Exhibit 10.1

EASTERN VIRGINIA BANKSHARES, INC.

2007 EQUITY COMPENSATION PLAN

ARTICLE 1

DEFINITIONS

 

1.03 Administrator

Administrator means the Committee. Notwithstanding the preceding sentence,
“Administrator” means the Board on any date on which there is not a Committee.

 

1.04 Agreement

Agreement means a written agreement (including any amendment or supplement
thereto) between the Company and a Participant specifying the terms and
conditions of an Award granted to such Participant.

 

1.05 Award

Award means an award of Performance Shares, a Stock Award, Stock Unit, Option or
SAR granted to a Participant.

 

1.06 Board

Board means the Board of Directors of the Company.

 

1.07 Change in Control

Change in Control means a change in control of the Company of a nature that
would be required to be reported (assuming such event has not been previously
reported) in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act (or a successor provision thereto), provided that,
without limitation, a Change in Control shall be deemed to have occurred at such
time after February 1, 2007 as (i) any “person”, within the meaning of
Section 14(d) of the Exchange Act, becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding securities, or
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors cease for any reason
to constitute at least a majority thereof unless the election or the nomination
for election, by the Company’s shareholders, of each new director was approved
by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.

 

1.08 Code

Code means the Internal Revenue Code of 1986, and any amendments thereto.

 

1.09 Committee

Committee means the Compensation Committee of the Board.

 

1.10 Common Stock

Common Stock means the common stock of the Company.

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1.11 Control Change Date

Control Change Date means the date on which a Change in Control occurs. If a
Change in Control occurs on account of a series of transactions, the Control
Change Date is the date of the last of such transactions.

 

1.12 Company

Company means Eastern Virginia Bankshares, Inc.

 

1.13 Corresponding SAR

Corresponding SAR means an SAR that is granted in relation to a particular
Option and that can be exercised only upon the surrender to the Company,
unexercised, of that portion of the Option to which the SAR relates.

 

1.14 Exchange Act

Exchange Act means the Securities Exchange Act of 1934, as amended from time to
time.

 

1.15 Fair Market Value

Fair Market Value means, on any given date, the closing price of a share of
common stock on the NASDAQ National Global Market or on the Principal Stock
Exchange on which the Common Stock is traded, or if the Common Stock is not
traded on such day, then on the next preceding day the Common Stock was so
traded or using any other reasonable application of a reasonable valuation
method.

 

1.16 Incentive Award

Incentive Award means an Award which, subject to such terms and conditions as
may be prescribed by the Administrator, entitles the Participant to receive a
payment, in cash or Common Stock or a combination of cash and Common Stock, from
the Company or a Subsidiary.

 

1.17 Incentive Stock Option

Incentive Stock Option means an Option which qualifies and is intended to
qualify as an Incentive Stock Option under Section 422 of the Code.

 

1.18 Initial Value

Initial Value means, with respect to a Corresponding SAR, the Option price per
share of the related Option and, with respect to an SAR granted independently of
an Option, the price per share of Common Stock as determined by the
Administrator on the date of the grant; provided, however, that the price per
share of Common Stock encompassed by the grant of an SAR shall not be less than
the Fair Market Value on the date of grant.

 

1.19 Non-Qualified Stock Option

Non-Qualified Stock Option means an Option other than an Incentive Stock Option.

 

1.20 Option

Option means a stock option that entitles the holder to purchase from the
Company a stated number of shares of Common Stock at the price set forth in an
Agreement.

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1.21 Participant

Participant means a key employee of the Company or a Subsidiary or a member of
the Board or the board of directors of a Subsidiary or a consultant to the
Company or a Subsidiary who satisfies the requirements of Article IV and is
selected by the Administrator to receive an Award.

 

1.22 Performance Criteria

Performance Criteria means one or more of (a) cash flow and/or free cash flow
(before or after dividends), (b) earnings per share (including earnings before
interest, taxes, depreciation and amortization) (diluted and basic earnings per
share), (c) the price of Common Stock, (d) return on equity, (e) total
shareholder return, (f) return on capital (including return on total capital or
return on invested capital), (g) return on assets or net assets, (h) market
capitalization, (i) total enterprise value (market capitalization plus debt),
(j) economic value added, (k) debt leverage (debt to capital), (l) revenue,
(m) income or net income, (n) operating income (o) operating profit or net
operating profit, (p) operating margin or profit margin, (q) return on operating
revenue, (r) cash from operations, (s) operating ratio, (t) commodity or
operating revenue and (u) market share.

