Exhibit 10.2

 

GERMAN AMERICAN BANCORP, INC.

 

2019 LONG-TERM EQUITY INCENTIVE PLAN

 

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German American Bancorp, Inc. (“Company”) hereby establishes the German American
Bancorp, Inc. 2019 Long-Term Equity Incentive Plan (“Plan”), effective May 16,
2019.

 

ARTICLE I
APPROVAL AND PURPOSE

 

Section 1.01.                         Approval of Plan.  The Company’s Board of
Directors approved this Plan on March 4, 2019, contingent on approval by the
Company’s shareholders within 12 months following its adoption by the Board.

 

Section 1.02.                         Description of Plan.  The Plan is designed
to promote the interests of the Company and its shareholders by providing a
means by which the Board can award stock-based incentives to employees and
directors of the Company or any Subsidiary (“Participants”).  The Plan permits
the Board to grant Incentive Stock Options, Non-Qualified Stock Options,
Restricted Stock, and Stock Appreciation Rights, all as provided herein.

 

Section 1.03.                         Purpose of Plan.  The purpose of the Plan
is to further the growth, development, and financial success of the Company by
providing for stock-based incentives to Participants that align their interests
more closely with those of the Company’s shareholders.  The Company also
believes that the Plan will assist it in its efforts to attract and retain
quality employees and directors.

 

ARTICLE II
DEFINITIONS AND RULES OF CONSTRUCTION

 

Section 2.01.                         Definitions.  When capitalized in this
Plan, the following terms shall have the meanings specified below, unless the
context otherwise requires:

 

(a)                                 “Award” means a grant made to a Participant
pursuant to Article VI.

 

(b)                                 “Award Agreement” means a written instrument
between the Company and a Participant evidencing an Award and prescribing the
terms, conditions, and restrictions applicable to the Award.

 

(c)                                  “Board of Directors” or “Board” means the
Company’s Board of Directors, as constituted from time to time.

 

(d)                                 “Cause” means, with respect to a
Participant, that, in the Board’s reasonable good faith judgment, the
Participant (i) has materially breached the terms of any employment Agreement
with the Employer and failed to correct the breach within ten (10) days after
receiving the Board’s written notice of such cure; (ii) has committed gross
negligence or willful misconduct in the performance or intentional
non-performance of any material duty of his employment; and/or (iii)

 

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has engaged in dishonesty, fraud, or intentional misconduct with respect to the
business or affairs of the Employer (monetarily or otherwise).

 

(e)                                  “Code” means the Internal Revenue Code of
1986, as amended from time to time.

 

(f)                                   “Committee” means the committee described
in Section 3.01; provided however, to the extent that the Board has not
designated a Committee, “Committee” means the “Board.”

 

(g)                                  “Company” means German American
Bancorp, Inc.

 

(h)                                 “Director” means a director of the Company
or a Subsidiary who is not also an Employee.

 

(i)                                     “Employee” means any individual employed
by the Company or a Subsidiary, including an employee who is a member of the
Board or the board of directors of a Subsidiary.

 

(j)                                    “Employer” means the Company and/or a
Subsidiary.

 

(k)                                 “Exercise Price” means the price, if any,
required to be paid to the Company upon the exercise of an Award.

 

(l)                                     “Fair Market Value” means, with respect
to a Share on any date, as follows:

 

(1)                                 if the Shares are listed or admitted to
trade and are readily tradable on a national securities exchange, the closing
price of a Share on the principal national securities exchange on which the
Shares are listed or admitted to trade on such date, or, if there is no trading
of the Shares on such date, the closing price of a Share as quoted on the next
preceding date on which there was trading in Shares;

 

(2)                                 if the Shares are not subject to paragraph
(1) above, but are readily tradable on an established securities market, the
closing price of a Share on such date on such market, or if there is no trading
of the Shares on such date, the closing price of a Share on the next preceding
date on which there was trading in Shares; and

 

(3)                                 if the Shares are not subject to paragraph
(1) or (2) above, the fair market value of the Shares on such date, as
determined by the Committee in a manner that satisfies the requirements of Code
Section 409A and the guidance thereunder for exempt equity-based compensation.

 

(m)                             “Grant Date” means the date on which the
Committee approves the grant.

 

(n)                                 “Incentive Stock Option” means an option for
Shares granted pursuant to the Plan that satisfies the requirements of Code
Section 422.

