Rates of Stock</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2"># of Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Price Appreciation for</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Options Granted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Exercise or</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Option Term</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Options Granted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">to Employees in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Base Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Expiration</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="2">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">(#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Fiscal&nbsp;Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">($/SH)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Date</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">5% ($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">10% ($)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thomas V.&nbsp;Brown
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael J.&nbsp;Keough
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">326,396</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">827,152</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James L.&nbsp;Walden
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jimmy A.&nbsp;Russell
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John R.&nbsp;Foster
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">H. Lee Thrash,&nbsp;III
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    These amounts represent the number of Common Shares underlying
    grants of options priced at 100% of market value on the date of
    grant. The options were granted under our 1998 Incentive Plan.
    Of each award, 25% vested on July&nbsp;9, 2002, 25% vested on
    January&nbsp;9, 2003 and 50% will vest on January 9, 2004.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    This amount represents the number of Common Shares underlying a
    grant of options to Mr.&nbsp;Keough, in connection with his
    hiring, at 100% of market value on the date of grant. These
    options will vest in four equal installments, the first of which
    vested on March&nbsp;4, 2003.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Option Exercises and Year-End Value Table.</I> The following
table sets forth certain information concerning unexercised
options held by the Named Officers as of December&nbsp;31, 2002.
No Named Officer exercised any options during the year ended
December&nbsp;31, 2002.

<P align="center">9

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B>FY-End Option Value</B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Securities Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Value of Unexercised</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">Unexercised Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">In-the-Money Options at</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">at FY-End (#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="2">FY-End ($) (1)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="2">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Unexercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Unexercisable</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thomas V.&nbsp;Brown
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,616</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,508</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,758</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael J.&nbsp;Keough
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James L.&nbsp;Walden
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59,683</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,664</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,758</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jimmy A.&nbsp;Russell
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,251</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,758</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John R.&nbsp;Foster
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,152</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,758</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">H. Lee Thrash,&nbsp;III
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,758</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The fair market value used for computations in this column was
    $9.48, which was the closing market price of the Company&#146;s
    Common Shares on December&nbsp;31, 2002.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Equity Compensation Plan Information.</I> The table below
contains information about the compensation plans and individual
compensation arrangements that were in place as of
December&nbsp;31, 2002 under which we have equity securities
authorized for issuance.

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Number of securities</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">remaining available for</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Number of securities to be</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">future issuance under</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">issued upon exercise of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">Weighted-average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">equity compensation plans</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">outstanding options, warrants</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">exercise price of outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">(excluding securities</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">and rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">options, warrants and rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">reflected in column (a))</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="2">Plan Category</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">(a)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">(b)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">(c)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity compensation plans approved by
    security&nbsp;holders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,081,788</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,686</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity compensation plans not approved by
    security&nbsp;holders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    This amount represents (i)&nbsp;349,319 Common Shares issuable
    upon the exercise of options outstanding under our 1993 Key
    Employees&#146; Share Ownership Plan, (ii)&nbsp;42,000 Common
    Shares issuable upon the exercise of options outstanding under
    our 1996 Director Equity Plan and (iii) 1,690,469 Common Shares
    issuable upon the exercise of options under our 1998 Key
    Employee Incentive Compensation Plan.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    There are no securities available for future issuance under the
    1993 Key Employee Share Ownership Plan or 1998 Key Employee
    Incentive Compensation Plan, both of which have been terminated.
    An aggregate of 24,686 Common Shares are available for future
    issuance under the 1996 Director Equity Plan.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    This amount represents Common Shares issuable upon the exercise
    of options granted to Mr.&nbsp;Keough and Ronald J. Domanico in
    March&nbsp;2002 and October&nbsp;2002, respectively, in
    connection with their hiring.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As required by the letter agreement establishing the terms and
conditions of Mr.&nbsp;Keough&#146;s employment, the Company
granted to Mr.&nbsp;Keough options to purchase 60,000 restricted
Common Shares at an exercise price equal to the fair market
value of the Common Shares on his date of hire, or $8.65. These
options, which expire in 2012, are subject to vesting at a rate
of 25% per year over a four-year period.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Similarly, as required by the letter agreement establishing the
terms and conditions of Ronald J. Domanico&#146;s employment as
the Company&#146;s Vice President and Chief Financial Officer,
the Company granted to Mr.&nbsp;Domanico options to purchase
50,000 restricted Common Shares at an exercise price equal to
the fair market value of the Common Shares on the date of grant,
or $8.40. These options also expire in 2012 and are subject to
vesting at a rate of 25% per year over a four-year period.

<P align="center">10

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Retirement Plans.</I> Substantially all of the Company&#146;s
employees participate in a non-contributory defined benefit
pension plan. The pension plan provides for retirement,
disability and death benefits. Employees who retire at the
normal retirement age of 65 and receive their benefits as a
single life annuity are entitled to annual pension benefits
generally equal to .75% of average annual compensation,
multiplied by number of years of credited service. Average
annual compensation is the highest average compensation received
by an employee for any consecutive five-year period during the
last 10 consecutive plan years of an employee&#146;s
participation in the plan. Average annual compensation is
defined as an employee&#146;s gross wages, excluding fringe
benefits (salary and bonus columns of the Summary Compensation
Table). Prior to April&nbsp;1, 2000, when the annual benefit
formula was changed to the formula described above, the annual
benefit was calculated as follows: 1.35% times average annual
compensation, multiplied by the number of years of credited
service (not greater than 33&nbsp;years), less .65% of final
average annual compensation (defined as average annual
compensation for the last three consecutive calendar years
preceding retirement, up to the taxable wage base as established
by the Social Security Administration) for each year of credited
service at normal retirement date (not greater than
33&nbsp;years). The new formula removed the offset to social
security and the 33-year service cap for all salaried and
non-bargained employees covered in the plan. Benefit accruals
under the old formula through March&nbsp;31, 2000 were frozen
and participants age 50 with 10 or more years of service became
entitled to receive the greater of the benefit provided under
the old formula or the new formula.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company also maintains a Supplemental Executive Retirement
Plan, or SERP, which supplements the Company&#146;s pension plan
benefits by providing to certain highly compensated employees
the additional retirement benefits to which they otherwise would
be entitled under the Company&#146;s pension plan in the absence
of certain limitations imposed by the Internal Revenue Code. The
additional benefits payable under the SERP will be based on the
pension plan formula as in effect prior to April&nbsp;1, 2000,
but without regard to the taxable wage base established by the
Social Security Administration or the 33-year maximum limit on
credited years of service.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows the estimated annual benefits payable
upon retirement to employees participating in the Company&#146;s
non-contributory defined benefit pension plan and entitled to
the greater of the benefit provided under the old formula or the
new formula, as supplemented by the SERP, at specified
compensation levels and years of service:

<P align="center">
<B>Combined Retirement Plans Estimated Annual Benefits</B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="18%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="31"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="31" align="center" nowrap><B><FONT size="2">Credited Years of Service</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="2">Average Annual</FONT></B></TD>
    <TD></TD>
    <TD colspan="31" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="2">Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">10</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">15</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">20</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">25</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">30</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">35</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">40</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="2">45</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$150,000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">200,000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,525</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">250,000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">139,049</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">300,000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,650</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56,475</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94,125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">131,775</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169,424</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">350,000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">155,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">177,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">199,799</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">400,000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,725</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">102,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">153,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">179,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">230,174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">450,000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">115,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">144,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">202,650</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">231,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">260,549</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">500,000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64,650</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,975</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">129,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161,625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">193,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">226,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">258,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,924</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">550,000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">107,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">142,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">178,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">214,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">321,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">600,000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">195,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">234,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">273,525</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">312,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">351,674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">650,000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">212,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">254,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">297,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">339,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">382,049</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At December&nbsp;31, 2002, the estimated credited years of
service and average annual compensation under the retirement
plans for each of the Named Officers were as follows: Thomas V.
Brown, 40&nbsp;years and $642,392 (credited years of service
include term of service with former employer in accordance with
Mr. Brown&#146;s employment agreement); Mr.&nbsp;Keough,
26&nbsp;years (credited years of service include term of service
in industry in accordance with Mr.&nbsp;Keough&#146;s employment
letter agreement) and $450,000; James L. Walden, 10&nbsp;years
and $378,941; Jimmy A. Russell, 28&nbsp;years and $324,556; John
R. Foster, 16&nbsp;years (credited years of service include
prior industry experience) and $229,249; and H. Lee Thrash, III,
19&nbsp;years and $293,822.