 

1.23 Performance Shares

Performance Shares means an Award, in the amount determined by the Administrator
and specified in an Agreement, stated with reference to a specified number of
shares of Common Stock, that entitles the holder to receive a payment for each
specified share equal to the Fair Market Value of Common Stock on the date of
payment.

 

1.24 Plan

Plan means the Eastern Virginia Bankshares, Inc. 2007 Equity Compensation Plan.

 

1.25 SAR

SAR means a stock appreciation right that entitles the holder to receive, with
respect to each share of Common Stock encompassed by the exercise of such SAR,
the excess, if any, of the Fair Market Value at the time of exercise over the
Initial Value. References to “SARs” include both Corresponding SARs and SARs
granted independently of Options, unless the context requires otherwise.

 

1.26 Stock Award

Stock Award means Common Stock awarded to a Participant under Article VIII.

 

1.27 Stock Unit

Stock Unit means an Award, in an amount determined by the Administrator and
specified in an Agreement, stated with reference to a specified number of shares
of Common Stock, that entitles the holder to receive a payment for each Stock
Unit equal to the Fair Market Value of a share of Common Stock on the date of
payment.

 

1.28 Subsidiary

Subsidiary means a Company or other business entity that the Company directly or
indirectly, through one or more intermediaries, controls fifty percent (50%) or
more of the voting equity of such Company.

ARTICLE II

PURPOSES

The Plan is intended to assist the Company and Subsidiaries in recruiting and
retaining individuals with ability and initiative by enabling such persons to
participate in the future success of the Company and its Subsidiaries and to

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associate their interests with those of the Company and its shareholders. The
Plan is intended to permit the grant of Incentive Stock Options and
Non-Qualified Stock Options, and the grant of SARs, Stock Awards, Incentive
Awards, Stock Units and Performance Shares. No Option that is intended to be an
Incentive Stock Option shall be invalid for failure to qualify as an Incentive
Stock Option. The proceeds received by the Company from the sale of Common Stock
pursuant to this Plan shall be used for general corporate purposes.

ARTICLE III

ADMINISTRATION

The Plan shall be administered by the Administrator. The Administrator shall
have authority to grant Awards upon such terms (not inconsistent with the
provisions of this Plan), as the Administrator may consider appropriate. Such
terms may include conditions (in addition to those contained in this Plan) on
the exercisability of all or any part of an Option or SAR or on the
transferability or forfeitability of a Stock Award or an award of Performance
Shares, Stock Units or an Incentive Award, including by way of example and not
of limitation, requirements that the Participant complete a specified period of
employment or service with the Company or a Subsidiary, requirements that the
Company achieve a specified level of financial performance or that the Company
achieve a specified level of financial return. Notwithstanding any such
conditions, the Administrator may, in its discretion, accelerate the time at
which any Option or SAR may be exercised, or the time at which a Stock Award may
become transferable or nonforfeitable or both, or the time at which an award of
Performance Shares, Stock Units or an Incentive Award may be settled. In
addition, the Administrator shall have complete authority to interpret all
provisions of this Plan; to prescribe the form of Agreements; to adopt, amend,
and rescind rules and regulations pertaining to the administration of the Plan;
and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific power
to the Administrator shall not be construed as limiting any power or authority
of the Administrator. Any decision made, or action taken, by the Administrator
in connection with the administration of this Plan shall be final and
conclusive. Neither the Administrator nor any member of the Committee shall be
liable for any act done in good faith with respect to this Plan or any Agreement
or Award. All expenses of administering this Plan shall be borne by the Company,
a Subsidiary or a combination thereof.

ARTICLE IV

ELIGIBILITY

Any key employee of the Company, any member of the Board, any employee or
director of a Subsidiary (including a Company that becomes a Subsidiary after
the adoption of this Plan), or any consultant or advisor to the Company or a
Subsidiary is eligible to participate in this Plan if the Administrator, in its
sole discretion, determines that such person has contributed or can be expected
to contribute to the profits or growth of the Company or a Subsidiary.