 

(o)                                 “Named Executive Officer” means, at the time
of receiving an Award under the Plan, an individual who is (i) serving as the
Company’s principal executive officer or acting in a similar capacity,
regardless of compensation level, (ii) serving as the Company’s principal
financial officer or acting in a similar capacity, regardless of compensation
level, or (iii) one of the

 

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Company’s three most highly compensated executive officers other than the
aforementioned principal executive officer and principal financial officer, or
any such similar officer set forth under Item 402 of Regulation S-K under the
Securities Act of 1933, as amended, or under any successor rule or regulation.

 

(p)                                 “Non-Qualified Stock Option” means an option
for Shares granted pursuant to the Plan that that is not an Incentive Stock
Option.

 

(q)                                 “Option” means an Incentive Stock Option or
a Non-Qualified Stock Option.

 

(r)                                    “Participant” means a person to whom an
Award has been granted under the Plan, provided, however, a Participant shall
cease to be such at such time as all Awards granted to him under the Plan have
been exercised and/or forfeited.

 

(s)                                   “Performance-Based Compensation” means
compensation described in Code Section 162(m)(4)(C) that is excluded from
“applicable employee remuneration” under Code Section 162(m).

 

(t)                                    “Performance-Based Restricted Stock”
means Restricted Stock that is subject to forfeiture unless specified
Performance Targets are satisfied during the Performance Period.

 

(u)                                 “Performance Measures” means, with respect
to Performance-Based Restricted Stock, the objective factors used to determine
whether the restrictions on the Restricted Stock have lapsed.  “Performance
Measures” shall be based on any of the factors listed below, alone or in
combination, as determined by the Committee.  Such factors may be applied (i) on
a corporate-wide or business-unit basis, (ii) including or excluding one or more
Subsidiaries, (iii) in comparison with plan, budget, or prior performance,
and/or (iv) on an absolute basis or in comparison with peer-group performance. 
The factors that may be used as Performance Measures are: (i) return on assets;
(ii) return on equity; (iii) total shareholder return; (iv) operating income;
(v) net income; (vi) earnings per share; and (vii) income before interest and
taxes.  Performance Measures may differ from Participant to Participant and
Award to Award.

 

(v)                                 “Performance Period” means the period of
time during which Performance Targets must be achieved with respect to an Award
of Restricted Stock, as established by the Committee.

 

(w)                               “Performance Targets” means, with respect to
an Award of Performance-Based Restricted Stock, the objective performance under
the Performance Measures for that Performance Period that will result in
payments under the Award.  Performance Targets may differ from Participant to
Participant and Award to Award.

 

(x)                                 “Period of Restriction” means the period
during which a Share of Restricted Stock is subject to restrictions and a
substantial risk of forfeiture.

 

(y)                                 “Plan” means the German American
Bancorp, Inc. 2019 Long-Term Equity Incentive Plan, as set out in this document,
as amended from time to time.

 

(z)                                  “Restricted Stock” means Shares awarded
pursuant to the Plan that, at the time of grant, are nontransferable and are
subject to a substantial risk of forfeiture.

 

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(aa)                          “Rule 16b-3” means Rule 16b-3 under the Securities
Exchange Act of 1934, as amended.

 

(bb)                          “Separation from Service,” “Separates from
Service,” or any variation of such term means, (i) in the case of an Employee, a
complete termination of the employment relationship between the Employee and all
Employers and, (ii) in the case of a Director, termination of the Director’s
service as a Director.

 

(cc)                            “Service-Based Restricted Stock” means
Restricted Stock with restrictions based solely on the Participant’s continued
service with the Company or an Affiliate.

 

(dd)                          “Share” means one of the Company’s common shares,
no par value.

 

(ee)                            “Stock Appreciation Right” or “SAR” has the
meaning given to it in Section 6.02(a).

 

(ff)                              “Subsidiary” means any company (other than the
Company) that is a “subsidiary corporation” within the meaning of Code
Section 424.

 

(gg)                            “Termination Date” has the meaning given to it
in Section 9.02.

 

Section 2.02.                         Rules of Construction.  The following
rules shall apply in construing the Plan and any Award Agreement:

 

(a)                                 Except as expressly provided below, this
Plan, the Awards, all documents evidencing Awards and all other related
documents shall be governed by, and construed in accordance with, the laws of
the State of Indiana without regard to conflict of law principles.

 

(b)                                 Words used in the masculine shall be
construed to include the feminine gender, where appropriate, and words used in
the singular or plural shall be construed as being in the plural or singular,
where appropriate.