<P align="center">11

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Employment Agreements.</I> The Company entered into an
employment agreement, effective January&nbsp;1, 1991, with
Thomas V. Brown. The employment agreement established
Mr.&nbsp;Brown&#146;s initial annual base salary at $350,000 and
provides that subsequent increases in his base salary are to be
determined by the Compensation and Employee Benefits Committee.
Pursuant to the employment agreement, the Company granted to
Mr.&nbsp;Brown options to purchase 120,000 Common Shares at
$4.00 per share, which were to expire January&nbsp;1, 2001, and
which were subject to vesting at a rate of 20% per year over a
five-year period. All of these options have been exercised. Also
pursuant to the employment agreement, the Company has provided
Mr.&nbsp;Brown with $1,000,000 in term life insurance, the
initiation fee and monthly dues for a local country club, an
annual $5,000 allowance for financial planning and tax
preparation services and travel and accident insurance in the
amount of $1,000,000.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Brown&#146;s employment agreement runs for an
indefinite term, but may be terminated by the Company or
Mr.&nbsp;Brown with or without cause upon 60&nbsp;days&#146;
prior notice. Certain terms of the agreement (i)&nbsp;providing
for one year&#146;s severance pay to Mr.&nbsp;Brown in the event
of his termination by the Company without cause and
(ii)&nbsp;prohibiting Mr.&nbsp;Brown from competing with the
Company for one year following his voluntary termination of
employment with the Company expired in 1996.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company entered into an employment agreement with James L.
Walden on January&nbsp;25, 1993 to establish
Mr.&nbsp;Walden&#146;s compensation during the first year of his
employment. Under the employment agreement,
Mr.&nbsp;Walden&#146;s base salary for his first year of
employment was set at $250,000, with future increases to be
determined by the Compensation and Employee Benefits Committee.
The agreement also provided Mr.&nbsp;Walden with a guaranteed
minimum bonus of 10% of his base salary for the first year and
provided that Mr.&nbsp;Walden was eligible for immediate
participation in the 1993 Key Employees&#146; Share Ownership
Plan and the Company&#146;s Incentive Bonus Plan. Pursuant to
the employment agreement, the Company granted Mr.&nbsp;Walden
options to purchase 20,000 shares of Common Stock at $17.75, the
fair market value of such shares on the date of grant. These
options expired on February&nbsp;5, 2003 and are subject to
vesting at a rate of 20% per year over a five-year period.
Options for these 20,000 shares were fully vested as of
February&nbsp;5, 1998, and 4,000 were exercised before they
expired. Under the agreement, the Company also has provided
Mr.&nbsp;Walden with term life insurance in an amount equal two
times his annual base salary, travel and accident insurance in
the amount of $500,000, an annual $5,000 allowance for financial
planning and tax preparation services and an allowance for local
country club dues.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On February&nbsp;13, 2002, the Company entered into a letter
agreement with Michael J. Keough setting forth certain terms and
conditions of his employment. The letter agreement established
Mr.&nbsp;Keough&#146;s initial annual base salary at $450,000
and provides that subsequent increases in his base salary are to
be determined by the Board. It also provides for an annual bonus
for 2002 and 2003 at least equal to 10% and 20%, respectively,
of Mr.&nbsp;Keough&#146;s base salary. Pursuant to the letter
agreement, the Company has provided Mr.&nbsp;Keough with
$1,000,000 in term life insurance, the initiation fee and
monthly dues for a local country club, a relocation allowance of
$37,500, an annual allowance for financial planning services and
immediate participation in the SERP with 25 years of credit for
service in the industry (with the total benefit payable under
the SERP to be offset by payments from qualified plans of prior
employers). The Company also agreed in the letter agreement to
nominate Mr. Keough to the Board and to make the grant of stock
options described above.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Keough&#146;s employment under the letter agreement
runs for an indefinite term. If his employment is terminated
other than upon his death or disability or for cause, as defined
in the agreement, or upon a change in control of the Company,
the agreement provides that he will be entitled to a severance
benefit equal to at least 12&nbsp;months&#146; base salary and
benefits.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Change in Control Severance Agreements.</I> The Company has a
change in control severance agreement with each of the Named
Officers and the Company&#146;s other executive officers in
order to ensure their continued service in the event of a change
in control of the Company. Each of the agreements provides that
the individual will receive a severance benefit upon the
termination of his or her employment without cause, or
voluntarily for good reason, within two years after a change in
control. The severance benefit is equal to the lesser of
(i)&nbsp;two years&#146; base salary or (ii)&nbsp;the highest
amount that would not result in any &#147;excess parachute

<P align="center">12

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
payment&#148; under federal tax laws. The individual will also
receive the amount of any compensation he or she has previously
earned, including compensation that has been deferred pursuant
to a non-tax-qualified plan.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In exchange for these benefits, each of the covered individuals
has agreed not to voluntarily terminate employment with the
Company between the date on which a change of control is
announced and the date on which it is either consummated or
abandoned.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The agreements have no fixed expiration but can be cancelled by
the Company upon one year&#146;s notice.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Resignation Agreement. </I>The Company entered into a
resignation agreement with H. Lee Thrash, III, effective
October&nbsp;8, 2002, in connection with his resignation as an
executive officer and director of the Company. Under this
agreement, Mr.&nbsp;Thrash will continue to be employed by and
perform services for the Company, and the Company will continue
to provide Mr.&nbsp;Thrash with the annual salary in effect for
him immediately prior to his resignation ($261,510), until
November&nbsp;1, 2003. During this salary continuation period,
he will also continue receiving many of the welfare and pension
benefits to which he was previously entitled, except that he
will not accrue vacation, participate in the SERP or receive the
benefits of his change-in-control severance agreement with the
Company. The welfare benefits will terminate, however, if he
becomes covered by another employer&#146;s group medical plan
during the continuation period. The agreement provided for
Mr.&nbsp;Thrash to receive a bonus for 2002 under the 1998
Incentive Plan (the amount awarded was 10% of his salary prior
to October&nbsp;8, 2002, or $19,631), as well as a special bonus
of $200,000. In addition, the Company will pay the cost of
Mr.&nbsp;Thrash&#146;s health insurance continuation coverage
under COBRA for up to 18&nbsp;months after November&nbsp;1,
2003, so long as Mr.&nbsp;Thrash remains eligible for the
coverage.

<P align="center">
<B>APPROVAL OF LONG-TERM EQUITY INCENTIVE PLAN</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following summary of the new Caraustar Industries, Inc.
Long-Term Equity Incentive Plan is qualified in its entirety by
reference to the text of the plan, a copy of which is attached
as Appendix&nbsp;A to this proxy statement.

<P align="left">
<B>Purpose</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board has adopted our new Long-Term Equity Incentive Plan
(the &#147;New Incentive Plan&#148;), to enhance alignment of
the interests of participating key employees with the interests
of the Company&#146;s shareholders by rewarding participating
key employees for improving our financial performance in a
manner that is consistent with the creation of increased
shareholder value. Awards under the New Incentive Plan may be in
the form of Common Share purchase options, restricted Common
Shares, or a combination of both.

