Exhibit 10.1

CAMDEN NATIONAL CORPORATION

2012 EQUITY AND INCENTIVE PLAN

 

SECTION 1GENERAL PURPOSE OF THE PLAN; DEFINITIONS

The name of the plan is the Camden National Corporation 2012 Equity and
Incentive Plan (the “Plan”). The purpose of the Plan is to encourage and enable
the officers, Employees, Independent Directors and other key persons (including
consultants) of Camden National Corporation (the “Company”) and its Subsidiaries
upon whose judgment, initiative and efforts the Company largely depends for the
successful conduct of its business to acquire a proprietary interest in the
Company. It is anticipated that providing such persons with a direct stake in
the Company’s welfare will assure a closer identification of their interests
with those of the Company, thereby stimulating their efforts on the Company’s
behalf and strengthening their desire to remain with the Company. Except as
provided in Section 8(g) below, this Plan will be operated within an applicable
exemption from the restrictions of Code Section 409A, as more particularly
described in Section 23(b) below.

 

The following terms shall be defined as set forth below:

 

“Award” or “Awards,” except where referring to a particular category of grant
under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock
Awards, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards
and Dividend Equivalent Rights.

 

“Board” means the Board of Directors of the Company.

 

“Cash-Based Award” means an Award entitling the recipient to receive a
cash-denominated payment.

 

“Cause” shall have the same meaning as in the grantee’s written employment
agreement (or other similar written agreement) with the Company or a Subsidiary.
In the absence of such a definition, “Cause” means (i) the commission of the
grantee of a felony or of any lesser criminal offense involving moral turpitude;
(ii) the willful commission by the grantee of a criminal or other act that, in
the judgment of the Board, will likely cause substantial economic damage to the
Company or any Subsidiary or substantial injury to the business reputation of
the Company or any Subsidiary; (iii) the commission by the grantee of an act of
fraud in the performance of his or her duties on behalf of the Company or any
Subsidiary; (iv) the continuing willful failure of the grantee to perform his or
her duties to the Company or any Subsidiary (other than any such failure
resulting from the grantee’s incapacity due to physical or mental illness) after
written notice thereof; or (v) an order of or agreement with a federal or state
regulatory agency or a court of competent jurisdiction requiring the termination
of the grantee’s Service with the Company or any Subsidiary.

 

“Change of Control” is defined in Section 20.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
Code, and related rules, regulations and interpretations. Any reference to a
particular section of the Code shall include a reference to any successor
section of the Code.

 

“Committee” is defined in Section 2(a).

 

“Covered Employee” means an Employee who is a “Covered Employee” within the
meaning of Section 162(m) of the Code.

 

“Director” means a member of the Board of Directors of the Company or a
Subsidiary.

 

“Disability” shall have the same meaning as set forth in the grantee’s written
employment agreement (or other similar written agreement) with the Company or a
Subsidiary. In the absence of such a definition, “Disability” means any mental
or physical condition with respect to which the grantee qualified for and
receives benefits under a long-term disability plan of the Company or
Subsidiary, or in the absence of such a long-term disability plan or coverage
under such plan, “Disability” shall mean a physical or mental condition which,
in the sole discretion of the Committee, is reasonably expected to be of
indefinite duration and to substantially prevent the grantee from fulfilling his
or her duties or responsibilities to the Company or a Subsidiary. If an Award is
determined to be subject to Code Section 409A, then notwithstanding anything
else herein to the contrary, “Disability” or “Disabled” shall mean that a
grantee: (i) is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months; or (ii) is, by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months, receiving income replacement benefits for a period of not less than
three (3) months under an accident and health plan covering the Company’s
Employees, or (iii) is determined to be totally disabled by the Social Security
Administration. Except to the extent prohibited under Code Section 409A, if
applicable, the Committee shall have discretion to determine if a termination of
Service due to Disability has occurred.

 

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“Dividend Equivalent Right” means Awards granted pursuant to Section 13.

 

“Effective Date” means the date on which the Plan is approved by stockholders as
set forth in Section 22.

 

“Employee” means any person employed by the Company or any Subsidiary. Directors
who are also employed by the Company or a Subsidiary shall be considered
Employees under the Plan.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

 

“Fair Market Value” of a share of Stock on any given date means the closing
price on the date of grant if that date is a trading date, or the closing price
on the trading date just before the date of grant if the date of grant is not a
trading date, in accordance with the Treasury Regulations issued under Code
Section 409A. If the stock ceases to be readily tradable, the fair market value
on the date of grant shall be the value determined in good faith by the
Committee by the reasonable application of a reasonable valuation method as
required by the Treasury Regulations issued under Code Section 409A.

 

“Incentive Stock Option” means any Stock Option designated and qualified as an
“incentive stock option” as defined in Section 422 of the Code.

 

“Independent Director” means a member of the Board who (a) is not a current
Employee of the Company or a Subsidiary; (b) is not a former Employee of the
Company who receives compensation for prior services (other than benefits under
a Qualified Retirement Plan) during the taxable year; (c) has not been an
officer of the Company; (d) does not receive remuneration from the Company or a
Subsidiary, either directly or indirectly, in any capacity other than as a
Director except in an amount for which disclosure would not be required pursuant
to Item 404 of SEC Regulation S-K in accordance with the proxy solicitation
rules of the SEC, as amended or any successor provision thereto; and (e) does
not possess an interest in any other transaction, and is not engaged in a
business relationship for which disclosure would be required pursuant to Item
404(a) of SEC Regulation S-K under the proxy solicitation rules of the SEC, as
amended or any successor provision thereto. The term Independent Director shall
be interpreted in such manner as shall be necessary to conform to the
requirements of section 162(m) of the Code, Rule 16b-3 promulgated under the
Exchange Act and the corporate governance standards imposed on compensation
committees under the listing requirements imposed by any national securities
exchange on which the Company lists or seeks to list its securities.

 

“Non-Qualified Stock Option” means any Stock Option that is not an Incentive
Stock Option.

 

“Option” or “Stock Option” means any option to purchase shares of Stock granted
pursuant to Section 5.

 

“Performance Share Award” means Awards granted pursuant to Section 11.

 

“Performance Cycle” means one or more periods of time, which may be of varying
and overlapping durations, as the Committee may select, over which the
attainment of one or more performance criteria will be measured for the purpose
of determining a grantee’s right to and the payment of a Performance Share
Award, Restricted Stock Award, Restricted Stock Unit or Cash-Based Award.

 

“Restricted Stock Award” means Awards granted pursuant to Section 7.

 

“Restricted Stock Unit” means Awards granted pursuant to Section 8.

 

“Retirement” means retirement from employment with the Company or a Subsidiary
in accordance with the then current retirement policies of the Company or
Subsidiary, as applicable. “Retirement” with respect to a non-employee Director
means the termination of service from the board(s) of directors of the Company
and any Subsidiary following written notice to such board(s) of directors of the
non-employee Directors intention to retire. Notwithstanding the foregoing,
unless the Committee specifies otherwise at the time of an Award, an Employee
who continues to serve on the Board following retirement as an Employee or a
Director who continues to serve as an advisory board member or director emeritus
shall not be deemed to have terminated due to Retirement until both Service as
an Employee and Director, or in the latter case, as a Director and advisory
board member or director emeritus has terminated.

 

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“Service” means service as an Employee or non-employee Director of the Company
or a Subsidiary, as the case may be, and shall include service as a director
emeritus or advisory director.

 

“Stock” means the Common Stock, no par value, of the Company, subject to
adjustments pursuant to Section 3.

 

“Stock Appreciation Right” or “SAR” means any Award granted pursuant to Section
6.

 

“Subsidiary” means any corporation or other entity (other than the Company) in
which the Company has a controlling interest, either directly or indirectly.

 

“Unrestricted Stock Award” means any Award granted pursuant to Section 9.

 

SECTION 2ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT GRANTEES AND
DETERMINE AWARDS

(a) Committee. The Plan shall be administered by the members of the Compensation
Committee of the Company who are Independent Directors (the “Committee”);
provided that if the Committee consists of fewer than three Independent
Directors, then the Board shall appoint to the Committee such additional
Independent Directors as shall be necessary to provide for a Committee
consisting of at least three Independent Directors. Any members of the Committee
who do not qualify as Independent Directors shall abstain from participating in
any discussion to make or administer Awards that are made to grantees who at the
time of consideration for such Award: (i) are persons subject to the short-swing
profit rules of Section 16 of the Exchange Act, or (ii) are reasonably
anticipated to be Covered Employees during the term of the Award. The Board (or
those members of the Board who are “independent directors” under the corporate
governance statutes of any national securities exchange on which the Company
lists its securities) may, in its discretion, take any action and exercise any
power, privilege or discretion conferred on the Committee under the Plan with
the same force and effect under the Plan as if done or exercised by the
Committee.