 

(c)                                  Provisions of the Plan applicable to
Incentive Stock Options shall be construed to effect compliance with Code
Section 422.

 

(d)                                 Captions and headings are for convenience
only, and they shall not affect the construction of the Plan or any Award
Agreement.

 

(e)                                  Reference to any provision of the Code or
other law shall be deemed to include a reference to the successor of such
provision.

 

(f)                                   The Plan and the Awards are intended to
comply with and shall be construed to effect compliance with, the exemptions
under Rule 16b-3, in the case of Participants who are subject to Section 16 of
the Securities Exchange Act of 1934; provided, however, the Company shall have
no liability to any Participant for Section 16 consequences of an Award.

 

(g)                                  It is intended that Awards granted with an
Exercise Price not less than Fair Market Value on the date of grant shall
qualify as performance-based compensation or otherwise be

 

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exempt from deductibility limitations under Code Section 162(m), and the Plan
and the Awards shall be construed accordingly.

 

(h)                                 It is intended that all Awards shall be
exempt from the provisions of Code Section 409A, and the provisions of the Plan
and any Agreement applicable to an Award shall be construed in accordance with
such intent.

 

(i)                                     If a court of competent jurisdiction
holds any provision invalid and unenforceable, the remaining provisions of the
Plan shall continue in effect, provided that the essential economic terms of the
Plan and any Award can still be enforced.

 

ARTICLE III
ADMINISTRATION

 

Section 3.01.                         Committee.  Except as otherwise provided
herein, the Plan shall be administered by the Board or, at the Board’s option,
by a compensation committee thereof to which the Board has duly delegated the
administration of the Plan.  The Committee shall consist solely of two or more
non-employee directors (within the meaning of Rule 16b-3) who are “outside
directors” for purposes of Code Section 162(m) and the regulations thereunder. 
Any action of the Committee with respect to administration of the Plan shall be
taken by a majority vote or written consent of its members.

 

Section 3.02.                         Powers of Committee.  Subject to the
express provisions of the Plan and any express limitations on its delegated
authority, the Committee is authorized and empowered to administer the Plan and
to (i) designate those persons who are Participants; (ii) grant Awards;
(iii) determine the effective date of each Award, the number of Shares subject
to the Award, and the other terms and conditions of the Award, which terms and
conditions need not be the same for each Award; (iv) interpret the Plan;
(v) determine the Fair Market Value of the Shares; (vi) accelerate the time
during which an Award may be exercised, either in accordance with Section 6.09
or otherwise, in each case notwithstanding the provisions of the Award Agreement
stating the time during which the Award may be exercised; (vii) prescribe,
amend, and rescind rules relating to the Plan; (viii) authorize any person to
execute on behalf of the Company any instrument required to effectuate the grant
of an Award previously granted by the Committee; (ix) determine the rights and
obligations of Participants under the Plan; and (x) make all other
determinations deemed necessary or advisable for the administration of the
Plan.  Notwithstanding the preceding provisions, the Committee is not authorized
to take any action that would cause an Award hereunder to become subject to the
provisions of Code Section 409A.

 

Section 3.03.                         Binding Determinations.  Any action taken
by, or inaction of, the Company, the Board, or the Committee relating or
pursuant to the Plan (including, without limitation, any determination of Fair
Market Value) shall be within the sole discretion of that entity or body and
shall be conclusive and binding upon all persons.  Subject only to compliance
with the express provisions hereof, the Board and Committee may act in their
sole discretion in matters within their authority related to the Plan.

 

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Section 3.04.                         Reliance on Experts.  In making any
determination or in taking or not taking any action under the Plan, the
Committee or the Board, as the case may be, may obtain and rely upon the advice
of experts, including employees of and professional advisors to the Company.

 

Section 3.05.                         Delegation.  The Committee may delegate
ministerial non-discretionary functions to one or more Company officers or
employees.  Subject to applicable law, the Committee may delegate to the
Company’s Chief Executive Officer all or part of its authority and duties with
respect to the granting of Awards to individuals who are not (i) subject to the
reporting and other provisions of Section 16 of the Securities Exchange Act of
1934 or (ii) covered employees within the meaning of Code Section 162(m)(3). 
Any delegation pursuant to this Section shall specify the duration of the
delegation and limit the amount of Awards that may be granted pursuant thereto.