<P align="left">
<B>Shares Available for Issuance</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
An aggregate of 4,000,000 Common Shares are authorized for
issuance under the New Incentive Plan. This aggregate number is
subject to adjustment for stock splits, stock dividends, and
selected other types of recapitalizations, including mergers. In
calculating the maximum number of Common Shares issuable under
the New Incentive Plan, the following rules will apply:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Shares granted outright as restricted stock or issued as a
    result of the exercise of stock options will reduce the number
    of shares issuable;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Shares subject to a stock option terminated without the issuance
    of common stock will again be available for issuance, but
    restricted stock that is forfeited will not again be available
    for issuance; and</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Shares received by the Company in connection with the exercise
    of stock options or the payment of withholding taxes will again
    be available for issuance.</TD>
</TR>

</TABLE>

<P align="left">
<B>Term</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Plan awards may be made so long as authorized shares are
available for issuance under the New Incentive Plan, but not
later than May&nbsp;7, 2013. All Plan awards made prior to the
Annual Meeting will be

<P align="center">13

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<DIV align="left">
contingent on shareholder approval of the New Incentive Plan. No
awards have been made under the New Incentive Plan as of the
date of this proxy statement.
</DIV>

<P align="left">
<B>Administration and Participants</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A committee of two or more non-employee directors, which
initially will be the Compensation and Employee Benefits
Committee of the Board, will administer the New Incentive Plan.
The Committee will have full discretionary authority in
interpreting the terms of the New Incentive Plan and of
individual award agreements under the New Incentive Plan.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each year, the Chief Executive Officer will nominate key
employees of the Company and its subsidiaries to participate in
award programs under the New Incentive Plan for that year. In
making nominations, the Chief Executive Officer will consider
relevant factors, including each key employee&#146;s functions,
responsibilities and the value of the employee&#146;s past and
future services for the Company&#146;s profitability and sound
growth. The Committee will then select Plan participants from
the nominated key employees. For 2003, the Chief Executive
Officer has nominated, and the Committee has approved the
participation of, 110 key employees.

<P align="left">
<B>Awards</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee will grant awards under the New Incentive Plan in
the form of either stock options or a combination of stock
options and restricted stock. Awards will be granted
periodically, but no participant will receive an award more than
once in a 12-month period except in connection with his or her
hiring.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company currently intends that stock options will comprise
up to (but not more than) 50% of each award granted to senior
key managers who participate in the New Incentive Plan or to
other participating key managers designated by the Committee,
with performance accelerated restricted stock, or PARS,
comprising the remainder of the awards to these participants.
For awards granted to all other participants, there is no limit
on the percentage of the awards that stock options may comprise.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company also currently intends that each award will be
stated as a percentage of the participant&#146;s salary. For
each award so stated, the number of options and shares of
restricted stock a participant receives will be based on the
closing price of the Common Shares on the day the award is made
(or the next preceding trading day, if the Common Shares do not
trade on the day the award is made). In 2003, the maximum award
granted will be 25% of the participant&#146;s salary, except
that the maximum award granted to senior key managers and others
specifically designated by the Committee may be 50%.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The maximum number of Common Shares covered by awards granted
under the New Incentive Plan to any participant in any calendar
year is 100,000.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Options. </I>All stock options awarded under the New
Incentive Plan will have an exercise price at least equal to the
fair market value of the Common Shares on the date the options
are granted. Options will have a vesting schedule of up to five
years and a term of up to ten years, in each case as determined
by the Committee in its discretion and set forth in the
individual award agreements.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The exercise price of an option may be paid in such
consideration as the Committee may deem appropriate, including
cash, Common Shares or a combination of cash and Common Shares.
In addition, to the extent permitted by law, the Committee may
permit a participant to elect to pay the option price upon the
exercise of a stock option by authorizing a third party to sell
Common Shares (or a sufficient portion of the shares) acquired
upon exercise of the stock option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire option
price and any tax withholding resulting from such exercise. In
any case, the permitted methods of payment will be as set forth
in the applicable individual award agreement.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The New Incentive Plan expressly prohibits the repricing of
outstanding options, including through the exchange of a new
lower-priced option for an outstanding higher-priced option.
However, the Committee may adjust the exercise price of
outstanding options for stock splits, stock dividends, and
selected other types of recapitalizations, including mergers.

<P align="center">14

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Restricted Stock. </I>All Common Shares awarded as restricted
stock under the New Incentive Plan will be forfeitable and
nontransferable (subject to such exceptions as the Committee may
determine) until they vest. Vesting will occur, and the transfer
restrictions will lapse, on the date set by the Committee at the
time of grant. This vesting date may be up to ten years after
the date of grant. Restricted stock awards may also be subject
to the attainment of performance goals, or to such other
conditions as the Committee may determine at the time of grant.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee may make awards of restricted stock under the New
Incentive Plan in the form of PARS. PARS will vest prior to
their vesting date if the closing price of the Common Shares
exceeds a specified threshold, or if another performance goal is
met. The Committee will set this price threshold or performance
goal for each PARS award at the time of grant.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The performance goals that may be used under the New Incentive
Plan in connection with grants of PARS or other restricted stock
awards include economic profit, return on net assets, return on
shareholders&#146; equity, return on assets, return on capital,
earnings per share, net earnings, gross income, earnings growth,
price per share, share appreciation and operating profit of the
Company or any of its subsidiaries. The Committee will have sole
discretion to determine whether performance goals have been met.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee may require that the Company retain possession of
the certificates representing restricted stock with respect to
which the transfer restrictions have not lapsed. Notwithstanding
retention of the certificates by the Company, the participant in
whose name any certificate is issued will have all rights of a
shareholder of the Company, including dividend and voting rights.

<P align="left">
<B>Termination of Employment</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee will determine the consequences to awards under
the New Incentive Plan of a participant&#146;s death,
disability, retirement or other termination of employment. These
consequences will be as set forth in the individual award
agreements or as the Committee may otherwise determine.

<P align="left">
<B>Transferability of Awards</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A participant may transfer options awarded under the New
Incentive Plan by will, the laws of descent and distribution or
a qualified domestic relations order. In addition, at the
discretion of the Committee, a participant may transfer options
by gift or other transfer other than for value to any of the
following:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the participant&#146;s family member, as that term is defined in
    the New Incentive Plan;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a trust in which either the participant or the
    participant&#146;s family members have more than 50% of the
    beneficial interest;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a foundation in which the participant or the participant&#146;s
    family members control the management of assets; or</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    any other entity in which the participant or the
    participant&#146;s family members own more than 50% of the
    voting interests.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Except as the Committee otherwise determines, no PARS or other
restricted stock may be transferred until their transfer
restrictions lapse. Once the restrictions lapse, the stock will
be freely transferable, subject to applicable securities laws.

<P align="left">
<B>Amendment and Termination of Plan</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee may suspend or terminate the New Incentive Plan
without notice. The Committee may also amend the New Incentive
Plan, but may not, without shareholder approval, adopt any
amendment that would require approval of the shareholders
pursuant to Section&nbsp;162(m) of the Internal Revenue Code (as
it affects options awarded under the New Incentive Plan to
&#147;covered employees&#148;). In addition, no amendment may
impair the rights of participants with respect to awards that
have already been granted under the New Incentive Plan without
the participants&#146; prior written consent.

<P align="center">15

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<P align="left">
<B>Other</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All awards under the New Incentive Plan that have not yet vested
will vest fully and automatically upon a change of control of
the Company. The New Incentive Plan defines a &#147;change of
control&#148; as the occurrence of any of the following events:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    A majority of the Board ceases to consist of a combination of
    incumbent directors and directors whose election or nomination
    was approved by at least two thirds of the incumbent directors
    then on the Board;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Any person becomes a beneficial owner of Company securities
    representing 25% or more of the combined voting power of the
    Company&#146;s outstanding voting securities, subject to
    exceptions described in the New Incentive Plan;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The consummation of a merger, consolidation, share exchange or
    similar business combination that requires the approval of
    shareholders, subject to exceptions described in the New
    Incentive Plan; or</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Action by the Company upon a plan of complete liquidation or
    dissolution, or to sell all or substantially all of the
    Company&#146;s assets, in either case with the approval of
    shareholders.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All awards under the New Incentive Plan are intended to qualify
to the extent possible for exemption from the short-swing profit
rules of Section&nbsp;16 under the Securities Exchange Act of
1934.