 

(b) Powers of Committee. The Committee shall have the power and authority to
grant Awards consistent with the terms of the Plan, including the power and
authority:

 

(i) to select the individuals to whom Awards may from time to time be granted;

 

(ii) to determine the time or times of grant, and the extent, if any, of
Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights,
Restricted Stock Awards, Restricted Stock Units, Unrestricted Stock Awards,
Cash-Based Awards, Performance Share Awards and Dividend Equivalent Rights, or
any combination of the foregoing, granted to any one or more grantees;

 

(iii) to determine the number of shares of Stock to be covered by any Award;

 

(iv) to determine and modify from time to time the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of any
Award, which terms and conditions may differ among individual Awards and
grantees, and to approve the form of written instruments evidencing the Awards;

 

(v) to accelerate at any time the exercisability or vesting of all or any
portion of any Award;

 

(vi) subject to the provisions of Section 5(a)(ii), to extend at any time the
period in which Stock Options may be exercised;

 

(vii) to determine at any time whether, to what extent, and under what
circumstances distribution or the receipt of Stock and other amounts payable
with respect to an Award shall be deferred either automatically or at the
election of the grantee and whether and to what extent the Company shall pay or
credit amounts constituting interest (at rates determined by the Committee) or
dividends or deemed dividends on such deferrals; and

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(viii) at any time to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and proceedings as
it shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related written instruments); to make all determinations it
deems advisable for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.

 

All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan grantees.

 

(c) Delegation of Authority to Grant Awards. Subject to applicable law, the
Committee, in its discretion, may delegate to the Chief Executive Officer of the
Company all or part of the Committee’s authority and duties with respect to the
granting of Options, to individuals who are not subject to the reporting and
other provisions of Section 16 of the Exchange Act or “covered employees” within
the meaning of Section 162(m) of the Code. Any such delegation by the Committee
shall include a limitation as to the amount of Options that may be granted
during the period of the delegation and shall contain guidelines as to the
determination of the exercise price of any Stock Option or Stock Appreciation
Right, the conversion ratio or price of other Awards and the vesting criteria.
The Committee may revoke or amend the terms of a delegation at any time but such
action shall not invalidate any prior actions of the Committee’s delegate or
delegates that were consistent with the terms of the Plan.

 

(d) Information to be Furnished to Committee.  As may be permitted by applicable
law, the Company and any Subsidiary of the Company shall furnish the Committee
with such data and information as it determines may be required for it to
discharge its duties. The records of the Company and any Subsidiary of the
Company as to a grantee’s employment, termination of Service, leave of absence,
reemployment and compensation shall be conclusive on all persons unless
determined by the Committee to be manifestly incorrect. Subject to applicable
law, grantees and other persons entitled to benefits under the Plan must furnish
the Committee such evidence, data or information as the Committee considers
desirable to carry out the terms of the Plan.

 

(e) Committee Action.  The Committee shall hold such meetings, and may make such
administrative rules and regulations, as it may deem proper. A majority of the
members of the Committee shall constitute a quorum, and the action of a majority
of the members of the Committee present at a meeting at which a quorum is
present, as well as actions taken pursuant to the unanimous written consent of
all of the members of the Committee without holding a meeting, shall be deemed
to be actions of the Committee. All actions of the Committee shall be final and
conclusive and shall be binding upon the Company, grantees and all other
interested parties. Any person dealing with the Committee shall be fully
protected in relying upon any written notice, instruction, direction or other
communication signed by a member of the Committee or by a representative of the
Committee authorized to sign the same on its behalf.

 

(f) Indemnification. To the fullest extent permitted by law and the Company’s
governing documents, each person who is or shall have been a member of the
Committee, or of the Board, or an officer of the Company to whom authority was
delegated in accordance with Section 2(c), or an Employee of the Company or any
Subsidiary of the Company, shall be indemnified and held harmless by the Company
against and from any loss (including amounts paid in settlement), cost,
liability or expense (including reasonable attorneys’ fees) that may be imposed
upon or reasonably incurred by him or her in connection with or resulting from
any claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf, unless such loss, cost, liability, or
expense is a result of his or her own willful misconduct or except as expressly
provided by statute or regulation. The foregoing shall not be exclusive of (i)
any other rights of indemnification to which such persons may be entitled under
the Company’s charter or bylaws, as a matter of law, or otherwise, or any power
that the Company may have to indemnify them or hold them harmless, and/or (ii)
any rights under any directors’ and officers’ liability insurance coverage which
may be in effect from time to time.

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SECTION 3STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

(a) Stock Issuable. The maximum number of shares of Stock reserved and available
for issuance under the Plan shall be 800,000 shares, subject to adjustment as
provided in Section 3(b); provided that not more than 400,000 shares shall be
issued in the form of Unrestricted Stock Awards, Restricted Stock Awards, or
Performance Share Awards. For purposes of this limitation, the shares of Stock
underlying any Awards (including any awards granted pursuant to the Company’s
2003 Stock Option and Incentive Plan) which are forfeited, canceled, held back
upon exercise of an Option or settlement of an Award to cover the exercise price
or tax withholding, reacquired by the Company, satisfied without the issuance of
Stock or otherwise terminated (other than by exercise) shall be added back to
the shares of Stock available for issuance under the Plan. In addition, the
maximum number of shares that may be issued under this Plan pursuant to the
exercise of Incentive Stock Options shall be 800,000. Subject to such overall
limitations, shares of Stock may be issued up to such maximum numbers pursuant
to any type or types of Award; provided, however, that Stock Options or Stock
Appreciation Rights with respect to no more than 30,000 shares of Stock may be
granted to any one individual grantee during any one calendar year period. The
shares available for issuance under the Plan may be authorized but unissued
shares of Stock or shares of Stock reacquired by the Company and held in its
treasury.

 

(b) Changes in Stock. Subject to Section 3(c) hereof, if, as a result of any
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar change in the Company’s capital stock, the
outstanding shares of Stock are increased or decreased or are exchanged for a
different number or kind of shares or other securities of the Company, or
additional shares or new or different shares or other securities of the Company
or other non-cash assets are distributed with respect to such shares of Stock or
other securities, or, if, as a result of any merger or consolidation, sale of
all or substantially all of the assets of the Company, the outstanding shares of
Stock are converted into or exchanged for a different number or kind of
securities of the Company or any successor entity (or a parent or subsidiary
thereof), the Committee shall make an appropriate or proportionate adjustment in
(i) the maximum number of shares reserved for issuance under the Plan, including
the maximum number of shares that may be issued in the form of Unrestricted
Stock Awards, Restricted Stock Awards or Performance Share Awards, (ii) the
number of Stock Options or Stock Appreciation Rights that can be granted to any
one individual grantee and the maximum number of shares that may be granted
under a Performance-based Award, (iii) the number and kind of shares or other
securities subject to any then outstanding Awards under the Plan, (iv) the
repurchase price per share subject to each outstanding Restricted Stock Award,
and (v) the price for each share subject to any then outstanding Stock Options
and Stock Appreciation Rights under the Plan, without changing the aggregate
exercise price (i.e., the exercise price multiplied by the number of Stock
Options and Stock Appreciation Rights) as to which such Stock Options and Stock
Appreciation Rights remain exercisable. The adjustment by the Committee shall be
final, binding and conclusive. No fractional shares of Stock shall be issued
under the Plan resulting from any such adjustment, but the Committee in its
discretion may make a cash payment in lieu of fractional shares.

 

The Committee may also adjust the number of shares subject to outstanding Awards
and the exercise price and the terms of outstanding Awards to take into
consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Committee that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided that no
such adjustment shall be made in the case of an Incentive Stock Option, without
the consent of the grantee, if it would constitute a modification, extension or
renewal of the Option within the meaning of Section 424(h) of the Code.

 

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For any Options or Stock Appreciation Rights issued hereunder, any changes in
the capital structure of the Company under this Section 3(b) must be made
proportionately in compliance with Treasury Regulation Section
1.409A-1(b)(5)(v), so that such Options or SARs remain exempt from the
application of Code Section 409A.

 

(c) Mergers and Other Transactions. In the case of and subject to the
consummation of (i) the dissolution or liquidation of the Company, (ii) the sale
of all or substantially all of the assets of the Company on a consolidated basis
to an unrelated person or entity, (iii) a merger, reorganization or
consolidation in which the outstanding shares of Stock are converted into or
exchanged for a different kind of securities of the successor entity and the
holders of the Company’s outstanding voting power immediately prior to such
transaction do not own a majority of the outstanding voting power of the
successor entity immediately upon completion of such transaction, or (iv) the
sale of all of the Stock of the Company to an unrelated person or entity (in
each case, a “Sale Event”), all Options and Stock Appreciation Rights that are
not exercisable immediately prior to the effective time of the Sale Event shall
become fully exercisable as of the effective time of the Sale Event and all
other Awards with conditions and restrictions relating solely to the passage of
time and continued employment shall become fully vested and non-forfeitable as
of the effective time of the Sale Event, except as the Committee may otherwise
specify with respect to particular Awards. Upon the effective time of the Sale
Event, the Plan and all outstanding Awards granted hereunder shall terminate,
unless provision is made in connection with the Sale Event in the sole
discretion of the parties thereto for the assumption or continuation of Awards
theretofore granted by the successor entity, or the substitution of such Awards
with new Awards of the successor entity or parent thereof, with appropriate
adjustment as to the number and kind of shares and, if appropriate, the per
share exercise prices, as such parties shall agree (after taking into account
any acceleration hereunder). In the event of such termination, each grantee
shall be permitted, within a specified period of time prior to the consummation
of the Sale Event as determined by the Committee, to exercise all outstanding
Options and Stock Appreciation Rights held by such grantee, including those that
will become exercisable upon the consummation of the Sale Event; provided,
however, that the exercise of Options and Stock Appreciation Rights not
exercisable prior to the Sale Event shall be subject to the consummation of the
Sale Event.