 

Section 3.06.                         Limitations on Liability.  No director,
officer, or agent of the Company shall be liable for any action, omission, or
decision under the Plan that is taken, made, or omitted in good faith.

 

ARTICLE IV
ELIGIBILITY

 

The Committee shall, from time to time, designate those persons eligible to
receive Awards under the Plan from among employees and directors of the Company
or any Subsidiary.  The Committee may grant more than one Award to any
Participant.

 

ARTICLE V
SHARES SUBJECT TO AWARDS

 

Section 5.01.                         Aggregate Share Limit.  Subject to
adjustment as provided in Sections 5.02 and 5.04 and any limitations specified
elsewhere in the Plan, the maximum number of Shares cumulatively available for
issuance under the Plan shall not exceed 1,000,000 Shares.   At all times the
Company shall reserve and keep available a sufficient number of Shares as shall
be required to satisfy the requirements of all outstanding Awards granted under
the Plan.

 

Section 5.02.                         Share Counting, Shares Returned to the
Plan and Limitations.  Subject to the application of Section 5.04, Shares that:
(a) are subject to issuance upon exercise of an Option but cease to be subject
to such Option for any reason other than exercise of such Option; (b) are
subject to an Award granted hereunder but are forfeited or are repurchased by
the Company at the original issue price; or (c) are subject to an Award that
otherwise terminates without Shares being issued will again be available for
grant and issuance in connection with future Awards under the Plan. The
following Shares may not again be made available for future grant and issuance
as Awards under the Plan: (x) Shares that are withheld to pay the Exercise Price
of an Award or to satisfy any tax withholding obligations in connection with an
Award; (y) Shares not issued or delivered as a result of the net settlement of
an outstanding Option or SAR; or (z) shares of the Company’s Common Stock
repurchased on the open market with the proceeds of an exercised Option.  In the
case of Stock Appreciation Rights, only Shares delivered in connection with the
settlement thereof shall be deducted from the aggregate Share limit set forth in
Section 5.01.

 

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Section 5.03.                         Limitation Applicable to Specific Awards. 
The maximum number of Shares that may be delivered pursuant to Incentive Stock
Options granted under the Plan is 1,000,000 Shares.  The only limitation on the
number of Shares available for Non-Qualified Stock Options, Stock Appreciation
Rights, and Restricted Stock Awards shall be that specified in Sections 5.01.

 

Section 5.04.                         Adjustments Upon Recapitalization or
Reorganization.  If the outstanding Shares are changed into, or exchanged for, a
different number or kind of shares or securities of the Company through any
capital reorganization or reclassification, or if the number of outstanding
Shares is changed through a stock split or stock dividend, an appropriate
adjustment shall be made by the Committee in the number, kind, and/or Exercise
Price with respect to Shares as to which Awards may be granted under the Plan. 
A corresponding adjustment shall likewise be made in the number, kind, and/or
Exercise Price for Shares with respect to which there are unexercised
outstanding Awards.  Any such adjustment in an outstanding Award, however, shall
be made without change in the total price applicable to the unexercised portion
of the Award but with a corresponding adjustment in the price for each Share
covered by the Award.  In making such adjustments, or in determining that no
such adjustments are necessary, the Committee may rely upon the advice of
counsel and accountants to the Company, and the good faith determination of the
Committee shall be final, conclusive, and binding.  No fractional shares of
stock shall be issued or issuable under the Plan on account of any such
adjustment.  No adjustment shall be made pursuant to this Section, if it would
cause an Award to become subject to Code Section 409A.

 

ARTICLE VI
 AWARDS

 

Section 6.01.                         Grant of Awards.  Awards authorized under
this Article VI may be granted pursuant to another incentive program that
incorporates by reference the terms and conditions of this Plan.  Awards may be
granted singly or in combination or tandem with other Awards.  Awards may also
be granted in replacement of, or as substitution for, other awards granted by
the Company, whether or not such other awards were granted under this Plan. 
Without limiting the foregoing, if a Participant pays all or part of the
Exercise Price or taxes associated with an Award by the transfer of Shares or
the surrender of all or part of an Award (including the Award being exercised),
the Committee may, in its discretion, grant a new Award to replace the Shares
that were transferred or the Award that was surrendered.  The Company may assume
awards granted by an organization acquired by the Company or may grant Awards in
replacement of, or in substitution for, any such awards.