<P align="left">
<B>Certain Federal Income Tax Consequences</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain tax consequences of the New Incentive Plan under current
federal law are summarized in the following discussion. This
discussion deals with the general tax principles applicable to
the New Incentive Plan and is intended for general information
only. Alternative minimum tax and state and local income taxes
are not discussed and may vary depending on individual
circumstances and from locality to locality.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For federal income tax purposes, the recipient of stock options
granted under the New Incentive Plan will not have taxable
income upon the grant of the option, nor will the Company then
be entitled to any deduction. Generally, upon exercise of the
options, the optionee will realize ordinary income, and the
Company will be entitled to a deduction, in an amount equal to
the difference between the option exercise price and the fair
market value of the stock at the date of exercise. The
optionee&#146;s basis for the stock for purposes of determining
his gain or loss on his subsequent disposition of the shares
generally will be the fair market value of the stock on the date
of exercise.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A participant to whom PARS or other restricted stock is awarded
will not have taxable income upon the issuance of the stock, and
the Company will not then be entitled to a deduction, unless the
participant makes an election under Section&nbsp;83(b) of the
Internal Revenue Code. However, when restrictions on shares of
restricted stock lapse, such that the shares are no longer
subject to transfer restrictions and to forfeiture to the
Company, the participant will realize ordinary income and the
Company will be entitled to a deduction in an amount equal to
the fair market value of the shares at that time, less the
purchase price, if any, the participant paid for the shares
(subject to the limitation on deductibility under
Section&nbsp;162(m) of the Internal Revenue Code, as described
below, with respect to PARS). If an election is made under
Section&nbsp;83(b) with respect to restricted stock, the
employee will realize ordinary income at the date of issuance
equal to the difference between the fair market value of the
shares at that date less the purchase price, and the Company
will be entitled to a deduction in the same amount (again, with
respect to PARS, subject to the limits of Section&nbsp;162(m)).

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Section&nbsp;162(m) of the Internal Revenue Code, income
tax deductions of publicly-traded companies may be limited to
the extent total compensation (including base salary, annual
bonus, stock option exercises and non-qualified benefits) for
certain executive officers exceeds $1&nbsp;million (less the
amount of any &#147;excess parachute payments&#148; as defined
in Section&nbsp;280G of the Internal Revenue Code) in any one
year. It is the Company&#146;s policy generally to design its
compensation programs to conform to Section&nbsp;162(m) so that
total compensation paid to any employee will not exceed
$1&nbsp;million in any one year, except for compensation
payments in excess of $1&nbsp;million that qualify as
&#147;performance-based.&#148; Awards of stock options under the
New

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<DIV align="left">
Incentive Plan are intended to qualify as performance-based
compensation under Section&nbsp;162(m), as are awards of
restricted stock that are contingent upon the attainment of
performance goals. Shareholder approval of the New Incentive
Plan is required for the awards to so qualify. The Company also
intends to comply with other requirements of the
performance-based compensation exclusion under Section 162(m),
including option pricing requirements and requirements governing
the administration of the New Incentive Plan, and therefore
expects that compensation paid to top executives through option
awards and contingent restricted stock awards under the New
Incentive Plan will be deductible.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Awards of PARS, by contrast, will not qualify as
&#147;performance-based&#148; compensation under
Section&nbsp;162(m), and the Company may therefore not be
entitled to a full deduction, or even any deduction, upon the
lapse of restrictions on PARS awarded to the executive officers
to whom Section&nbsp;162(m) applies.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>The Board unanimously recommends a vote for approval of the
Long-Term Equity Incentive Plan.</B>

<P align="center">
<B>APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS</B>

<P align="left">
<B>Audit Committee Disclosure</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors maintains an Audit Committee comprised of
four directors. The Board of Directors and the Audit Committee
believe that all members of the Audit Committee are
&#147;independent directors&#148; within the meaning of
applicable NASDAQ rules. The Audit Committee operates under a
written charter adopted by the Board.

<P align="left">
<B>Report of the Audit Committee</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee oversees the Company&#146;s financial
reporting process on behalf of the Board of Directors.
Management is responsible for the Company&#146;s financial
reporting process, including its system of internal controls,
and for the preparation of Consolidated Financial Statements in
accordance with generally accepted accounting principles. The
Company&#146;s independent auditors are responsible for auditing
those financial statements and for expressing an opinion on the
conformity of those audited financial statements to generally
accepted accounting principles. Our responsibility is to monitor
and review these processes.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In this context, the Audit Committee has reviewed and discussed
with management and Deloitte &#38; Touche, LLP, the
Company&#146;s independent auditors, the audited financial
statements as of and for the year ended December&nbsp;31, 2002.
The Audit Committee has discussed with the independent auditors
the matters required to be discussed by Statement on Auditing
Standards No.&nbsp;61 (Communication with Audit Committees). In
addition, the Audit Committee has received from the independent
auditors the written disclosures and letter required by
Independence Standards Board No.&nbsp;1 (Independence
Discussions with Audit Committees) and discussed with them their
independence from the Company and management. The Audit
Committee also has considered whether the independent
auditors&#146; provision of non-audit services to the Company is
compatible with the auditors&#146; independence.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company&#146;s
Annual Report on Form&nbsp;10-K for the year ended
December&nbsp;31, 2002, for filing with the Securities and
Exchange Commission.
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Audit Committee:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Robert J. Clanin, Chairman</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    James H. Hance, Jr.</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Ralph M. Holt, Jr.</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    James E. Rogers</TD>
</TR>

</TABLE>

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<P align="left">
<B>Audit Fees</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fees billed by Deloitte &#38; Touche, LLP (&#147;Deloitte &#38;
Touche&#148;) for the audit of fiscal year 2002 and the review
of Forms 10-Q were $488,000. In addition, Deloitte &#38; Touche
billed fees of $325,000 in 2002 for its re-audit of the
Company&#146;s 2001 financial statements.

<P align="left">
<B>Financial Information Systems Design and Implementation
Fees</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deloitte &#38; Touche did not render any services related to
financial information systems design and implementation for the
fiscal year ended December&nbsp;31, 2002.

<P align="left">
<B>All Other Fees</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fees billed for all other services rendered by Deloitte &#38;
Touche for the fiscal year ended December&nbsp;31, 2002 were
(1)&nbsp;$350,375 for audit-related services, (2)&nbsp;$21,200
for tax compliance and preparation fees and (3)&nbsp;$106,240
for all other services, for an aggregate of $477,815.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Although Arthur Andersen LLP (&#147;Andersen&#148;), the
Company&#146;s former independent public accountants, did not
bill audit fees or financial information systems design and
implementation fees for fiscal year 2002, it billed fees for all
other services for the fiscal year ended December&nbsp;31, 2002
of (1)&nbsp;$45,000 for audit-related services,
(2)&nbsp;$237,537 for tax compliance and preparation services
and (3)&nbsp;$143,720 for all other services, for an aggregate
of $421,257.