 

Notwithstanding anything to the contrary in this Section 3(c), in the event of a
Sale Event pursuant to which holders of the Stock of the Company will receive
upon consummation thereof a cash payment for each share surrendered in the Sale
Event, the Company shall have the right, but not the obligation, to make or
provide for a cash payment to the grantees holding Options and Stock
Appreciation Rights in exchange for the cancellation thereof, in an amount equal
to the difference between (A) the value as determined by the Committee of the
consideration payable per share of Stock pursuant to the Sale Event (the “Sale
Price”) times the number of shares of Stock subject to outstanding Options and
Stock Appreciation Rights (to the extent then exercisable at prices not in
excess of the Sale Price) and (B) the aggregate exercise price of all such
outstanding Options and Stock Appreciation Rights. Transactions under this
provision must be made in a manner that the Options and SAR’s remain exempt from
the application of Code Section 409A.

 

(d) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by Employees, Independent
Directors or other key persons of another corporation in connection with the
merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Committee may direct that the substitute
awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances. Any substitute Awards granted under the Plan
shall not count against the share limitation set forth in Section 3(a).

 

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SECTION 4ELIGIBILITY

Grantees under the Plan will be such full or part-time officers and other
Employees, Independent Directors and key persons (including consultants and
prospective employees) of the Company and its Subsidiaries as are selected from
time to time by the Committee in its sole discretion.

 

SECTION 5STOCK OPTIONS

Any Stock Option granted under the Plan shall be in such form as the Committee
may from time to time approve. Stock Options granted under the Plan may be
either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock
Options may be granted only to Employees of the Company or any Subsidiary that
is a “subsidiary corporation” within the meaning of Section 424(f) of the Code.
To the extent that any Option does not qualify as an Incentive Stock Option, it
shall be deemed a Non-Qualified Stock Option. No Incentive Stock Option shall be
granted under the Plan after January 1, 2023.

 

(a) Stock Options Granted to Employees, Independent Directors and Key Persons.
The Committee in its discretion may grant Stock Options to eligible Employees,
Independent Directors and key persons of the Company or any Subsidiary. Stock
Options granted pursuant to this Section 5(a) shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
If the Committee so determines, Stock Options may be granted in lieu of cash
compensation at the optionee’s election, subject to such terms and conditions as
the Committee may establish.

 

(i) Exercise Price. The exercise price per share for the Stock covered by a
Stock Option granted pursuant to this Section 5(a) shall be determined by the
Committee at the time of grant but shall not be less than 100 percent of the
Fair Market Value on the date of grant. If an Employee owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code) more than 10
percent of the combined voting power of all classes of stock of the Company or
any parent or subsidiary corporation and an Incentive Stock Option is granted to
such Employee, the option price of such Incentive Stock Option shall be not less
than 110 percent of the Fair Market Value on the grant date.

 

(ii) Option Term. The term of each Stock Option shall be fixed by the Committee,
but no Stock Option shall be exercisable more than ten (10) years after the date
the Stock Option is granted. If an Employee owns or is deemed to own (by reason
of the attribution rules of Section 424(d) of the Code) more than 10 percent of
the combined voting power of all classes of stock of the Company or any parent
or subsidiary corporation and an Incentive Stock Option is granted to such
Employee, the term of such Stock Option shall be no more than five (5) years
from the date of grant.

 

(iii) Exercisability; Rights of a Stockholder. Stock Options shall become
exercisable at such time or times, whether or not in installments, as shall be
determined by the Committee and Section 16 hereof at or after the grant date.
Subject to the expiration provisions in Section 5(a)(ii), the Committee may at
any time accelerate the exercisability of all or any portion of any Stock
Option. An optionee shall have the rights of a stockholder only as to shares
acquired upon the exercise of a Stock Option and not as to unexercised Stock
Options.

 

(iv) Method of Exercise. Stock Options may be exercised in whole or in part, by
giving written or electronic notice of exercise to the Company, specifying the
number of shares to be purchased. Payment of the purchase price may be made by
one or more of the following methods to the extent provided in the Option Award
agreement:

 

(A) In cash, by certified or bank check or other instrument acceptable to the
Committee;

 

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(B) Through the delivery (or attestation to the ownership) of shares of Stock
that have been purchased by the optionee on the open market or that have been
beneficially owned by the optionee for at least six (6) months and are not then
subject to restrictions under any Company plan. Such surrendered shares shall be
valued at Fair Market Value on the exercise date;

 

(C) Subject to compliance with applicable law, by the optionee delivering to the
Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company for the purchase price; provided that in
the event the optionee chooses to pay the purchase price as so provided, the
optionee and the broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Committee shall prescribe as
a condition of such payment procedure; or

 

(D) With respect to Stock Options that are not Incentive Stock Options, by a
“net exercise” arrangement pursuant to which the Company will reduce the number
of shares of Stock issuable upon exercise by the largest whole number of shares
with a Fair Market Value that does not exceed the aggregate exercise price.

 

Payment instruments will be received subject to collection. The transfer to the
optionee on the records of the Company or of the transfer agent of the shares of
Stock to be purchased pursuant to the exercise of a Stock Option will be
contingent upon receipt from the optionee (or a purchaser acting in his stead in
accordance with the provisions of the Stock Option) by the Company of the full
purchase price for such shares and the fulfillment of any other requirements
contained in the Option Award agreement or applicable provisions of laws. In the
event an optionee chooses to pay the purchase price by previously-owned shares
of Stock through the attestation method, the number of shares of Stock
transferred to the optionee upon the exercise of the Stock Option shall be net
of the number of shares attested to. In the event that the Company establishes,
for itself or using the services of a third party, an automated system for the
exercise of Stock Options, such a system using an internet website or
interactive voice response, then the paperless exercise of Stock Options may be
permitted through the use of such an automated system.

 

(v) Annual Limit on Incentive Stock Options. To the extent required for
“incentive stock option” treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the shares of Stock
with respect to which Incentive Stock Options granted under this Plan and any
other plan of the Company or its parent and subsidiary corporations become
exercisable for the first time by an optionee during any calendar year shall not
exceed $100,000. To the extent that any Stock Option exceeds this limit, it
shall constitute a Non-Qualified Stock Option.

 

(b) Non-transferability of Options. No Stock Option shall be transferable by the
optionee otherwise than by will or by the laws of descent and distribution and
all Stock Options shall be exercisable, during the optionee’s lifetime, only by
the optionee, or by the optionee’s legal representative or guardian in the event
of the optionee’s incapacity. Notwithstanding the foregoing, the Committee, in
its sole discretion, may provide in the Award agreement regarding a given Option
that the optionee may transfer his or her Non-Qualified Stock Options to members
of his or her immediate family, to trusts for the benefit of such family
members, or to partnerships in which such family members are the only partners,
provided that the transferee agrees in writing with the Company to be bound by
all of the terms and conditions of this Plan and the applicable Option.

 

SECTION 6STOCK APPRECIATION RIGHTS

(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right is an Award
entitling the recipient to receive an amount in cash or shares of Stock or a
combination thereof having a value equal to the excess of the Fair Market Value
of the Stock on the date of exercise over the exercise price of the Stock
Appreciation Right, which price shall not be less than 100 percent of the Fair
Market Value of the Stock on the date of grant (or more than the option exercise
price per share, if the Stock Appreciation Right was granted in tandem with a
Stock Option) multiplied by the number of shares of Stock with respect to which
the Stock Appreciation Right shall have been exercised, with the Committee
having the right to determine the form of payment. The Stock Appreciation Rights
issued hereunder are intended to be exempt from the application of Code Section
409A and shall be administered in compliance with Treasury Regulation Section
1.409A-1(b)(5)(i)(B).

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(b) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation Rights
may be granted by the Committee in tandem with, or independently of, any Stock
Option granted pursuant to Section 5 of the Plan. In the case of a Stock
Appreciation Right granted in tandem with a Non-Qualified Stock Option, such
Stock Appreciation Right may be granted either at or after the time of the grant
of such Option. In the case of a Stock Appreciation Right granted in tandem with
an Incentive Stock Option, such Stock Appreciation Right may be granted only at
the time of the grant of the Option.

 

A Stock Appreciation Right or applicable portion thereof granted in tandem with
a Stock Option shall terminate and no longer be exercisable upon the termination
or exercise of the related Option.

 

(c) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights
shall be subject to such terms and conditions as shall be determined from time
to time by the Committee, subject to the following:

 

(i) Stock Appreciation Rights granted in tandem with Options shall be
exercisable at such time or times and to the extent that the related Stock
Options shall be exercisable.

 

(ii) Upon exercise of a Stock Appreciation Right, the applicable portion of any
related Option shall be surrendered.

 

(iii) All Stock Appreciation Rights shall be exercisable during the grantee’s
lifetime only by the grantee or the grantee’s legal representative.

 

(iv) No dividends may be granted on Stock Appreciation Rights until exercised as
provided in Section 13(d) below.

 

SECTION 7RESTRICTED STOCK AWARDS

(a) Nature of Restricted Stock Awards. A Restricted Stock Award is an Award
entitling the recipient to acquire, at such purchase price as determined by the
Committee, shares of Stock subject to such restrictions and conditions as the
Committee may determine at the time of grant (“Restricted Stock”). Conditions
may be based on continuing Service (or other service relationship) and/or
achievement of pre-established performance goals and objectives. The grant of a
Restricted Stock Award is contingent on the grantee executing the Restricted
Stock Award agreement. The terms and conditions of each such agreement shall be
determined by the Committee, and such terms and conditions may differ among
individual Awards and grantees. Restricted Stock Awards granted hereunder are
intended to comply with Code Section 83 and are thereby exempt from the
application of Code Section 409A.