ARTICLE V

STOCK SUBJECT TO PLAN

 

5.01 Shares Issued

Upon the award of shares of Common Stock pursuant to a Stock Award or in
settlement of an award of Stock Units, Performance Shares or an Incentive Award,
the Company may issue shares of Common Stock from its authorized but unissued
Common Stock. Upon the exercise of any Option or SAR the Company may deliver to
the Participant (or the Participant’s broker if the Participant so directs),
shares of Common Stock from its authorized but unissued Common Stock.

 

5.02 Aggregate Limit

The maximum aggregate number of shares of Common Stock that may be issued under
this Plan, pursuant to the exercise of SARs and Options, the grant of Stock
Awards and the settlement of Performance Shares, Stock Units and Incentive
Awards is 400,000 shares. The maximum aggregate number of shares that may be
issued under this Plan and the maximum number of shares that may be issued
pursuant to the exercise of Options shall be subject to adjustment as provided
in Article XII.

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5.03 Reallocation of Shares

If an Option is terminated, in whole or in part, for any reason other than its
exercise or the exercise of a Corresponding SAR, the number of shares of Common
Stock allocated to the Option or portion thereof may be reallocated to other
Awards to be granted under this Plan. If an SAR is terminated, in whole or in
part, for any reason other than its exercise or the exercise of a related
Option, the number of shares of Common Stock allocated to the SAR or portion
thereof may be reallocated to other Awards to be granted under this Plan. If a
Stock Unit, Incentive Award or an award of Performance Shares is terminated, in
whole or in part, the number of shares of Common Stock allocated to the Stock
Unit, Incentive Award or Performance Shares or portion thereof may be
reallocated to other Awards to be granted under this Plan. If a Stock Award is
forfeited or terminated, in whole or in part, for any reason, the number of
shares of Common Stock allocated to the Stock Award or portion thereof may be
reallocated to other Awards to be granted under this Plan. If shares of Common
Stock are surrendered or withheld in satisfaction of tax withholding
requirements the number of shares surrendered or withheld may be reallocated to
other Awards to be granted under this Plan.

ARTICLE VI

OPTIONS

 

6.01 Award

In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom an Option is to be granted and will specify
the number of shares of Common Stock covered by each such award.

 

6.02 Option Price

The price per share for Common Stock purchased on the exercise of an Option
shall be determined by the Administrator on the date of grant, but shall not be
less than the Fair Market Value on the date the Option is granted. Except for an
adjustment authorized under Article XII, the Option price may not be reduced (by
amendment or cancellation of the Option or otherwise) after the date of grant.

 

6.03 Maximum Option Period

The maximum period in which an Option may be exercised shall be ten years from
the date such Option was granted. The terms of any Option may provide that it
has a term that is less than such maximum period. The term of exercisability of
any option may not be extended or renewed except as may be permitted by Code
Section 409A.

 

6.04 Nontransferability

Except as provided in Section 6.05, each Option granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution. In
the event of any transfer of an Option (by the Participant or his transferee),
the Option and any Corresponding SAR that relates to such Option must be
transferred to the same person or persons or entity or entities. Except as
provided in Section 6.05, during the lifetime of the Participant to whom the
Option is granted, the Option may be exercised only by the Participant. No right
or interest of a Participant in any Option shall be liable for, or subject to,
any lien, obligation, or liability of such Participant.

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6.05 Transferable Options

Section 6.04 to the contrary notwithstanding, and if the Agreement provides, a
Non-Qualified Stock Option may be transferred by a Participant to the
Participant’s children, grandchildren, spouse, one or more trusts for the
benefit of such family members or a partnership in which such family members are
the only partners, on such terms and conditions as may be permitted under
Securities Exchange Commission Rule 16b-3 as in effect from time to time. The
holder of an Option transferred pursuant to this section shall be bound by the
same terms and conditions that governed the Option during the period that it was
held by the Participant; provided, however, that such transferee may not
transfer the Option except by will or the laws of descent and distribution. In
the event of any transfer of an Option (by the Participant or his transferee),
the Option and any Corresponding SAR that relates to such Option must be
transferred to the same person or persons or entity or entities.

 

6.06 Employee Status

For purposes of determining the applicability of Section 422 of the Code
(relating to Incentive Stock Options), or in the event that the terms of any
Option provide that it may be exercised only during employment or continued
service or within a specified period of time after termination of employment or
service, the Administrator may decide to what extent leaves of absence for
governmental or military service, illness, temporary disability, or other
reasons shall not be deemed interruptions of continuous employment or service.