<P align="left">
<B>Information Regarding Former Accountants</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On April&nbsp;2, 2002, the Board of Directors, upon the
recommendation of the Audit Committee, decided to no longer
engage Andersen as the Company&#146;s independent public
accountants and engaged Deloitte &#38; Touche to serve as the
Company&#146;s independent public accountants for the year ended
December&nbsp;31, 2002.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Andersen&#146;s reports on the Company&#146;s consolidated
financial statements for each of the years ended 2001 and 2002
did not contain an adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope
or accounting principles.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the years ended December&nbsp;31, 2001 and 2000 and
through April&nbsp;2, 2002, there were no disagreements with
Andersen on any matter of accounting principle or practice,
financial statement disclosure, or auditing scope or procedure
which, if not resolved to Andersen&#146;s satisfaction, would
have caused them to make reference to the subject matter in
connection with their report on the Company&#146;s consolidated
financial statements for such years; and there were no
reportable events as defined in Item&nbsp;304(a)(1)(v) of
Regulation&nbsp;S-K.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company provided Andersen with a copy of the foregoing
disclosures and, in response thereto, Andersen has furnished the
Company with a letter, dated April&nbsp;3, 2002, addressed to
the Securities and Exchange Commission, stating its agreement
with such statements.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the years ended December&nbsp;31, 2001 and 2000 and
through April&nbsp;2, 2002, the Company did not consult Deloitte
with respect to the application of accounting principles to a
specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company&#146;s
consolidated financial statements, or any other matters or
reportable events as set forth in Items 304(a)(2)(i) and
(ii)&nbsp;of Regulation&nbsp;S-K.

<P align="left">
<B>Appointment Of Independent Public Accountants</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board, upon the recommendation of the Audit Committee, has
approved the selection of Deloitte &#38; Touche as independent
public accountants to examine the books of the Company and its
subsidiaries for the current year and to report on the
consolidated financial statements of the Company and its
subsidiaries. Representatives of Deloitte &#38; Touche are
expected to be present at the Annual Meeting with the
opportunity to make a statement if they so desire, and they are
expected to be available to respond to appropriate questions.

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Approval of the proposal requires the affirmative vote of a
majority of the Common Shares voted on the proposal. Should the
shareholders vote negatively, the Board of Directors will
consider a change in auditors for the next year.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>The Board unanimously recommends a vote for ratification of
the selection of Deloitte &#38; Touche as independent public
accountants to audit the books of the Company and its
subsidiaries for the current year.</B>

<P align="center">
<B>PROPOSALS FOR 2004 ANNUAL MEETING OF SHAREHOLDERS</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shareholders who intend to present proposals at next year&#146;s
annual meeting are advised that any such proposal must be
received by the Secretary of the Company no later than the close
of business on December&nbsp;6, 2003 in order to be considered
for inclusion in the Company&#146;s proxy statement and proxy
appointment form relating to that meeting. Only persons who have
held beneficially or of record at least $2,000 in market value,
or 1% of the outstanding Common Shares, for at least one year on
the date the proposal is submitted and who continue in such
capacity through the meeting date are eligible to submit
proposals to be considered for inclusion in the Company&#146;s
proxy statement. In addition, the Company&#146;s bylaws
prescribe procedures a shareholder must follow to make
nominations for director candidates or propose any other
business to be considered at an annual meeting. Shareholder
nominations for director will be considered at an annual meeting
or any other meeting at which an election is to be held if the
shareholder delivers to the Secretary of the Company, not later
than the close of business on the fifth business day following
the date on which notice is first given to shareholders of the
meeting at which such election is to be held, a notice setting
forth the information specified in Section&nbsp;3 of
Article&nbsp;III of the Company&#146;s bylaws. Other shareholder
proposals will be considered at an annual meeting if the
shareholder delivers to the Secretary of the Company at its
principal executive office, no less than 60 nor more than
90&nbsp;days prior to the meeting, a written notice setting
forth the information specified in Section&nbsp;15 of
Article&nbsp;III of the Company&#146;s bylaws. Notwithstanding
the limitations described in the preceding sentence, in the
event the Company&#146;s annual meeting is held on a date other
than the second Wednesday in May, and public disclosure of the
date of the annual meeting is made less than 70&nbsp;days prior
to the meeting date, a shareholder&#146;s notice of proposed
business will be considered timely if received by the Company no
later than the tenth day following the date of public disclosure
of the meeting date. Any shareholder desiring a copy of the
Company&#146;s bylaws will be furnished one without charge upon
written request to the Secretary at 3100 Joe Jerkins Boulevard,
Austell, Georgia, 30106.

<P align="center">
<B>OTHER MATTERS</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board is not aware of any other matters that may be
presented for action at the Annual Meeting, but if other matters
do properly come before the meeting, it is intended that the
Common Shares represented by the accompanying proxy appointment
form will be voted by the persons named in the form in
accordance with their best judgment.

<P align="center">19

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You are cordially invited to attend this year&#146;s meeting.
However, whether you plan to attend the meeting or not, you are
respectfully urged to sign and return the enclosed proxy
appointment form, which will, of course, be returned to you at
the meeting if you are present and so request.
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="g81803g8180305.gif" alt="-s- RUSSELL M. ROBINSON, II"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Russell M. Robinson, II</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Chairman of the Board</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="g81803g8180306.gif" alt="-s- THOMAS V. BROWN"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Thomas V. Brown</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    President and Chief Executive Officer</TD>
</TR>

</TABLE>

<P align="center">20
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<P align="center">
<B>APPENDIX A</B>

<P align="center">
<B>CARAUSTAR INDUSTRIES, INC.</B>

<P align="center">
<B>2003 LONG-TERM EQUITY INCENTIVE PLAN</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Purpose.</B> The purpose of
this Plan is to enhance alignment of the interests of selected
employees of Caraustar Industries, Inc. (the
&#147;<I>Company</I>&#148;) with the interests of our
shareholders by rewarding the participating employees for
improving our financial performance in a manner that is
consistent with the creation of increased shareholder value. In
furtherance of this objective, awards in the form of common
stock purchase options or restricted common stock, or a
combination of both, may be granted in accordance with the
provisions of this Plan.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Effective Date and Term.</B>
Subject to the approval of the shareholders of the Company at
the Company&#146;s 2003 annual shareholders&#146; meeting, the
Plan shall be effective as of May&nbsp;7, 2003. This Plan shall
remain in effect as long as any awards under it are outstanding,
provided that no such awards may be made after May&nbsp;7, 2013.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Administration.</B> This Plan
is to be administered by a committee of the Board of Directors
of the Company designated by the Board (the
&#147;<I>Committee</I>&#148;), initially the Compensation and
Employee Benefits Committee. The Committee shall consist of at
least two members who are not employees of the Company or any
corporation of which the Company owns 50% or more of the voting
stock (each, a &#147;<I>Subsidiary</I>&#148;). Each member of
the Committee should, to the extent practicable, qualify as an
&#147;outside director&#148; within the meaning of
Section&nbsp;162(m) of the Internal Revenue Code of 1986, as
amended (or any successor provision) and as a &#147;non-employee
director&#148; within the meaning of Rule&nbsp;16b-3 under the
Securities Exchange Act of 1934, as amended (or any successor
provision); <I>provided, however,</I> that no award under this
Plan shall be invalidated by reason of one or more members of
the Committee not so qualifying.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee may delegate to any member of the Committee, the
Chief Executive Officer or any other senior officer of the
Company the authority to make awards under this Plan, pursuant
to such conditions and limitations as the Committee may
establish, except that only the Committee may make awards to
participants who are subject to Section&nbsp;16 of the
Securities Exchange Act of 1934, as amended (the
&#147;<I>Exchange Act</I>&#148;). Except to the extent
prohibited by applicable law or the applicable rules of a stock
exchange, the Committee may allocate all or any portion of its
responsibilities and powers, other than the power to grant
awards, to any one or more of its members and may delegate all
or any part of such responsibilities and powers to any person or
persons selected by it. The Committee may revoke any such
allocation or delegation at any time.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee shall have full discretion, power and authority to
make awards under this Plan and to construe, interpret and
administer this Plan. All decisions, actions or interpretations
of the Committee shall be final, conclusive and binding on all
parties.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Shares Available For This
Plan.</B> Subject to Section&nbsp;14, a maximum of 4,000,000
shares of common stock of the Company (&#147;<I>Common
Stock</I>&#148;) shall be available for delivery pursuant to
awards made under this Plan.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For purposes of calculating the number of shares of Common Stock
available for delivery under this Plan, where the value of an
award is variable on the date it is granted, the value shall be
deemed to be the maximum limitation of the award.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any shares subject to stock options granted under this Plan that
are not issued or otherwise are returned to the Company, whether
because awards have been forfeited, lapsed, expired, been
canceled, withheld to satisfy withholding tax obligations or
otherwise, shall again be available for other awards under this
Plan.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the exercise price of any stock option granted under this
Plan is satisfied by tendering shares of Common Stock to the
Company (by either actual delivery or by attestation), only the
number of shares of Common Stock issued net of the shares of
Common Stock tendered shall be deemed delivered for purposes of
determining the maximum number of shares of Common Stock
available for delivery under this Plan.