 

(b) Certificates. Unless the Committee shall otherwise determine, certificates
evidencing the Restricted Stock shall remain in the possession of the Company
until such Restricted Stock is vested as provided in Section 7(g) below, and the
grantee shall be required, as a condition of the grant, to deliver to the
Company a stock power endorsed in blank. The certificates evidencing the
Restricted Stock Award shall at all times prior to the applicable vesting date
bear such restrictive legends as the Committee, in its discretion, may specify.
Notwithstanding the foregoing, the Company may in its sole discretion issue
Restricted Stock Awards in any other approved format (e.g. electronically) in
order to facilitate the paperless transfer of such Awards. In the event
Restricted Stock Awards are not issued in certificate form, the Company and the
transfer agent shall maintain appropriate bookkeeping entries that evidence
grantees’ ownership of such Awards. Restricted Stock Awards that are not issued
in certificate form shall be subject to the same terms and conditions of the
Plan as certificated shares, including the restrictions on transferability and
the delivery to the Company of a stock power endorsed in blank.

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(c) Voting Rights. Upon execution of a written instrument setting forth the
Restricted Stock Award and payment of any applicable purchase price, a grantee
shall have the rights of a stockholder with respect to the voting of the
Restricted Stock, subject to such conditions contained in the written instrument
evidencing the Restricted Stock Award.

 

(d) Waiver, Deferral and Reinvestment of Dividends. The Restricted Stock Award
agreement may require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.

 

(e) Tender Offers and Merger Elections.  Each grantee to whom a Restricted Stock
Award is granted shall have the right to respond, or to direct the response,
with respect to the related shares of Stock, to any tender offer, exchange
offer, cash/stock merger consideration election or other offer made to, or
elections made by, the holders of shares of Stock. Such a direction for any such
shares of Stock shall be given by proxy or ballot (if the grantee is the
beneficial owner of the shares of Stock for voting purposes) or by completing
and filing, with the inspector of elections, the trustee or such other person
who shall be independent of the Company as the Committee shall designate in the
direction (if the grantee is not such a beneficial owner), a written direction
in the form and manner prescribed by the Committee. If no such direction is
given, then the shares of Stock shall not be tendered.

 

(f) Restrictions. Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the Restricted Stock Award agreement. In addition, the Company
shall have certain optional rights to repurchase unvested shares of Restricted
Stock upon termination of the grantee’s Service in accordance with Sections
16(d)(2) and 16(e).

 

(g) Vesting of Restricted Stock. The Committee at the time of grant shall
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the non-transferability of the
Restricted Stock and the Company’s optional right of repurchase shall lapse.
Subsequent to such date or dates and/or the attainment of such pre-established
performance goals, objectives and other conditions, the shares on which all
restrictions have lapsed shall no longer be Restricted Stock and shall be deemed
“vested.” The Committee may, in its sole discretion, determine that one (1) or
more Restricted Stock Awards are fully earned and vested immediately.

 

SECTION 8RESTRICTED STOCK UNITS

(a) Nature of Restricted Stock Units. A Restricted Stock Unit is an Award of
phantom stock units to a grantee, subject to restrictions and conditions as the
Committee may determine at the time of grant. Conditions may be based on
continuing employment (or other service relationship) and/or achievement of
pre-established performance goals and objectives. The grant of a Restricted
Stock Unit is contingent on the grantee executing the Restricted Stock Unit
agreement. The terms and conditions of each such agreement shall be determined
by the Committee, and such terms and conditions may differ among individual
Awards and grantees. At the end of the deferral period, the Restricted Stock
Unit, to the extent vested, shall be paid to the grantee in the form of shares
of Stock.

 

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(b) Election to Receive Restricted Stock Units in Lieu of Compensation. The
Committee may, in its sole discretion, permit a grantee to elect to receive a
portion of the cash compensation or Restricted Stock Award otherwise due to such
grantee in the form of a Restricted Stock Unit. In the case of an election to
defer cash compensation, any such election must be made no later than the last
day of the tax year prior to the tax year in which the cash compensation is
earned by the grantee; provided, however, that in the year in which a grantee
first becomes eligible to make such an election, the grantee may make the
election no later than thirty (30) days after initial eligibility. In the case
of an election to defer a Restricted Stock Award, such election must be made by
the grantee: (i) no later than the 30th day after the grant of Restricted Stock,
and (ii) no later than twelve (12) months in advance of the earliest date on
which the restrictions could lapse. Any such election shall be made in writing
and shall be delivered to the Company and in accordance with rules and
procedures established by the Committee. The Committee shall have the sole right
to determine whether and under what circumstances to permit such elections and
to impose such limitations and other terms and conditions thereon as the
Committee deems appropriate.

 

(c) Rights as a Stockholder. During the deferral period, a grantee shall have no
rights as a stockholder; provided, however, that the grantee may be credited
with Dividend Equivalent Rights with respect to the phantom stock units
underlying his Restricted Stock Unit, subject to such terms and conditions as
the Committee may determine.

 

(d) Restrictions. A Restricted Stock Unit may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of during the deferral
period.

 

(e) Termination. Except as may otherwise be provided by the Committee either in
the Award agreement or, subject to Section 18 below, in writing after the Award
agreement is issued, a grantee’s right in all Restricted Stock Units that have
not vested shall automatically terminate upon the grantee’s termination of
Service (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.

 

(f) Code Section 409A. Except as provided in Section 8(g) below, any Restricted
Stock Units issued hereunder must be distributed to the participants so as to
comply with the so-called “short-term deferral” exemption under Code Section
409A. As such, such Awards must be distributed no later than 2½ months after the
end of the later of the Company’s fiscal year or the taxable year of the Covered
Employee in which the Awards are deemed vested for purposes of Code Section
409A.

 

(g) Defined Contribution Retirement Plan. The Company has established a Defined
Contribution Retirement Plan (the “DCRP”) for the benefit of a select group of
management Employees effective January 1, 2008. This DCRP constitutes a
non-qualified deferred compensation plan as defined in Code Section 409A and is
intended to comply with the requirement of Code Section 409A. The DCRP grants
Restricted Stock Units subject to the restrictions contained in this Section 8.
The operational provisions of the DCRP, including the provisions therein
relative to compliance with Code Section 409A, are incorporated by reference
into this Plan and are hereby made a part hereof.

 

SECTION 9UNRESTRICTED STOCK AWARDS

The Committee may, in its sole discretion, grant (or sell at such purchase price
determined by the Committee) an Unrestricted Stock Award to any grantee pursuant
to which such grantee may receive shares of Stock free of any restrictions
(“Unrestricted Stock”) under the Plan. Unrestricted Stock Awards may be granted
in respect of past services or other valid consideration, or in lieu of cash
compensation due to such grantee.

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SECTION 10CASH-BASED AWARDS

The Committee may, in its sole discretion, grant Cash-Based Awards to any
grantee in such number or amount and upon such terms, and subject to such
conditions, as the Committee shall determine at the time of grant. The Committee
shall determine the maximum duration of the Cash-Based Award, the amount of cash
to which the Cash-Based Award pertains, the conditions upon which the Cash-Based
Award shall become vested or payable, and such other provisions as the Committee
shall determine. Each Cash-Based Award shall specify a cash-denominated payment
amount, formula or payment ranges as determined by the Committee. Anything
herein to the contrary notwithstanding, all Cash–Based Awards shall be made
pursuant to a component plan of this Plan that provides for the terms and
conditions of such Awards. Further, any such component plan shall be documented
and administered in compliance with Code Section 409A. Payment, if any, with
respect to a Cash-Based Award, shall be made in accordance with the terms of the
Award and may be made in cash or in shares of Stock, as the Committee
determines.

 

SECTION 11PERFORMANCE SHARE AWARDS

(a) Nature of Performance Share Awards. A Performance Share Award is an Award
entitling the recipient to receive a grant of shares of Stock upon the
attainment of specified performance goals. The Committee may make Performance
Share Awards independent of or in connection with the granting of any other
Award under the Plan. The Committee in its sole discretion shall determine
whether and to whom Performance Share Awards shall be made, the performance
goals, the periods during which performance is to be measured, and all other
limitations and conditions.

 

(b) Rights as a Stockholder. A grantee receiving a Performance Share Award shall
have the rights of a stockholder only as to shares actually received by the
grantee under the Plan and not with respect to shares subject to the Award but
not actually received by the grantee. A grantee shall be entitled to receive a
stock certificate evidencing the acquisition of shares of Stock pursuant to a
grant under a Performance Share Award only upon satisfaction of all conditions
specified in the Performance Share Award agreement (or in a performance plan
adopted by the Committee).

 

(c) Termination. Except as may otherwise be provided by the Committee either in
the Award agreement or, subject to Section 18 below, in writing after the Award
agreement is issued, a grantee’s rights in all Performance Share Awards shall
automatically terminate upon the grantee’s termination of employment (or
cessation of service relationship) with the Company and its Subsidiaries for any
reason.