 

6.07 Exercise

Subject to the provisions of this Plan and the applicable Agreement, an Option
may be exercised in whole at any time or in part from time to time at such times
and in compliance with such requirements as the Administrator shall determine;
provided, however, that Incentive Stock Options (granted under the Plan and all
plans of the Company and its Related Entities) may not be first exercisable in a
calendar year for stock having a Fair Market Value (determined as of the date an
Option is granted) exceeding the limit prescribed by Section 422(d) of the Code.
An Option granted under this Plan may be exercised with respect to any number of
whole shares less than the full number for which the Option could be exercised.
A partial exercise of an Option shall not affect the right to exercise the
Option from time to time in accordance with this Plan and the applicable
Agreement with respect to the remaining shares subject to the Option. The
exercise of an Option shall result in the termination of any Corresponding SAR
to the extent of the number of shares with respect to which the Option is
exercised.

 

6.08 Payment

Unless otherwise provided by the Agreement, payment of the Option price shall be
made in cash or a cash equivalent acceptable to the Administrator. If Common
Stock is used to pay all or part of the Option price, the sum of the cash and
cash equivalent and the Fair Market Value (determined as of the day preceding
the date of exercise) of the shares surrendered must not be less than the Option
price of the shares for which the Option is being exercised.

 

6.09 Change in Control

If provided in an Agreement, each outstanding Option shall be fully exercisable
(in whole or in part at the discretion of the holder) upon a Change in Control.

 

6.10 Shareholder Rights

No Participant shall have any rights as a shareholder with respect to shares
subject to his Option until the date of exercise of such Option.

 

6.11 Disposition of Stock

A Participant shall notify the Company of any sale or other disposition of
Common Stock acquired pursuant to an Option that was an Incentive Stock Option
if such sale or disposition occurs (i) within two years of the grant of an
Option or (ii) within one year of the issuance of the Common Stock to the
Participant. Such notice shall be in writing and directed to the Secretary of
the Company.

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ARTICLE VII

SARS

 

7.01 Award

In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom SARs are to be granted and will specify the
number of shares covered by each such award.

 

7.02 Maximum SAR Period

The maximum period in which an SAR may be exercised shall be ten years from the
date such SAR was granted. The terms of any SAR may provide that it has a term
that is less than such maximum period.

 

7.03 Nontransferability

Except as provided in Section 7.04, each SAR granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, a Corresponding SAR and the related Option must
be transferred to the same person or persons or entity or entities. Except as
provided in Section 7.04, during the lifetime of the Participant to whom the SAR
is granted, the SAR may be exercised only by the Participant. No right or
interest of a Participant in any SAR shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.

 

7.04 Transferable SARs

Section 7.03 to the contrary notwithstanding, if the Agreement provides, an SAR,
other than a Corresponding SAR that is related to an Incentive Stock Option, may
be transferred by a Participant to the Participant’s children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners, on such terms
and conditions as may be permitted under Securities Exchange Commission Rule
16b-3 as in effect from time to time. The holder of an SAR transferred pursuant
to this section shall be bound by the same terms and conditions that governed
the SAR during the period that it was held by the Participant; provided,
however, that such transferee may not transfer the SAR except by will or the
laws of descent and distribution. In the event of any transfer of a
Corresponding SAR (by the Participant or his transferee), the Corresponding SAR
and the related Option must be transferred to the same person or person or
entity or entities.

 

7.05 Exercise

Subject to the provisions of this Plan and the applicable Agreement, an SAR may
be exercised in whole at any time or in part from time to time at such times and
in compliance with such requirements as the Administrator shall determine;
provided, however, that a Corresponding SAR that is related to an Incentive
Stock Option may be exercised only to the extent that the related Option is
exercisable and only when the Fair Market Value exceeds the option price of the
related Option. An SAR granted under this Plan may be exercised with respect to
any number of whole shares less than the full number for which the SAR could be
exercised. A partial exercise of an SAR shall not affect the right to exercise
the SAR from time to time in accordance with this Plan and the applicable
Agreement with respect to the remaining shares subject to the SAR. The exercise
of a Corresponding SAR shall result in the termination of the related Option to
the extent of the number of shares with respect to which the SAR is exercised.

 

7.06 Change in Control

If provided in an Agreement, each outstanding SAR shall be fully exercisable (in
whole or in part at the discretion of the holder) upon a Change in Control.