<P align="center">A-1

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any shares of Common Stock subject to an award of restricted
stock under this Plan that are not issued or otherwise are
returned to the Company because such shares have been forfeited
shall not again be available for other awards under this Plan.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Limitation On Awards.</B>
Subject to Section&nbsp;14, (i)&nbsp;no individual employee may
receive awards of options pursuant to this Plan with respect to
more than 100,000 shares of Common Stock in any calendar year
and (ii)&nbsp;no participant may receive a grant of awards
hereunder more than once in any 12-month period unless the first
such grant is made in connection with his or her hiring by the
Company or a Subsidiary.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Eligibility.</B> Awards under
this Plan may be made to any salaried, full-time key executive
or operating or staff manager of the Company or any Subsidiary,
and to any other salaried, full-time employee of the Company or
any Subsidiary who is a significant contributor to the
Company&#146;s financial success. The Chief Executive Officer
shall nominate eligible employees for participation in this Plan
each year, and the Committee shall then select the persons to
receive awards under this Plan during that year from the
employees so nominated.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Stock Option Awards.</B> The
Committee may from time to time grant to eligible employees
awards under this Plan in the form of options to purchase shares
of Common Stock, at a price per share (the &#147;<I>Option
Price</I>&#148;) not less than 100% of the fair market value of
a share of Common Stock on the date of grant (or, if greater,
the par value of a share of Common Stock), subject to the
conditions set forth in this Plan.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the time of each grant of a stock option under this Plan, the
Committee shall fix the vesting schedule for such grant, which
shall not exceed 5&nbsp;years, and the time period during which
the option may be exercised, which shall not exceed
10&nbsp;years. The Committee shall also have the authority in
its discretion, subject to applicable law and regulations, to
specify all other terms and conditions relating to stock options
granted under this Plan, including without limitation provisions
for the exercise of options in installments, and in lieu of
payment in cash, the exercise in whole or in part of options by
tendering Common Stock owned by the employee, valued at the fair
market value on the date of exercise, or other acceptable forms
of consideration equal in value to the Option Price. The
Committee may, in its discretion, impose rules or conditions
with respect to utilization of Common Stock for all or part of
the Option Price, including limitations on the pyramiding of
shares.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee may not reduce the Option Price of any stock
option grant after it is made, except in connection with a
Corporate Reorganization (as defined in Section&nbsp;14), nor
may the Committee agree to exchange a new lower-priced option
for an outstanding higher-priced option.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Restricted Share Awards.</B>
The Committee may from time to time grant to eligible employees
awards under this Plan in the form of shares of restricted
common stock that are subject to a risk of forfeiture,
restrictions on transfer and such other conditions, if any, as
the Committee may establish, including continued service with
the Company or its Subsidiaries or the attainment of Performance
Objectives (as defined in Section&nbsp;9). These restricted
stock awards may be in the form of shares of performance
accelerated restricted stock, or &#147;PARS.&#148; PARS are
shares of restricted stock the restrictions on which are set to
lapse on a specified date, but will lapse on an accelerated
basis if specified Performance Objectives are met prior to such
date.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the time of each grant of restricted stock awards (including
PARS) under this Plan, the Committee shall set the terms and
conditions of the awards, including the applicable restrictions,
the date on which the restrictions and risk of forfeiture will
lapse, which shall not be later than 10&nbsp;years after the
date of grant, and any Performance Objectives upon the
attainment of which the awards are contingent or the
restrictions will lapse. PARS for which Performance Objectives
are not achieved will remain outstanding, with risks of
forfeiture and other restrictions to lapse in accordance with
the original terms of such PARS.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Performance Objectives.</B>
The performance objectives that may be used under this Plan (the
&#147;Performance Objectives&#148;) in connection with grants of
PARS or other restricted stock awards include economic profit,
return on net assets, return on shareholders&#146; equity,
return on assets, return on capital, earnings per share, net
earnings, gross income, earnings growth, price per share, share
appreciation and operating profit of the Company or any of its
Subsidiaries. The Committee shall have sole discretion to
determine whether Performance Objectives have been met.

<P align="center">A-2

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Deferred Awards.</B> The
Committee may permit recipients of awards to elect to defer
receipt of such awards under such terms and conditions as the
Committee may prescribe. The Committee may authorize the Company
to establish various trusts or make other arrangements with
respect to any deferred awards.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Fair Market Value.</B> For
all purposes of this Plan, the fair market value of a share of
Common Stock as of a certain date shall be the closing sale
price of the Common Stock on the next preceding date on which a
sale occurred on the principal exchange or market on which the
Common Stock is then listed or admitted to trading.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Change in Employment
Status.</B> The Committee may make such provisions as it in its
sole discretion may deem appropriate with respect to the effect,
if any, the termination of employment will have on any grants or
awards under this Plan. The Committee may also make such rules,
regulations and determinations as it deems appropriate under
this Plan in respect of any leave of absence taken by an
employee or any other change in employment status, such as a
change from full-time employment to a consulting relationship,
of an employee relative to any grant or award. Without limiting
the generality of the foregoing, the Committee shall be entitled
to determine (i)&nbsp;whether or not any such leave of absence
or other change in employment status shall constitute a
termination of employment and (ii)&nbsp;the impact, if any, of
any such leave of absence or other change in employment status
on awards under this Plan theretofore made to the employee.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Assignability.</B> Except as
otherwise provided by the Committee, stock options granted under
this Plan shall not be transferable by the grantee other than by
will, the laws of descent and distribution or a qualified
domestic relations order. The Committee in its discretion may
allow a participant to transfer options granted under the Plan
by gift or other transfer other than for value to any of the
following:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;any child, stepchild, grandchild, parent, stepparent,
    grandparent, spouse, former spouse, sibling, niece, nephew,
    mother-in-law, father-in-law, son-in-law, daughter-in-law,
    brother-in-law or sister-in-law of the participant, including in
    case adoptive relationships (each, a &#147;<I>Family
    Member</I>&#148;);</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;a trust in which either the participant or the
    participant&#146;s Family Members have more than 50% of the
    beneficial interest;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;a foundation in which the participant or the
    participant&#146;s Family Members control the management of
    assets; or</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;any other entity in which the participant or the
    participant&#146;s Family Members own more than 50% of the
    voting interests.</TD>
</TR>

</TABLE>

<P align="left">
Except as the Committee otherwise determines, no PARS or other
shares of restricted stock may be transferred until their
transfer restrictions lapse.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Corporate
Reorganization.</B> In the event of any change in corporate
capitalization (including a change in the number of shares of
Common Stock outstanding), such as a stock split or a corporate
transaction, such as any merger, consolidation, separation,
including a spin-off, or other distribution of stock or property
of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in
Section&nbsp;368 of the Internal Revenue Code) or any partial or
complete liquidation of the Company (a &#147;<I>Corporate
Reorganization</I>&#148;), the Committee or the Board may make
such substitution or adjustments in the aggregate number and
kind of shares reserved for issuance under this Plan, in the
maximum limitation on the number of awards that may be granted
to any participant, in the number and kind of shares or other
consideration subject to outstanding awards, in the Option Price
of shares subject to outstanding stock options and in the
Performance Objectives applicable to outstanding PARS and other
restricted stock, and such other equitable substitutions or
adjustments, as it may determine to be appropriate in its sole
discretion; <I>provided, however,</I> that the number of shares
subject to any award shall always be a whole number.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Committee&#146;s
Determinations.</B> The Committee&#146;s determinations under
this Plan, including without limitation its determinations
regarding the employees to receive awards or grants, the form,
amount and timing of such awards or grants, the terms and
provisions of such awards or grants and the agreements