 

Section 6.02.                         Types of Awards.  Awards under the Plan
shall consist of the following:

 

(a)                                 Stock Appreciation Rights.  A right to
receive a payment, in cash or Shares, equal to the excess of (i) the Fair Market
Value of a specified number of Shares on the date the right is exercised over
(ii) the Fair Market Value of the same number of Shares on the date the right is
granted, all as determined by the Committee (“Stock Appreciation Right” or
“SAR”).  The right may be conditioned upon the occurrence of certain events,
such as a change in control, or may be unconditional, as determined by the
Committee.  No Stock Appreciation Right shall be exercisable after the tenth
(10th) anniversary of its grant.

 

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(b)                                 Restricted Stock Award.  An Award that is
made in Restricted Stock.  All or part of any Restricted Stock Award may be
subject to conditions, restrictions, and risks of forfeiture, as and to the
extent established by the Committee.  Such Shares may be either
Performance-Based Restricted Stock or Service-Based Restricted Stock.

 

(c)                                  Option.  A right to purchase a specified
number of Shares during a specified period and at a specified exercise price,
all as determined by the Committee.  An Option may be an Incentive Stock Option
or a Non-Qualified Stock Option.  In addition to the terms, conditions, vesting
periods, and restrictions established by the Committee in the Award
Agreement, Incentive Stock Options must comply with the requirements of Code
Section 422, Section 6.04, and this Article VI.

 

Section 6.03.                         Terms and Conditions of Awards;
Agreements.  Awards granted under the Plan shall be evidenced by an Award
Agreement executed by the Company and the Participant, which shall contain such
terms and be in such form as the Committee may from time to time approve,
subject to the following limitations and conditions:

 

(a)                                 Grant and Notice of Award.  The date of an
Award grant shall, for all purposes, be the date on which the Board makes the
determination granting such an Award.  Notice of the determination shall be
given to each Participant to whom an Award is granted within a reasonable time
after the date of grant.  The grant of an Award shall not obligate the
Participant to exercise it.

 

(b)                                 Number of Shares.  The Award Agreement shall
state, as appropriate, the type and total number of Shares (i) granted as
Restricted Stock, (ii) with respect to which Stock Appreciation Rights are
granted, and/or (iii) with respect to which Options are granted.

 

(c)                                  Exercise Price.  The Award Agreement shall
state, as applicable, the Exercise Price per share of the Shares with respect to
which Options are issued, the Fair Market Value of Shares with respect to which
Stock Appreciation Rights are issued, and the purchase price for any Restricted
Stock.  The Exercise Price for an Option shall not be less than its Fair Market
Value on the Grant Date.  For Incentive Stock Options, the Exercise Price shall
satisfy the requirements of Section 6.04 and the provisions of the Code
applicable to incentive stock options.

 

(d)                                 Exercise and Payment of Exercise Price.  A
Participant may exercise a vested Option by (i) giving written notice to the
Company specifying the number of Shares to be purchased and accompanied by
payment of the full Exercise Price therefor in cash, by check, or in such other
form of lawful consideration as the Committee may approve, including without
limitation and in the sole discretion of the Committee, the transfer by the
Participant to the Company of outstanding Shares held by the Participant in a
manner intended to comply with the provisions of Rule 16b-3, if applicable, and
(ii) satisfying any other requirements set forth herein (including, without
limitation, the tax withholding requirements of Article VII) or in the
applicable Award Agreements.  Any Shares delivered by the Participant in
connection with the exercise of an Award must have been owned by the Participant
for at least six months as of the date of delivery.  Shares used to satisfy the
Exercise Price of an Award shall be valued at their Fair Market Value on the
date of exercise.

 

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(e)                                  Restrictions on Grants.  Notwithstanding
any other provisions set forth herein or in an Award Agreement, no Award may be
granted under the Plan after the Termination Date.

 

(f)                                   Vesting of Awards.

 

(i)                                     General Requirement. Awards shall vest
based on longevity of service and/or other schedules established by the
Committee, as set forth in each Award Agreement.

 

(ii)                                  Minimum Vesting Requirements.
Notwithstanding any other provision of the Plan, except in connection with
Awards that may be settled only in cash, no portion of an Award may vest before
the first anniversary of the date of grant, subject to accelerated vesting as
contemplated under Section 6.09 and clause (vi) of Section 3.02; provided,
however, that with respect to up to five percent (5%) of the maximum number of
Shares reserved under Section 5.01, the Company may grant Awards or otherwise
accelerate vesting without regard to the minimum vesting period set forth in
this clause (ii).