 

(d) Acceleration, Waiver, Etc. At any time prior to the grantee’s termination of
employment (or other service relationship) by the Company and its Subsidiaries,
the Committee may in its sole discretion accelerate, waive or, subject to
Section 18, amend any or all of the goals, restrictions or conditions applicable
to a Performance Share Award.

 

SECTION 12PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

Notwithstanding anything to the contrary contained herein, if any Restricted
Stock Award, Restricted Stock Unit, Cash-Based Award or Performance Share Award
granted to a Covered Employee is intended to qualify as “Performance-based
Compensation” under Section 162(m) of the Code and the regulations promulgated
thereunder (a “Performance-based Award”), such Award shall comply with the
provisions set forth below:

 

(a) Performance Criteria. The performance criteria used in performance goals
governing Performance-based Awards granted to Covered Employees may include one
or more of the following:

 

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(1)  basic earnings per share; (2)  basic cash earnings per share; (3)  diluted
earnings per share; (4)  core earnings per share; (5)  diluted cash earnings per
share; (6)  net income; (7)  cash earnings; (8)  net interest income; (9)
 non-interest income; (10)  general and administrative expense to average assets
ratio; (11)  cash general and administrative expense to average assets ratio;
(12)  efficiency ratio; (13)  cash efficiency ratio; (14)  return on average
assets; (15)  core return on average assets; (16)  cash return on average
assets; (17)  return on average stockholders’ equity; (18)  cash return on
average stockholders’ equity; (19)  core return on equity; (20)  return on
average tangible stockholders’ equity; (21)  cash return on average tangible
stockholders’ equity; (22)  core earnings; (23)  operating income; (24)
 operating efficiency ratio; (25)  net interest margin; (26)  growth in assets,
loans (including home equity lines of credit), or deposits; (27)  loan
production volume; (28)  non-performing loans; (29)  cash flow; (30)  capital
preservation (core or risk-based); (31)  interest rate risk exposure-net
portfolio value; (32)  interest rate risk-sensitivity; (33)  liquidity
parameters; (34) strategic business objectives, consisting of one or more
objectives based upon meeting specified cost targets, business expansion goals,
and goals relating to acquisitions or divestitures, or goals relating to capital
raising and capital management;

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(35)  stock price (including, but not limited to, growth measures and total
shareholder return); (36)  operating expense as a percentage of average assets;
(37)  core deposits as a percentage of total deposits; (38)  net charge-off
percentage; (39)  average percentage past due; (40)  classified assets to total
assets; (41)  compliance/audit exam findings; (42)  capital ratio; (43)  revenue
growth; (44)  tangible book value per diluted share; (45)  management
achievement of strategic plan goals; (46)  system knowledge & utilization of
core applications; (47)  customer service survey; or (48)  any combination of
the foregoing.

 

Performance measures may be based on the performance of the Company as a whole
or on any one or more Subsidiaries or business units of the Company or a
Subsidiary and may be measured relative to a peer group, an index or a business
plan. In establishing any performance measures, the Committee may provide for
the exclusion of the effects of the following items, to the extent identified in
the audited financial statements of the Company, including footnotes, or in the
Management’s Discussion and Analysis section of the Company’s annual report or
in the Compensation Discussion and Analysis Section, if any, of the Company’s
annual proxy statement: (i) extraordinary, unusual, and/or nonrecurring items of
gain or loss; (ii) gains or losses on the disposition of a business; (iii)
changes in tax or accounting principles, regulations or laws; or (iv) mergers or
acquisitions. To the extent not specifically excluded, such effects shall be
included in any applicable performance measure.

 

(b)   Adjustments.  Pursuant to this Section 12, in certain circumstances the
Committee may adjust performance measures; provided, however, no adjustment may
be made with respect to an Award that is intended to be performance-based
compensation within the meaning of Code Section 162(m), except to the extent the
Committee exercises such negative discretion as is permitted under applicable
law for purposes of an exception under Code Section 162(m). If the Committee
determines that a change in the business, operations, corporate structure or
capital structure of the Company or the manner in which the Company or any
Subsidiary of the Company conducts its business or other events or circumstances
render current performance measures to be unsuitable, the Committee may modify
such performance measures, in whole or in part, as the Committee deems
appropriate. If a grantee is promoted, demoted or transferred to a different
business unit during a performance period, the Committee may determine that the
selected performance measures or applicable performance period are no longer
appropriate, in which case, the Committee, in its sole discretion, may: (i)
adjust, change or eliminate the performance measures or change the applicable
performance period; or (ii) cause to be made a cash payment to the grantee in an
amount determined by the Committee.

 

(c) Grant of Performance-based Awards. With respect to each Performance-based
Award granted to a Covered Employee, the Committee shall select, within the
first 90 days of a Performance Cycle (or, if shorter, within the maximum period
allowed under Section 162(m) of the Code) the performance criteria for such
grant, and the achievement targets with respect to each performance criterion
(including a threshold level of performance below which no amount will become
payable with respect to such Award). Each Performance-based Award will specify
the amount payable, or the formula for determining the amount payable, upon
achievement of the various applicable performance targets. The performance
criteria established by the Committee may be (but need not be) different for
each Performance Cycle and different goals may be applicable to
Performance-based Awards to different Covered Employees.

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(d) Payment of Performance-based Awards. Following the completion of a
Performance Cycle, the Committee shall meet to review and certify in writing
whether, and to what extent, the performance criteria for the Performance Cycle
have been achieved and, if so, to also calculate and certify in writing the
amount of the Performance-based Awards earned for the Performance Cycle. The
Committee shall then determine the actual size of each Covered Employee’s
Performance-based Award, and, in doing so, may reduce or eliminate the amount of
the Performance-based Award for a Covered Employee if, in its sole judgment,
such reduction or elimination is appropriate.

 

(e) Shareholder Approval. Prior to payment of any Performance-based Award, such
Award must meet this shareholder approval requirement. In the case of
Performance-based Awards other than Stock Options, the shareholder approval
requirement is met if by a majority of shares voting in a separate vote, the
shareholders approve the Plan’s specific terms and the class of executives to
which it applies. In the case of Performance-based Awards of Stock Options, the
shareholders must approve by majority of shares voting in a separate vote: (i)
the Plan’s terms; (ii) the class of executives to which it applies; (iii) the
exercise price (or formula under which the price is determined); and (iv) the
maximum number of shares subject to Stock Options that the Plan can award to any
executive.

 

(f) Maximum Award Payable. The maximum Performance-based Award payable to any
one Covered Employee under the Plan for a Performance Cycle is 30,000 Shares
(subject to adjustment as provided in Section 3(b) hereof) or $1,000,000 in the
case of a Performance-based Award that is a Cash-Based Award.

 

(g)   Retirement.  Notwithstanding anything herein to the contrary, no Award
that is intended to be considered performance-based compensation under Code
Section 162(m) shall be granted under terms that will permit its accelerated
vesting upon Retirement or other termination of Service (other than death or
Disability). Notwithstanding anything to the contrary herein, in the event of
Retirement of a grantee during a Performance Cycle, the number of shares subject
to a performance-based Award that will vest in the grantee, if any, shall be
determined at the end of the Performance Cycle, and will be pro-rated based on
the period of the grantee’s active employment and the level of achievement of
the performance measures, provided that, the grantee was employed for a minimum
of one (1) year during the Performance Cycle.

 

SECTION 13DIVIDEND EQUIVALENT RIGHTS

(a) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
entitling the grantee to receive credits based on cash dividends that would have
been paid on the shares of Stock specified in the Dividend Equivalent Right (or
other award to which it relates) if such shares had been issued to and held by
the grantee. A Dividend Equivalent Right may be granted hereunder to any grantee
as a component of another Award or as a freestanding award. The terms and
conditions of Dividend Equivalent Rights shall be specified in the Award
agreement. Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of reinvestment or such
other price as may then apply under a dividend reinvestment plan sponsored by
the Company, if any. Dividend Equivalent Rights may be settled in cash or shares
of Stock or a combination thereof, in a single installment or installments. A
Dividend Equivalent Right granted as a component of another Award may provide
that such Dividend Equivalent Right shall be settled upon exercise, settlement,
or payment of, or lapse of restrictions on, such other award, and that such
Dividend Equivalent Right shall expire or be forfeited or annulled under the
same conditions as such other award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different from
such other award.

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(b) Interest Equivalents. Any Award under this Plan that is settled in whole or
in part in cash on a deferred basis may provide in the grant for interest
equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.

 

(c) Termination. Except as may otherwise be provided by the Committee either in
the Award agreement or, subject to Section 18 below, in writing after the Award
agreement is issued, a grantee’s rights in all Dividend Equivalent Rights or
interest equivalents shall automatically terminate upon the grantee’s
termination of employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.

 

(d) Code Section 409A. No dividends shall be paid or credited on Stock
Appreciation Rights or on unexercised Options which would have the effect of
reducing the exercise price of the option or Stock Appreciation Right base price
below Fair Market Value on the date of the grant in violation of Code Section
409A and the Treasury Regulations issued thereunder.

 

SECTION 14TAX WITHHOLDING

(a) Payment in Stock. Unless otherwise elected by the grantee and approved by
the Committee, subject to the Company’s insider trading policy, as in effect
from time to time, the Company’s minimum required tax withholding obligation
shall be satisfied in full by the grantee authorizing the Company to withhold
from shares of Stock to be issued pursuant to any Award a number of shares with
an aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the withholding amount due.