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<DIV align="left">
evidencing the same, need not be uniform and may be made by the
Committee selectively among employees who receive or are
eligible to receive awards or grants under this Plan whether or
not such employees are similarly situated. The Committee may,
with the consent of the participant, modify any determination it
previously made.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Withholding Taxes.</B> The
Committee or its designee shall have the right to determine the
amount of any federal, state or local required withholding tax,
and may require that any such required withholding tax be
satisfied by withholding shares of Common Stock or other amounts
which would otherwise be payable under this Plan.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
17.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Retention Of Shares.</B>
Shares of restricted stock awarded under this Plan may be
registered in the employees&#146; names when initially awarded,
but possession of certificates for the shares shall be retained
by the Secretary of the Company for the benefit of the
employees, or shares may be registered in book entry form only,
in both cases subject to the terms of this Plan and the
conditions of the particular awards.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
18.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Dividends And Voting.</B>
The Committee may permit each participant who holds restricted
stock awarded under this Plan to receive or accrue dividends and
other distributions made with respect to such stock under such
terms and conditions as in its discretion it deems appropriate.
The Committee may also permit the participant to vote or execute
proxies with respect to such shares under such terms and
conditions as in its discretion it deems appropriate.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
19.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Continued Employment.</B>
Nothing in this Plan or in any agreement entered into pursuant
to this Plan shall confer upon any employee the right to
continue in the employment of the Company or affect any right
that the Company may have to terminate the employment of such
employee.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
20.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Change In Control.</B> For
purposes of this Plan, a &#147;Change in Control&#148; shall
mean the occurrence of any of the following events:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;individuals who, on the date hereof, constitute the
    Board (the &#147;<I>Incumbent Directors</I>&#148;) cease for any
    reason to constitute at least a majority of the Board,
    <I>provided</I> that any person becoming a director subsequent
    to the date hereof whose election or nomination for election was
    approved by a vote of at least two thirds (&nbsp;2/3) of the
    Incumbent Directors then on the Board (either by a specific vote
    or by approval of the proxy statement of the Company in which
    such person is named as a nominee for director, without written
    objection to such nomination) shall be an Incumbent Director;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;any &#147;person&#148; (as such term is defined in
    Section&nbsp;3(a)(9) of the Exchange Act and in
    Sections&nbsp;13(d)(3) and 14(d)(2) of the Exchange Act) is or
    becomes a &#147;beneficial owner&#148; (as defined in
    Rule&nbsp;13d-3 under the Exchange Act), directly or indirectly,
    of securities of the Company representing 25% or more of the
    combined voting power of the Company&#146;s then outstanding
    securities eligible to vote for the election of the Board (the
    &#147;<I>Company Voting Securities</I>&#148;); <I>provided,
    however,</I> that such event shall not be deemed to be a Change
    in Control by virtue of any acquisition of Company Voting
    Securities (i)&nbsp;by the Company or any Subsidiary,
    (ii)&nbsp;by any employee benefit plan (or related trust)
    sponsored or maintained by the Company or any Subsidiary,
    (iii)&nbsp;by any underwriter temporarily holding securities
    pursuant to an offering of such securities, (iv)&nbsp;pursuant
    to any Business Combination (as defined below) that satisfies
    each of clauses&nbsp;(i), (ii)&nbsp;and (iii)&nbsp;of
    Section&nbsp;20(c), or (v)&nbsp;pursuant to or in connection
    with a transaction (other than a Business Combination) in which
    Company Voting Securities are acquired from the Company, if a
    majority of the Incumbent Directors approve a resolution
    providing expressly that such transaction does not constitute a
    Change in Control under this Section&nbsp;20(b);</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;the consummation of a merger, consolidation, statutory
    share exchange or similar form of corporate transaction
    involving the Company or any of its Subsidiaries that requires
    the approval of the Company&#146;s shareholders, whether for
    such transaction or for an issuance of securities in or in
    connection with the transaction (a &#147;<I>Business
    Combination</I>&#148;), unless immediately following such
    Business Combination (i)&nbsp;more than 50% of the total voting
    power of the ultimate parent corporation that directly or
    indirectly has beneficial ownership of 100% of the voting
    securities eligible to elect directors of the Surviving
    Corporation (the &#147;<I>Parent Corporation</I>&#148;) or, if
    there is no Parent Corporation, the corporation resulting from
    such Business Combination (the &#147;<I>Surviving
    Corporation</I>&#148;), is represented by Company</TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Voting Securities that were outstanding immediately prior to
    such Business Combination (or, if applicable, is represented by
    shares into which such Company Voting Securities were converted
    pursuant to such Business Combination), and such voting power
    among the holders thereof is in substantially the same
    proportion as the voting power of such Company Voting Securities
    among the holders thereof immediately prior to the Business
    Combination, (ii)&nbsp;no person (other than any employee
    benefit plan or related trust sponsored or maintained by the
    Surviving Corporation or the Parent Corporation), is or becomes
    the beneficial owner, directly or indirectly, of 25% or more of
    the total voting power of the outstanding voting securities
    eligible to elect directors of the Parent Corporation (or, if
    there is no Parent Corporation, the Surviving Corporation) and
    (iii)&nbsp;at least a majority of the members of the board of
    directors of the Parent Corporation (or, if there is no Parent
    Corporation, the Surviving Corporation) following the
    consummation of the Business Combination were Incumbent
    Directors at the time of the Board&#146;s approval of the
    execution of the initial agreement providing for such Business
    Combination; or</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;the Company acts upon a plan of complete liquidation or
    dissolution of the Company approved by the shareholders of the
    Company or effects a sale of all or substantially all of the
    Company&#146;s assets approved by the shareholders of the
    Company.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding the foregoing, a Change in Control of the
Company shall not be deemed to occur solely because any person
acquires beneficial ownership of more than 25% of the Company
Voting Securities as a result of an acquisition or a series of
acquisitions of Company Voting Securities by the Company that
reduces the number of Company Voting Securities outstanding;
however, if such person thereafter becomes the beneficial owner
of additional Company Voting Securities that increase the
percentage of outstanding Company Voting Securities beneficially
owned by such person, a Change in Control of the Company shall
then be deemed to occur.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
21.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Effect Of Change In
Control.</B> In the event of a Change in Control, all
outstanding options granted under the Plan shall become
immediately exercisable and the risk of forfeiture and other
restrictions on all shares of outstanding restricted stock shall
immediately lapse. Notwithstanding the foregoing, a Change of
Control shall have no effect on options or restricted stock
awarded to a Plan participant if the Change of Control consisted
of or resulted from the acquisition of beneficial ownership of
25% or more of the Company Voting Securities by such Plan
participant, any group of persons including such Plan
participant or any entity controlled by such Plan participant or
by any group of persons including such Plan participant.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
22.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Compliance With Laws And
Regulations.</B> Notwithstanding any other provisions of this
Plan, the issuance or delivery of any shares may be postponed
for such period as may be required to comply with any applicable
requirements of any national securities exchange or any
requirements under any other law or regulation applicable to the
issuance or delivery of such shares, and the Company shall not
be obligated to issue or deliver any such shares if the issuance
or delivery thereof shall constitute a violation of any
provision of any law or any regulation of any governmental
authority, whether foreign or domestic, or any national
securities exchange.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
23.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Amendment and
Termination.</B> The Board of Directors of the Company may alter
or amend this Plan, in whole or in part, from time to time, or
terminate this Plan at any time; provided, however, that
(i)&nbsp;no such action shall adversely affect any rights or
obligations with respect to awards previously made under this
Plan unless the action is taken in order to comply with
applicable law, stock exchange rules or accounting rules,
(ii)&nbsp;no amendment that has the effect of increasing the
number of shares subject to this Plan shall be made without the
approval of the Company&#146;s shareholders, (iii)&nbsp;the last
paragraph of Section&nbsp;7 (prohibiting option repricing) shall
not be amended without the approval of the Company&#146;s
shareholders and (iv)&nbsp;adjustments pursuant to
Section&nbsp;14 shall not be subject to clauses (i),
(ii)&nbsp;or (iii)&nbsp;of this Section&nbsp;23.