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7.07 Employee Status

If the terms of any SAR provide that it may be exercised only during employment
or continued service or within a specified period of time after termination of
employment or service, the Administrator may decide to what extent leaves of
absence for governmental or military service, illness, temporary disability or
other reasons shall not be deemed interruptions of continuous employment or
service.

 

7.08 Settlement

At the Administrator’s discretion, the amount payable as a result of the
exercise of an SAR may be settled in cash, Common Stock, or a combination of
cash and Common Stock. No fractional share will be deliverable upon the exercise
of an SAR but a cash payment will be made in lieu thereof.

 

7.09 Shareholder Rights

No Participant shall, as a result of receiving an SAR, have any rights as a
shareholder of the Company until the date that the SAR is exercised and then
only to the extent that the SAR is settled by the issuance of Common Stock.

ARTICLE VIII

STOCK AWARDS

 

8.01 Award

In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom a Stock Award is to be made and will specify
the number of shares of Common Stock covered by each such award.

 

8.02 Vesting

The Administrator, on the date of the award, may prescribe that a Participant’s
rights in a Stock Award shall be forfeitable or otherwise restricted for a
period of time or subject to such conditions as may be set forth in the
Agreement. By way of example and not of limitation, the restrictions may
postpone transferability of the shares or may provide that the shares will be
forfeited if the Participant separates from the service of the Company and its
Subsidiaries before the expiration of a stated period or if the Company, a
Subsidiary, the Company and its Subsidiaries or the Participant fails to achieve
stated performance objectives, including performance objectives stated with
reference to Performance Criteria. The Administrator, in its discretion, may
waive the requirements for vesting or transferability for all or part of the
shares subject to a Stock Award in connection with a Participant’s termination
of employment or service. An election by one Participant to postpone vesting of
a Stock Award or any other election that could result in a deferral of
compensation under Code Section 409A may be made only if authorized by the
Committee and only in accordance with the requirements of Code Section 409A.

 

8.03 Employee Status

In the event that the terms of any Stock Award provide that shares may become
transferable and nonforfeitable thereunder only after completion of a specified
period of employment or service, the Administrator may decide in each case to
what extent leaves of absence for governmental or military service, illness,
temporary disability, or other reasons shall not be deemed interruptions of
continuous employment or service.

 

8.04 Change in Control

If provided in an Agreement, each outstanding Stock Award shall be transferable
and nonforfeitable upon a Change in Control.

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8.05 Shareholder Rights

Prior to their forfeiture (in accordance with the applicable Agreement and while
the shares of Common Stock granted pursuant to the Stock Award may be forfeited
or are nontransferable), and if the Agreement so provides, a Participant will
have all the rights of a shareholder with respect to a Stock Award, including
the right to receive dividends and vote the shares; provided, however, that
during such period (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of shares of Common Stock granted pursuant to
a Stock Award, (ii) the Company shall retain custody of the certificates
evidencing shares of Common Stock granted pursuant to a Stock Award, and
(iii) the Participant will deliver to the Company a stock power, endorsed in
blank, with respect to each Stock Award. The limitations set forth in the
preceding sentence shall not apply after the shares of Common Stock granted
under the Stock Award are transferable and are no longer forfeitable.

ARTICLE IX

PERFORMANCE SHARE AWARDS

 

9.01 Award

In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom an Award of Performance Shares is to be made
and will specify the number of shares of Common Stock covered by each such
Award.

 

9.02 Earning the Award

The Administrator, on the date of the grant of an Award, shall prescribe that
the Performance Shares, or a portion thereof, will be earned, and the
Participant will be entitled to receive payment pursuant to the Award of
Performance Shares, only upon the satisfaction of performance objectives or such
other criteria as may be prescribed by the Administrator and set forth in the
Agreement. By way of example and not of limitation, the performance objectives
or other criteria may provide that the Performance Shares will be earned only if
the Participant remains in the employ or service of the Company or a Subsidiary
for a stated period or that the Company, a Subsidiary, the Company and its
Subsidiaries or the Participant achieve stated objectives including Performance
Objectives stated with reference to Performance Criteria. Notwithstanding the
preceding sentences of this Section 9.02, the Administrator, in its discretion,
may reduce the duration of the performance period and may adjust the performance
objectives for outstanding Performance Shares in connection with a Participant’s
termination of employment or service. An election by the Participant to postpone
vesting or payment of a Performance Share Award/or a Stock Unit or any other
election that could result in a deferral of compensation under Code Section 409A
may be made only if authorized by the Committee and only in accordance with the
requirements of Section 409A of the Code.