 

(b) Payment by Grantee. If the grantee elects and the Committee approves a form
of payment other that provided in Section 14(a), above, each grantee shall, no
later than the date as of which the value of an Award or of any Stock or other
amounts received thereunder first becomes includable in the gross income of the
grantee for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of, any Federal,
state, or local taxes of any kind required by law to be withheld by the Company
with respect to such income. Such arrangements may include payment, in whole or
in part by the grantee transferring to the Company shares of Stock owned by the
grantee with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due. The Company and its
Subsidiaries shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the grantee. The
Company’s obligation to deliver evidence of book entry (or stock certificates)
to any grantee is subject to and conditioned on tax withholding obligations
being satisfied by the grantee.

 

SECTION 15TERMINATION OF SERVICE

(a) Termination. For the purposes of the Plan, a grantee’s Service terminates on
the first day occurring on or after a grant date on which the grantee ceases to
be an Employee or Director of the Company or any Subsidiary, regardless of the
reason for such cessation, subject to the following:

 

(i)   The grantee’s cessation as an Employee shall not be deemed to occur by
reason of the transfer of the grantee between the Company and a Subsidiary or
between two Subsidiaries.

 

(ii)   The grantee’s cessation as an Employee shall not be deemed to occur by
reason of the grantee’s being on a bona fide leave of absence from the Company
or a Subsidiary approved by the Company or Subsidiary otherwise receiving the
grantee’s Services, provided such leave of absence does not exceed six (6)
months, or if longer, so long as the Employee retains a right to reemployment
with the Company or Subsidiary under an applicable statute or by contract. For
these purposes, a leave of absence constitutes a bona fide leave of absence only
if there is a reasonable expectation that the Employee will return to perform
Services for the Company or Subsidiary. If the period of leave exceeds six (6)
months and the Employee does not retain a right to reemployment under an
applicable statute or by contract, the employment relationship is deemed to
terminate on the first day immediately following such six (6) month period. For
purposes of this sub-section (ii), to the extent applicable, an Employee’s leave
of absence shall be interpreted by the Committee in a manner consistent with
Treasury Regulation Section 1.409A-1(h)(1).

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(b) Subsidiary Transaction. If, as a result of a sale or other transaction, the
Subsidiary for whom the grantee is employed (or to whom the grantee is providing
Services) ceases to be a Subsidiary, and the grantee is not, following the
transaction, an Employee of the Company or an entity that is then a Subsidiary,
then the occurrence of such transaction shall be treated as the grantee’s
termination of Service caused by the grantee being discharged by the entity for
whom the grantee is employed or to whom the grantee is providing Services.

 

(c)   Separation from Service/Code Section 409A. Except to the extent Code
Section 409A may be applicable to an Award, and subject to the foregoing
paragraph of this sub-section, the Committee shall have discretion to determine
if a termination of Service has occurred and the date on which it occurred. In
the event that any Award under the Plan constitutes “deferred compensation” as
defined in Code Section 409A, the term termination of Service shall be
interpreted by the Committee in a manner consistent with the definition of
“Separation from Service” as defined under Code Section 409A and under Treasury
Regulation Section 1.409A-1(h)(ii). For purposes of this Plan, a “Separation
from Service” shall have occurred if the Company and grantee reasonably
anticipate that no further Services will be performed by the grantee after the
date of the termination of Service (whether as an employee or as an independent
contractor) or the level of further Services performed will not exceed 20
percent of the average level of bona fide Services in the thirty-six (36) months
immediately preceding the termination of Service. If a grantee is a “Specified
Employee,” as defined in Code Section 409A and any payment to be made hereunder
shall be determined to be subject to Code Section 409A, then if required by Code
Section 409A, such payment or a portion of such payment (to the minimum extent
possible) shall be delayed and shall be paid on the first day of the seventh
month following grantee’s Separation from Service.

 

(d)   Directors. With respect to a grantee who is a Director, cessation as a
Director will not be deemed to have occurred if the grantee continues as a
director emeritus or advisory director.

 

SECTION 16EFFECT OF TERMINATION OF SERVICE ON AWARDS

The Committee shall establish the effect of a termination of Service on the
continuation of rights and benefits available under an Award or the Plan and, in
so doing, may make distinctions based upon, among other things, the cause of
termination of Service and type of Award. Unless the Committee shall
specifically state otherwise at the time an Award is granted or unless the
vesting of an Award is subject to the satisfaction of specific performance
measures, the following shall apply to all Awards:

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(a) Termination Due to Death. If the grantee’s Service terminates by reason of
death, any Award held by the grantee shall become fully vested and exercisable,
and any Stock Option may thereafter be exercised by the grantee’s legal
representative or legatee for a period of twelve (12) months from the date of
death or until the last day of the original term of the Stock Option, if
earlier.

 

(b) Termination Due to Disability. If the grantee’s Service terminates by reason
of Disability, any Award held by the grantee shall become fully vested and
exercisable, and any Stock Option may thereafter be exercised by the grantee or
his or her legal representative or legatee for a period of twelve (12) months
from the date of Disability or until the last day of the original term of the
Stock Option, if earlier.

 

(c) Termination for Cause. If the grantee’s Service is terminated for Cause, any
Award held by the grantee shall terminate immediately and be of no further force
and effect.

 

(d) Termination Due to Retirement.

 

(1) If the grantee’s Service terminates due to Retirement, and on the date of
Retirement the grantee is at least sixty (60) years old and has been employed by
the Company or a Subsidiary for at least ten (10) consecutive years, then any
Award held by the grantee shall become fully vested and exercisable, and any
Stock Option held by the grantee may be exercised by the grantee for a period of
twelve (12) months from the date of Retirement or until the last day of the
original term of the Stock Option, if earlier.

 

(2) If the grantee’s Service terminates due to Retirement, and on the date of
Retirement the grantee is not at least sixty (60) years old and/or has not been
employed by the Company or a Subsidiary for at least ten (10) consecutive years,
then any Award held by the grantee shall be vested or exercisable only to the
extent vested or exercisable on the date of Retirement. Any shares of Restricted
Stock held by the grantee that are not vested on the date of Retirement shall be
subject to an optional repurchase right of the Company at the original purchase
price. Any vested Stock Option held by the grantee shall be exercisable by the
grantee for a period of twelve (12) months from the date of Retirement or until
the last day of the original term of the Stock Option, if earlier.

 

(e) Other Termination. If the grantee’s Service terminates for any reason other
than as set forth in subsections (a), (b), (c) and (d) above, and unless
otherwise determined by the Committee, any Award held by the grantee shall be
vested and exercisable only to the extent vested and exercisable on the date
that the grantee’s Service terminates. Any shares of Restricted Stock held by
the grantee that are not vested on the date of termination of Service shall be
subject to an optional repurchase right of the Company at the original purchase
price. Any vested Stock Option held by the grantee shall be exercisable by the
grantee for a period of three (3) months from the date of termination of Service
or until the last day of the original term of the Stock Option, if earlier.

 

Notwithstanding anything to the contrary in this Section 16:

 

(i) an Employee who continues to serve as a Director following termination of
Service as an Employee or as a consultant to the Company or a Subsidiary and a
non-employee Director who continues to serve as a director emeritus or advisory
board member following termination of Service as a non-employee Director shall,
unless otherwise specified in the Award Agreement, continue to vest in his or
her Awards and shall not be deemed to have terminated Service due to Retirement
until Service in all such capacities has terminated;

 

(ii) no Stock Options will be considered Incentive Stock Options unless
exercised within three (3) months of termination of Service, except to the
extent that such Stock Options are exercised, after the death or Disability of
the grantee, within one (1) year following termination of Service and provided,
however, in order to obtain Incentive Stock Option treatment for Stock Options
exercised by heirs or devisees of an optionee, the optionee’s death must have
occurred while employed or within three (3) months of termination of Service;

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(iii) upon termination of Service for reason of Disability or death, Restricted
Stock Awards that are subject to the satisfaction of specific
performance-measures shall vest at the date of death or Disability, based on the
period of the grantee’s active employment and assuming achievement of the
performance measures at the target level;

 

(iv) upon termination of Service due to Retirement, Restricted Stock Awards that
are subject to the satisfaction of specific performance-measures shall vest in
the manner provided in Section 12(f);

 

(v) no Stock Option shall be eligible for treatment as an Incentive Stock Option
in the event such Stock Option is exercised more than one (1) year following
termination of Service due to Disability and provided, however, in order to
obtain Incentive Stock Option treatment for Stock Options exercised by heirs or
devisees of an optionee, the optionee’s death must have occurred while employed
or within three (3) months of termination of Service; and

 

(vi) the effect of a Change in Control on the vesting/exercisability or other
applicable conditions of any Award shall be as set forth in Article 19.

 

SECTION 17FORFEITURE EVENTS

(a) In the event that the grantee violates the terms of the separately executed
Non-Competition, Non-Solicitation and Non-Disclosure Agreement, or any agreement
he or she may enter into with the Company or its Subsidiaries addressing the
issues of non-competition, non-solicitation and non-disclosure, any and all
benefits and Awards due hereunder to said grantee shall be void and forfeited,
and any benefits previously distributed to the grantee shall be subject to
recoupment by the Company.