<P align="center">A-5
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">


<DIV align="center">
<IMG src="g81803caralogo.gif" alt="(CARAUSTAR LOGO)">
</DIV>

<DIV>&nbsp;</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="1%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="81%">&nbsp;</TD>
        <TD width="17%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD nowrap valign="top"><FONT size="2"><B>REVOCABLE<BR>
APPOINTMENT<BR>
OF PROXY</B></FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2"><B>CARAUSTAR INDUSTRIES, INC.<br>&nbsp;<br>
ANNUAL MEETING OF SHAREHOLDERS<br>
TO BE HELD ON MAY 7, 2003</B></FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</DIV>

<P align="center"><FONT size="2"><B>THIS APPOINTMENT OF PROXY IS SOLICITED ON BEHALF OF<BR>
THE BOARD OF DIRECTORS.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby constitutes and appoints Russell M.

Robinson, II
and Thomas V. Brown as Proxies with full power of substitution to act and vote
for and on behalf of the undersigned, as designated below, all the common
shares of Caraustar Industries, Inc. (the &#147;Company&#148;) held of record by the
undersigned on March&nbsp;14, 2003, at the annual meeting of shareholders to be held
at the Marietta Conference Center and Resort, 500 Powder Springs St., Marietta,
Georgia on May&nbsp;7, 2003 or any adjournment thereof.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THE PROXIES WILL VOTE FOR THE ELECTION OF THE

DIRECTOR NOMINEES NAMED
HEREIN AND FOR THE PROPOSALS UNLESS THE SHAREHOLDER DIRECTS OTHERWISE, IN WHICH
CASE THE PROXIES WILL VOTE AS DIRECTED.
</FONT>
<P align="center"><FONT size="2">(Continued and to be dated and signed on the reverse side.)
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="60%"><FONT size="2">CARAUSTAR INDUSTRIES, INC.<BR>
P.O. BOX 11126<BR>
NEW YORK, N.Y. 10203-0126
</FONT>
</TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">&#150; DETACH PROXY CARD HERE &#150;
</FONT>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="1%">&nbsp;</TD>
        <TD width="2%">&nbsp;</TD>

        <TD width="3%">&nbsp;</TD>
        <TD width="2%">&nbsp;</TD>

        <TD width="1%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>

        <TD width="3%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="6%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>

        <TD width="14%">&nbsp;</TD>

        <TD width="2%">&nbsp;</TD>
        <TD width="2%">&nbsp;</TD>
        <TD width="2%">&nbsp;</TD>

        <TD width="1%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>

        <TD width="21%">&nbsp;</TD>

        <TD width="3%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD nowrap valign="top"><FONT size="1">&#091;&nbsp; &#093;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap colspan="9" valign="top" align="left"><FONT size="1">PLEASE MARK, SIGN, DATE AND RETURN

THIS<BR>
PROXY PROMPTLY USING THE ENCLOSED <br>POSTAGE
PREPAID ENVELOPE.</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="8" valign="top" align="center"><FONT size="1">&#091;X&#093;<br>
VOTES MUST BE INDICATED<br>
(X)&nbsp;IN BLACK OR BLUE INK.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="19" valign="top" align="left"><FONT size="1">THE BOARD OF DIRECTORS RECOMMENDS A VOTE

FOR ALL PROPOSALS.</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">1.</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="11" valign="top" align="left"><FONT size="1">ELECTION OF THREE CLASS I

DIRECTORS</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="1">For</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="1">Against</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="1">Abstain</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">
FOR<BR>
ALL
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="left" valign="top"><FONT size="1">&#091; &nbsp; &#093;
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">WITHHOLD<BR>
FOR ALL
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="left" valign="top"><FONT size="1">&#091; &nbsp; &#093;
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">(*) EXCEPTIONS
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="left" valign="top"><FONT size="1">&#091;&nbsp; &#093;
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="right" valign="top"><FONT size="1"><br>
</FONT></TD>
        <TD align="right" valign="top"><FONT size="1">2.<br>
</FONT></TD>
        <TD nowrap valign="top"><FONT size="1"><br>
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">PROPOSAL TO APPROVE THE
COMPANY&#146;S LONG-TERM
EQUITY INCENTIVE PLAN.
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="center" valign="top"><FONT size="1">&#091; &nbsp; &#093;
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="center" valign="top"><FONT size="1">&#091; &nbsp; &#093;
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="center" valign="top"><FONT size="1">&#091; &nbsp; &#093;
</FONT>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="right" valign="top"><FONT size="1"><br>
</FONT></TD>
        <TD align="right" valign="top"><FONT size="1">3.<br>
</FONT></TD>
        <TD nowrap valign="top"><FONT size="1"><br>
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">PROPOSAL TO RATIFY THE
BOARD OF DIRECTORS&#146;
SELECTION OF DELOITTE &#038;
TOUCHE LLP as the Company&#146;s
independent public accountants.
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="center" valign="top"><FONT size="1">&#091; &nbsp; &#093;
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="center" valign="top"><FONT size="1">&#091; &nbsp; &#093;
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="center" valign="top"><FONT size="1">&#091; &nbsp; &#093;
</FONT>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="right" valign="top"><FONT size="1"><br>
</FONT></TD>
        <TD align="right" valign="top"><FONT size="1">4.<br>
</FONT></TD>
        <TD nowrap valign="top"><FONT size="1"><br>
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="7" valign="top" align="left"><FONT size="1">In their discretion, the Proxies are authorized to vote upon

such other <br>business as
may properly come before the meeting.</FONT></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left">
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
        <TD width="18%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="16%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="58%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">
Nominees:
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">Michael J. Keough; Bob M. Prillaman;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">Russell M. Robinson, II</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="3" valign="top" align="left"><FONT size="1">(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE

FOR ANY
INDIVIDUAL NOMINEE, MARK THE &#147;EXCEPTIONS&#148; BOX AND WRITE
THAT NOMINEE&#146;S NAME IN THE SPACE PROVIDED BELOW.)</FONT></TD>
</TR>
</TABLE>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="41%">&nbsp;</TD>
        <TD width="12%">&nbsp;</TD>
        <TD width="8%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="18%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="15%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(*) Exceptions

____________________________</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="5" valign="top" align="center"><FONT size="1">To change your address, please mark this box. &#091;

&nbsp; &#093;</FONT></TD>
</TR>
<TR>
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="5" valign="top" align="left"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="5" valign="top" align="left"><FONT

size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SCAN LINE</FONT></TD>
</TR>
<TR>
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="5" valign="top" align="left"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="5" valign="top" align="left"><FONT size="1">The undersigned acknowledges receipt of the accompanying

Notice of Annual Meeting and
Proxy Statement and revokes all Appointments of Proxy heretofore given by the
undersigned.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="5" valign="top" align="left"><FONT size="1">Please sign exactly as name appears on card. When shares

are held by joint tenants,
both should sign. When signing as attorney, as executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership, please sign
in partnership name by authorized person.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">
Date
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">Share Owner sign here
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">Co-Owner sign here</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">
<HR size="1" noshade>
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1"><HR size="1" noshade>
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
        <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1">
<HR size="1" noshade>
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="1"><HR size="1" noshade>
</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>
</TABLE>
</DIV>



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