 

9.03 Payment

In the discretion of the Administrator, the amount payable when an Award of
Performance Shares is earned may be settled in cash, by the issuance of Common
Stock or a combination of cash and Common Stock. A fractional share shall not be
deliverable when an Award of Performance Shares is earned, but a cash payment
will be made in lieu thereof. In the case of each Performance Share/Stock Unit
Award, either (A) payment shall be made by (i) the 15th day of the third month
following the end of the Participant’s first taxable year in which the payment
is no longer subject to a substantial risk of forfeiture or, if later, the 15th
day of the third month following the end of the Company’s first taxable year in
which the payment is no longer subject to a substantial risk of forfeiture or
(B) the terms of such Award shall be designed to satisfy Code Section 409A.

 

9.04 Shareholder Rights

No Participant shall, as a result of receiving an Award of Performance Shares,
have any rights as a shareholder until and to the extent that the Award of
Performance Shares is earned and settled by the issuance of Common Stock. After
an Award of Performance Shares is earned, if settled completely or partially in
Common Stock, a Participant will have all the rights of a shareholder with
respect to such Common Stock.

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9.05 Nontransferability

Except as provided in Section 7.06, Performance Shares granted under this Plan
shall be nontransferable except by will or by the laws of descent and
distribution. No right or interest of a Participant in any Performance Shares
shall be liable for, or subject to, any lien, obligation, or liability of such
Participant.

 

9.06 Transferable Performance Shares

Section 9.05 to the contrary notwithstanding, if the Agreement provides, an
Award of Performance Shares may be transferred by a Participant to the
Participant’s children, grandchildren, spouse, one or more trusts for the
benefit of such family members or a partnership in which such family members are
the only partners, on such terms and conditions as may be permitted under
Securities Exchange Commission Rule 16b-3 as in effect from time to time. The
holder of Performance Shares transferred pursuant to this section shall be bound
by the same terms and conditions that governed the Performance Shares during the
period that they were held by the Participant; provided, however that such
transferee may not transfer Performance Shares except by will or the laws of
descent and distribution.

 

9.07 Employee Status

In the event that the terms of any Performance Share Award provide that no
payment will be made unless the Participant completes a stated period of
employment or service, the Administrator may decide to what extent leaves of
absence for government or military service, illness, temporary disability, or
other reasons shall not be deemed interruptions of continuous employment or
service.

 

9.08 Change in Control

If provided in an Agreement, each outstanding Performance Share Award shall be
earned upon a Change in Control and Participants shall be entitled to that
portion of their Performance Share Award determined in the Agreement.

ARTICLE X

INCENTIVE AWARDS

 

10.01 Award

The Administrator shall designate Participants to whom Incentive Awards are
made. All Incentive Awards shall be finally determined exclusively by the
Administrator under the procedures established by the Administrator.

 

10.02 Terms and Conditions

The Administrator, at the time an Incentive Award is made, shall specify the
terms and conditions which govern the Award. Such terms and conditions shall
prescribe that the Incentive Award shall be earned only upon, and to the extent
that, performance objectives are satisfied during a performance period of at
least one year after the grant of the Incentive Award. By way of example and not
of limitation, the performance objectives may provide that the Incentive Award
will be earned only if the Company, a Subsidiary or the Company and its
Subsidiaries achieve stated objectives, including objectives stated with
reference to Performance Criteria. The Administrator, at the time an Incentive
Award is made, shall also specify when amounts shall be payable under the
Incentive Award and whether amounts shall be payable in the event of the
Participants’ death, disability, or retirement.

 

10.03 Nontransferability

Except as provided in Section 10.04, Incentive Awards granted under this Plan
shall be nontransferable except by will or by the laws of descent and
distribution. No right or interest of a Participant in an Incentive Award shall
be liable for, or subject to, any lien, obligation, or liability of such
Participant.