 

(b) The Committee may specify in an Award agreement that the grantee’s rights,
payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture or recoupment upon the occurrence of certain specified
events, in addition to any otherwise applicable vesting or performance
conditions of an Award. Such events include, but shall not be limited to,
termination of employment for Cause, termination of the grantee’s provisions of
Services to the Company or any Subsidiary, violation of material Company or
Subsidiary policies, breach of noncompetition, confidentiality, or other
restrictive covenants that may apply to the grantee, or other conduct of the
grantee that is detrimental to the business or reputation of the Company or any
Subsidiary.

 

(c)   If the Company is required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of misconduct, with any
financial reporting requirement under the securities laws, any grantee who is
subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002 or any similar securities law shall reimburse the Company the amount of any
payment in settlement of an Award earned or accrued during the twelve (12) month
period following the first public issuance of filing with the SEC (whichever
just occurred) of the financial document embodying such financial reporting
requirement.

 

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In addition, in the event of an accounting restatement, the Committee, in its
sole and exclusive discretion, may require that any grantee reimburse the
Company for all or any part of the amount of any payment in settlement of any
Award granted hereunder.

 

SECTION 18AMENDMENTS AND TERMINATION

(a) General.  The Board may, as permitted by law, at any time, amend or
terminate the Plan, and may amend any Award agreement, provided that no
amendment or termination (except as provided in Section 3(b) or 3(c)) may cause
the Award to violate Code Section 409A, or, in the absence of written consent to
the change by the affected grantee (or, if the grantee is not then living, the
affected beneficiary), adversely impair the rights of any grantee or beneficiary
under any Award granted under the Plan prior to the date such amendment is
adopted by the Board; provided, however, that, no amendment may (a) materially
increase the benefits accruing to grantees under the Plan; (b) materially
increase the aggregate number of securities which may be issued under the Plan,
other than pursuant to Section 3(b); or (c) materially modify the requirements
for participation in the Plan, unless the amendment under (a), (b) or (c) above
is approved by the Company’s stockholders. Except as provided in Section 3(b) or
3(c), in no event may the Committee exercise its discretion to reduce the
exercise price of outstanding Stock Options or effect repricing through
cancellation and re-grants.

 

(b) Amendment to Conform to Law and Accounting Changes.  Notwithstanding any
provision in this Plan or any Award agreement to the contrary, the Committee may
amend the Plan or an Award agreement, to take effect retroactively or otherwise,
as deemed necessary or advisable for the purpose of (i) conforming the Plan or
the Award agreement to any present or future law relating to plans of this or
similar nature (including, but not limited to, Code Section 409A), or (ii)
avoiding an accounting treatment resulting from an accounting pronouncement or
interpretation thereof issued by the SEC or Financial Accounting Standards Board
subsequent to the adoption of the Plan or the making of the Award affected
thereby, which, in the sole discretion of the Committee, may materially and
adversely affect the financial condition or results of operations of the
Company. By accepting an Award under this Plan, each grantee agrees and consents
to any amendment made pursuant to this Section 18 to any Award granted under the
Plan without further consideration or action.

 

SECTION 19STATUS OF PLAN

With respect to the portion of any Award that has not been exercised and any
payments in cash, Stock or other consideration not received by a grantee, a
grantee shall have no rights greater than the contractual rights of a general
unsecured creditor of the Company unless the Committee shall otherwise expressly
determine in connection with any Award or Awards. In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet the
Company’s obligations to deliver Stock or make payments with respect to Awards
hereunder, provided that the existence of such trusts or other arrangements is
consistent with the foregoing sentence.

 

SECTION 20CHANGE OF CONTROL PROVISIONS

Upon the occurrence of a Change of Control as defined in this Section 20:

 

(a) Except as otherwise provided in the applicable Award agreement, each
outstanding Stock Option and Stock Appreciation Right shall automatically become
fully exercisable.

 

(b) Except as otherwise provided in the applicable Award Agreement, conditions
and restrictions on each outstanding Restricted Stock Award, Restricted Stock
Unit and Performance Share Award which relate solely to the passage of time and
continued employment will be removed. Performance or other conditions (other
than conditions and restrictions relating solely to the passage of time and
continued employment) will continue to apply unless otherwise provided in the
applicable Award agreement.

20

 

 

 

(c) Prior to the exercise or payment of any Award that has become exercisable or
payable as a result of a Change of Control, the Company shall determine whether
Code Section 280G (governing golden parachute payments) applies to such payment.
If the Company determines that Code Section 280G does apply, the Company and any
affected grantee shall amend the relevant Award agreements to comply with Code
Section 280G, and establish payment amounts and schedules that comply with the
requirements of Code Section 280G.

 

(d) “Change of Control” shall mean the occurrence of any one of the following
events:

 

(i) an event of a nature that would be required to be reported in response to
Item 5.01 of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Exchange Act; or

(ii) any “Person,” as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company, any of its Subsidiaries, or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its Subsidiaries), together with
all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under
the Exchange Act) of such person, shall become the “beneficial owner” (as such
term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 50 percent or more of the combined
voting power of the Company’s then outstanding securities having the right to
vote in an election of the Company’s Board of Directors (“Voting Securities”)
(in such case other than as a result of an acquisition of securities directly
from the Company); or

(iii) persons who, as of the Effective Date, constitute the Company’s Board of
Directors (the “Incumbent Directors”) cease for any reason, including, without
limitation, as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board, provided that any
person becoming a director of the Company subsequent to the Effective Date shall
be considered an Incumbent Director if such person’s election was approved by or
such person was nominated for election by either (A) a vote of at least a
majority of the Incumbent Directors or (B) a vote of at least a majority of the
Incumbent Directors who are members of a nominating committee comprised, in the
majority, of Incumbent Directors; but provided further, that any such person
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of members of the Board of Directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board, including by reason of agreement
intended to avoid or settle any such actual or threatened contest or
solicitation, shall not be considered an Incumbent Director; or

(iv) the consummation of a consolidation, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a
“Corporate Transaction”); excluding, however, a Corporate Transaction in which
the stockholders of the Company immediately prior to the Corporate Transaction,
would, immediately after the Corporate Transaction, beneficially own (as such
term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
shares representing in the aggregate more than 50 percent of the voting shares
of the corporation issuing cash or securities in the Corporate Transaction (or
of its ultimate parent corporation, if any); or

(v) the approval by the stockholders of any plan or proposal for the liquidation
or dissolution of the Company.

Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Voting Securities outstanding, increases the proportionate number of shares
of Voting Securities beneficially owned by any person to 50 percent or more of
the combined voting power of all then outstanding Voting Securities; provided,
however, that if any person referred to in this sentence shall thereafter become
the beneficial owner of any additional shares of Voting Securities (other than
pursuant to a stock split, stock dividend, or similar transaction or as a result
of an acquisition of securities directly from the Company) and immediately
thereafter beneficially owns 50 percent or more of the combined voting power of
all then outstanding Voting Securities, then a “Change of Control” shall be
deemed to have occurred for purposes of the foregoing clause (i).

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SECTION 21GENERAL PROVISIONS

(a) Award Agreement. Each Award granted under the Plan shall be evidenced by a
written Award agreement signed by the grantee. A copy of the Award agreement, in
any medium chosen by the Committee, shall be provided (or made available
electronically) to the grantee.

 

(b) Vesting. Notwithstanding anything to the contrary herein, if the right to
become vested in an Award under the Plan (including the right to exercise a
Stock Option) is conditioned on the completion of a specified period of Service
with the Company or a Subsidiary, without achievement of performance measures or
other performance objectives being required as a condition of vesting, and
without it being granted in lieu of, or in exchange for, other compensation,
then the required period of Service for full vesting shall be determined by the
Committee and evidenced in the Award Agreement (subject to acceleration of
vesting, to the extent permitted by the Committee, including in the event of the
grantee’s death, Disability, or a Change in Control). If the Committee does not
specify the vesting period of an Award (other than an Award conditioned on the
satisfaction of performance measures), the Award shall vest at the rate of
twenty percent (20%) per year, commencing one year after the date of grant.

 

(c) No Distribution; Compliance with Legal Requirements. The Committee may
require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof. No shares of Stock shall be issued
pursuant to an Award until all applicable securities law and other legal and
stock exchange or similar requirements have been satisfied. The Committee may
require the placing of such stop-orders and restrictive legends on certificates
for Stock and Awards as it deems appropriate.

 

(d) Delivery of Stock Certificates. Stock certificates to grantees under this
Plan shall be deemed delivered for all purposes when the Company or a stock
transfer agent of the Company shall have electronically mailed, hand-delivered
and/or mailed such certificates in the United States mail, addressed to the
grantee, at the grantee’s last known address on file with the Company.
Uncertificated Stock shall be deemed delivered for all purposes when the Company
or a Stock transfer agent of the Company shall have given to the grantee by
electronic mail (with proof of receipt) or by United States mail, addressed to
the grantee, at the grantee’s last known address on file with the Company,
notice of issuance and recorded the issuance in its records (which may include
electronic “book entry” records). Notwithstanding anything herein to the
contrary, the Company shall not be required to issue or deliver any certificates
evidencing shares of Stock pursuant to the exercise of any Award, unless and
until the Committee has determined, with advice of counsel (to the extent the
Committee deems such advice necessary or advisable), that the issuance and
delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the requirements of
any exchange on which the shares of Stock are listed, quoted or traded. All
Stock certificates delivered pursuant to the Plan shall be subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or
advisable to comply with federal, state or foreign jurisdiction, securities or
other laws, rules and quotation system on which the Stock is listed, quoted or
traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock. In addition to the terms and conditions
provided herein, the Committee may require that an individual make such
reasonable covenants, agreements, and representations as the Committee, in its
discretion, deems necessary or advisable in order to comply with any such laws,
regulations, or requirements. The Committee shall have the right to require any
individual to comply with any timing or other restrictions with respect to the
settlement or exercise of any Award, including a window-period limitation, as
may be imposed in the discretion of the Committee.

22

 

 

 

(e) Form and Time of Elections/Notification Under Code Section 83(b).  Unless
otherwise specified herein, each election required or permitted to be made by
any grantee or other person entitled to benefits under the Plan, and any
permitted modification, or revocation thereof, shall be filed with the Company
at such times, in such form, and subject to such restrictions and limitations,
not inconsistent with the terms of the Plan, as the Committee shall require.
Notwithstanding anything herein to the contrary, the Committee may, on the date
of grant or at a later date, as applicable, prohibit an individual from making
an election under Code Section 83(b). If the Committee has not prohibited an
individual from making this election, an individual who makes this election
shall notify the Committee of the election within ten (10) days of filing notice
of the election with the Internal Revenue Service. This requirement is in
addition to any filing and notification required under the regulations issued
under the authority of Code Section 83(b).

 

(f) Other Compensation Arrangements. Nothing contained in this Plan shall
prevent the Board or the Committee, as applicable, from adopting other or
additional compensation arrangements or granting awards of stock, options, or
stock appreciation rights other than under the Plan in an arrangement that is or
is not intended to qualify under Code Section 162(m), and in each instance such
arrangements may be either generally applicable or applicable only in specific
cases.

 

(g) No Employment Rights or Rights to Future Awards. The Plan does not
constitute a contract of employment, and selection as a grantee will not give
any participating Employee the right to be retained in the employ of the Company
or any Subsidiary or any right or claim to any benefit under the Plan, unless
such right or claim has specifically accrued under the terms of the Plan. No
individual shall have the right to be selected to receive an Award under the
Plan, or, having been so selected, to receive a future Award under the Plan.

 

(h) Trading Policy Restrictions. Option exercises and other Awards under the
Plan shall be subject to such Company’s insider trading policy, as in effect
from time to time.

 

(i) Designation of Beneficiary. Each grantee to whom an Award has been made
under the Plan may designate a beneficiary or beneficiaries to exercise any
Award or receive any payment under any Award payable on or after the grantee’s
death. Any such designation shall be in writing on a form provided for that
purpose by the Committee and shall not be effective until received by the
Committee. If no beneficiary has been designated by a deceased grantee, if the
designated beneficiaries have predeceased the grantee, or if the Committee is in
doubt as to the entitlement of any such beneficiary to an Award, then the
Committee may determine to recognize grantee’s estate as the beneficiary, in
which case the Company, the Committee and the members thereof shall have no
further liability to anyone.

 

(j) Specified Employees. If a Covered Employee in the Plan is classified as a
so-called “Specified Employee” of the Company or a subsidiary of the Company and
if the 409A “Specified Employee” restriction is applicable, any Code Section
409A deferred compensation payable under this Plan or any other deferred
compensation project subject to Code Section 409A, may not be made before the
date which is six (6) months after the date of the Covered Employee’s separation
from service (or, if earlier, the date of the Covered Employee’s death) in
accordance with Code Section 409A(a)(2)(B)(i) and the Treasury Regulations
issued thereunder.

 

(k) Benefits Under Other Plans. Except as otherwise provided by the Committee or
as set forth in a Qualified Retirement Plan, Awards to a grantee (including the
grant and the receipt of benefits) under the Plan shall be disregarded for
purposes of determining the grantee’s benefits under, or contributions to, any
Qualified Retirement Plan, non-qualified plan and any other benefit plans
maintained by the grantee’s employer. The term “Qualified Retirement Plan” means
any plan of the Company or a Subsidiary that is intended to be qualified under
Code Section 401(a).

23

 

 

 

(l) Forfeiture of Awards under Sarbanes-Oxley Act. If the Company is required to
prepare an accounting restatement due to the material noncompliance of the
Company, as a result of misconduct, with any financial reporting requirement
under the securities laws, then any grantee who is one of the individuals
subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002 shall reimburse the Company for the amount of any Award received by such
individual under the Plan during the 12-month period following the first public
issuance or filing with the United States Securities and Exchange Commission, as
the case may be, of the financial document embodying such financial reporting
requirement.

 

SECTION 22EFFECTIVE DATE OF PLAN

This Plan shall become effective upon approval by the holders of a majority of
the votes cast at a meeting of stockholders at which a quorum is present.
Subject to such approval by the stockholders and to the requirement that no
Stock may be issued hereunder prior to such approval, Stock Options and other
Awards may be granted hereunder on and after adoption of this Plan by the Board.

 

SECTION 23GOVERNING LAW

(a) General. This Plan and all Awards and actions taken thereunder shall be
governed by, and construed in accordance with, the laws of the State of Maine,
applied without regard to conflict of law principles, except as superseded by
applicable federal law. The federal and state courts located nearest to the
Company’s home office in the State of Maine shall have exclusive jurisdiction
over any claim, complaint, or lawsuit brought under the terms of the Plan. By
accepting any Award under the Plan, each grantee, and any other person claiming
any rights under the Plan, agrees to submit himself or herself, and any such
legal action as he or she shall bring under the Plan, to the sole jurisdiction
of such courts for the adjudication and resolution of any such disputes.

 

(b) Code Section 409A. All Options and Stock Appreciation Rights issued
hereunder are intended to be exempt from the application of Code Section 409A
and shall be issued at an exercise price of Fair Market Value on the date of the
grant. The Restricted Stock Awards under Section 7 are issued in compliance with
Code Section 83 and are thereby exempt from Code Section 409A. Except as
provided in Section 8(g) above, all other compensation provided hereunder is
intended to qualify for an exemption from Code Section 409A due to the fact that
such compensation is immediately taxable and therefore does not constitute
“deferred compensation” under Code Section 409A, or will be distributed within
the so-called “short-term deferral period” after vesting. Any interpretations or
administrative actions necessary to implement these provisions shall be made so
that such Options, Stock Appreciation Rights or compensation is exempt from
compliance with Code Section 409A, except for the deferred compensation plan
described in Section 8(g) above, which will be administered and operated in
compliance with Code Section 409A.

 

SECTION 24VALIDITY

If any provision of this Plan is determined to be illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts
hereof, but the Plan shall be construed and enforced as is such illegal or
invalid provision had never been included herein.

24

 

 

SECTION 25NOTICE

 

Unless otherwise provided in an Award agreement, all written notices and all
other written communications to the Company provided for in the Plan or in any
Award agreement, shall be delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid (provided that
international mail shall be sent via overnight or two-day delivery), or sent by
facsimile, email or prepaid overnight courier to the Company at its principal
executive office. Such notices, demands, claims and other communications shall
be deemed given:

 

(a)   in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;

 

(b)   in the case of certified or registered U.S. mail, five (5) days after
deposit in the U.S. mail; or

 

(c)   in the case of facsimile or email, the date upon which the transmitting
party received confirmation of receipt; provided, however, that in no event
shall any such communications be deemed to be given later than the date they are
actually received, provided they are actually received.

 

In the event a communication is not received, it shall only be deemed received
upon the showing of an original of the applicable receipt, registration or
confirmation from the applicable delivery service. Communications that are to be
delivered by the U.S. mail or by overnight service to the Company shall be
directed to the attention of the Company’s Senior Vice President of Human
Resources.

 

SECTION 26CONSTRUCTION

In the Plan, unless otherwise stated or the context otherwise requires, the
following uses apply:

 

(a)   references to a statute shall refer to the statute and any successor
statute, and to all regulations promulgated under or implementing the statute or
its successor, as in effect at the relevant time;

 

(b)   in computing periods from a specified date to a later specified date, the
words “from” and “commencing on” (and the like) mean “from and including,” and
the words “to,” “until” and “ending on” (and the like) mean “to, but excluding”;

 

(c)   references to a governmental or quasi-governmental agency, authority or
instrumentality shall also refer to a regulatory body that succeeds to the
functions of the agency, authority or instrumentality;

 

(d)   indications of time of day means Eastern Standard Time (EST) time;

 

(e)   “including” means “including, but not limited to”;

 

(f)   all references to sections, schedules and exhibits are to sections,
schedules and exhibits in or to this Plan unless otherwise specified;

 

(g)   all words used in this Plan will be construed to be of such gender or
number as the circumstances and context require;

 

25

 

 

(h)   the captions and headings of articles, sections, schedules and exhibits
appearing in or attached to this Plan have been inserted solely for convenience
of reference and shall not be considered a part of this Plan nor shall any of
them affect the meaning or interpretation of this Plan or any of its provisions;

 

(i)   any reference to a document or set of documents in this Plan, and the
rights and obligations of the parties under any such documents, shall mean such
document or documents as amended from time to time, and any and all
modifications, extensions, renewals, substitutions or replacements thereof; and

 

(j)   all accounting terms not specifically defined herein shall be construed in
accordance with U.S. Generally Accepted Accounting Principles (GAAP).

 

 

 

 

DATE APPROVED BY BOARD OF DIRECTORS: February 28, 2012

26