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10.04 Transferable Incentive Awards

Section 10.03 to the contrary notwithstanding, if provided in an Agreement, an
Incentive Award may be transferred by a Participant to the Participant’s
children, grandchildren, spouse, one or more trusts for the benefit of such
family members or to a partnership in which such family members are the only
partners, on such terms and conditions as may be permitted by Rule 16b-3 under
the Exchange Act as in effect from time to time. The holder of an Incentive
Award transferred pursuant to this Section shall be bound by the same terms and
conditions that governed the Incentive Award during the period that it was held
by the Participant, provided, however, that such transferee may not transfer the
Incentive Award except by will or the laws of descent and distribution.

 

10.05 Employee Status

If the terms of an Incentive Award provide that a payment will be made
thereunder only if the Participant completes a stated period of employment or
service, the Administrator may decide to what extent leaves of absence for
governmental or military service, illness, temporary disability or other reasons
shall not be deemed interruptions of continuous employment or service.

 

10.06 Change in Control

If provided in an Agreement, each outstanding Incentive Award shall be earned in
its entirety upon a Change in Control.

 

10.07 Shareholder Rights

No Participant shall, as a result of receiving an Incentive Award, have any
rights as a shareholder of the Company or an Subsidiary on account of such award
until, and except to the extent that, the Incentive Award is earned and settled
in shares of Common Stock.

ARTICLE XI

STOCK UNITS

 

11.01 Award

In accordance with the provisions of Article IV, the Administrator will
designate individual to whom an Award of Stock Units is to be made and will
specify the number of Stock Units covered by such Award.

 

11.02 Earning the Award

The Administrator, on the date of grant of the Award, may prescribe that the
Stock Units or a portion thereof, will be earned only upon, and the Participant
will be entitled to receive a payment pursuant to the Award of Stock Units, only
upon the satisfaction of Performance Objectives or such other criteria as may be
prescribed by the Administrator and set forth in the Agreement. By way of
example and not of limitation, the Performance Objectives or other criteria may
provide that the Stock Units will be earned only if the Participant remains in
the employ or service of the Company or a Subsidiary for a stated period or that
the Company, a Subsidiary, the Company and its Subsidiaries or the Participant
achieve stated objectives including Performance Objectives stated with reference
to Performance Criteria. Notwithstanding the preceding sentences of this
Section 11.02, the Administrator, in its discretion, may reduce the duration of
the performance period and may adjust the performance objectives for outstanding
Stock Units in connection with a Participant’s termination of employment or
service. An election by the Participant to postpone vesting or payment of a
Performance Share Award/or a Stock Unit or any other election that could result
n a deferral of compensation under Code Section 409A may be made only if
authorized by the Committee and only in accordance with the requirements of
Section 409A of the Code.

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11.03 Payment

In accordance with the Agreement, the amount payable when an award of Stock
Units is earned may be settled in cash, Common Stock or a combination of cash
and Common Stock. A fractional share shall not be deliverable when an Award of
Stock Units is earned, but a cash payment will be made in lieu thereof. In the
case of each Performance Share/Stock Unit Award, either (A) payment shall be
made by (i) the 15th day of the third month following the end of the
Participant’s first taxable year in which the payment is no longer subject to a
substantial risk of forfeiture or, if later, the 15th day of the third month
following the end of the Company’s first taxable year in which the payment is no
longer subject to a substantial risk of forfeiture or (B) the terms of such
Award shall be designed to satisfy Code Section 409A.

 

11.04 Nontransferability

A Participant may not sell, transfer, pledge, exchange, hypothecate, or
otherwise dispose of a Stock Unit Award other than by will or the laws of
descent and distribution. The limitations set forth in the preceding sentence
shall not apply to Common Stock issued as payment pursuant to a Stock Unit
Award.

 

11.05 Shareholder Rights

No Participant shall, as a result of receiving a Stock Unit Award, have any
rights as a shareholder of the Company or Subsidiary until and to the extent
that the Stock Units are earned and settled in shares of Common Stock. After
Stock Units are earned and settled in shares of Common Stock, a Participant will
have all the rights of a shareholder with respect to such shares.

 

11.06 Change in Control

If provided in an Agreement, each Stock Unit shall be earned in its entirety as
of a Control Change Date without regard to whether any Performance Criteria or
other condition to which the award is subject have been met.

ARTICLE XII

ADJUSTMENT UPON CHANGE IN COMMON STOCK

The maximum number of shares as to which Awards may be granted under this Plan,
and the terms of outstanding Awards, shall be adjusted as the Committee shall
determine to be equitably required in the event that (a) the Company (i) effects
one or more stock dividends, stock split-ups, subdivisions or consolidations of
shares or (ii) engages in a transaction to which Section 424 of the Code
applies, (b) there occurs any other event which, in the judgment of the
Committee necessitates such action or (c) there is a Change in Control. Any
determination made under this Article XII by the Committee shall be final and
conclusive.

The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefore, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the maximum
number of shares as to which Awards may be granted, the per individual
limitations on the number of shares of Common Stock for which Awards may be
granted or the terms of outstanding Awards.

The Committee may make Awards in substitution for performance shares, phantom
shares, stock awards, stock options, stock appreciation rights, or similar
awards held by an individual who becomes an employee of the Company or a
Subsidiary in connection with a transaction or event described in the first
paragraph of this Article XII. Notwithstanding any provision of the Plan (other
than the limitation of Section 5.02), the terms of such substituted Awards shall
be as the Committee, in its discretion, determines is appropriate.

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ARTICLE XIII

COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES

No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all domestic stock exchanges on which the Company’s shares may be
listed. The Company shall have the right to rely on an opinion of its counsel as
to such compliance. Any share certificate issued to evidence Common Stock when a
Stock Award is granted, a Performance Share, Stock Unit or Incentive Award is
settled or for which an Option or SAR is exercised may bear such legends and
statements as the Administrator may deem advisable to assure compliance with
federal and state laws and regulations. No Option or SAR shall be exercisable,
no Stock Award, Stock Unit, Performance Share or Incentive Award shall be
granted, no Common Stock shall be issued, no certificate for shares shall be
delivered, and no payment shall be made under this Plan until the Company has
obtained such consent or approval as the Administrator may deem advisable from
regulatory bodies having jurisdiction over such matters.

ARTICLE XIV

GENERAL PROVISIONS

 

14.01 Effect on Employment and Service

Neither the adoption of this Plan, its operation, nor any documents describing
or referring to this Plan (or any part thereof), shall confer upon any
individual any right to continue in the employ or service of the Company or a
Subsidiary or in any way affect any right or power of the Company or a
Subsidiary to terminate the employment or service of any individual at any time
with or without assigning a reason therefore.

 

14.02 Unfunded Plan

The Plan, insofar as it provides for grants, shall be unfunded, and the Company
shall not be required to segregate any assets that may at any time be
represented by grants under this Plan. Any liability of the Company to any
person with respect to any grant under this Plan shall be based solely upon any
contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.

 

14.03 Rules of Construction

Headings are given to the articles and sections of this Plan solely as a
convenience to facilitate reference. The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or
successor of such provision of law.

 

14.04 Tax Withholding

Each Participant shall be responsible for satisfying any income and employment
tax withholding obligation attributable to participation in this Plan. In
accordance with procedures established by the Administrator, a Participant may
surrender shares of Common Stock, or receive fewer shares of Common Stock than
otherwise would be issuable, in satisfaction of all or part of that obligation.

ARTICLE XV

AMENDMENT

The Board may amend or terminate this Plan from time to time; provided, however,
that no amendment may become effective until shareholder approval is obtained if
(i) the amendment increases the aggregate number of shares of Common Stock that
may be issued under the Plan (other than an adjustment pursuant to Article XII)
or (ii) the amendment changes the class of individuals eligible to become
Participants. No amendment shall, without a

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Participant’s consent, adversely affect any rights of such Participant under any
Award outstanding at the time such amendment is made or shall cause an Award to
result in a Code Section 409A deferral of compensation unless such amended Award
complies with the requirements of Code Section 409A.

ARTICLE XVI

DURATION OF PLAN

No Awards may be granted under this Plan more than ten years after the earlier
of the date the Plan is adopted by the Board or the date that the Plan is
approved in accordance with Article XVII. Awards granted before that date shall
remain valid in accordance with their terms.

ARTICLE XVII

EFFECTIVE DATE OF PLAN

Options, SARs, Incentive Awards, Stock Units and Performance Shares may be
granted under this Plan upon its adoption by the Board, provided that no Option,
SAR, Incentive Awards Stock Units or Performance Shares shall be effective or
exercisable unless this Plan is approved by a majority of the votes cast by the
Company’s shareholders, voting either in person or by proxy, at a duly held
shareholders’ meeting at which a quorum is present or by unanimous consent.
Stock Awards may be granted under this Plan, upon the later of its adoption by
the Board or its approval by shareholders in accordance with the preceding
sentence.