 

(g)                                  Issuance of Shares and Compliance with
Securities Laws.  The Company may postpone the issuance and delivery of
certificates representing Shares until (i) the admission of such Shares to
listing on any stock exchange on which Shares are then listed and (ii) the
completion of such registration or other qualification of Shares under any state
or federal law, rule, or regulation as the Company shall determine to be
necessary or advisable, which registration or other qualification the Company
shall use its best efforts to complete; provided, however, a person purchasing
or otherwise receiving Shares pursuant to the Plan has no right to require the
Company to register the Shares under federal or state securities laws at any
time.  Any person purchasing or otherwise receiving Shares pursuant to the Plan
may be required to make such representations and furnish such information as
may, in the opinion of counsel for the Company, be appropriate to permit the
Company, in light of the existence or non-existence with respect to such Shares
of an effective registration under the Securities Act of 1933, as amended, or
any similar state statute, to issue the Shares in compliance with the provisions
of those or any comparable acts.

 

(h)                                 Named Executive Officer Grants and Minimum
Holding Period.  Option and SAR Awards made or granted to any Named Executive
Officer shall provide that any Shares received in connection with the exercise
or vesting thereof shall be subject to an additional one year holding period
before any sale or transfer of such Shares may take place, other than with
respect to any Shares withheld by the Company to satisfy a Participant’s
withholding tax obligation in connection with an Award.

 

Section 6.04.                         Additional Limitations Applicable to
Incentive Stock Options.

 

(a)                                 General.  To the extent that any Award
granted pursuant to this Plan contains an Incentive Stock Option, the
limitations and conditions of this Section shall apply to such Incentive Stock
Option and the Award Agreement relating thereto in addition to the terms and
conditions otherwise specified by the Plan and the Award Agreement.

 

(b)                                 Price.  The price of an Incentive Stock
Option shall be an amount per share not less than the Fair Market Value per
share of the Shares on the Grant Date.  In the case of Incentive

 

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Stock Options granted to an employee of the Company who is a 10% shareholder,
the option price shall be an amount per share not less than one hundred ten
percent (110%) of the Fair Market Value per share of the Shares on the Grant
Date.

 

(c)                                  Exercise Period.  Unless terminated earlier
pursuant to other terms and provisions of the Award Agreement, the term of each
Incentive Stock Option shall expire within the period prescribed in the
Agreement relating thereto, which shall not be more than five years from the
Grant Date, if the Participant is a 10% shareholder (as defined in Code
Section 422(b)(6)), and not more than ten years from the Grant Date, if the
Participant is not a 10% shareholder (as defined in Code Section 422(b)(6)).

 

(d)                                 Limitation on Grants.  No Incentive Stock
Option shall be granted under this Plan after Termination Date.

 

(e)                                  Limitation on Transferability.  No
Incentive Stock Option shall be assignable or transferable except by will or
under the laws of descent and distribution.  During the lifetime of a
Participant, an Incentive Stock Option shall be exercisable only by the
Participant and may not be transferred or assigned.

 

(f)                                   Maximum Exercise Rule.  The aggregate Fair
Market Value (determined as of the Grant Date) of the Shares with respect to
which Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year under this Plan and any other incentive
stock option plan (within the meaning of Code Section 422) of the Company or any
parent or subsidiary corporation of the Company shall not exceed $100,000.

 

(g)                                  Other Code Limits.  Incentive Stock Options
may be granted only to employees of the Company (or a Subsidiary) that satisfy
the other eligibility requirements of the Code.  There shall be imposed in any
Award Agreement relating to Incentive Stock Options such other terms and
conditions as from time to time are required for the Option be an “incentive
stock option” within the meaning of Code Section 422.

 

Section 6.05.                         Additional Provisions Related to
Restricted Stock.

 

(a)                                 The Committee may impose restrictions on
Restricted Stock based upon any one or more of the following criteria: (i) the
achievement of specific Performance Targets, (ii) vesting based on period of
service with the Company and any of its Subsidiaries, (iii) applicable federal
or state securities laws, or (iv) any other basis determined by the Committee,
in its sole discretion.

 

(b)                                 Notwithstanding any other provision of this
Section to the contrary, for purposes of qualifying grants of Restricted Stock
as Performance-Based Compensation, the Committee shall establish restrictions
based upon the achievement of pre-established Performance Targets.  The specific
Performance Targets that must be satisfied for the Period of Restriction to
lapse or terminate shall be established the Committee on or before the latest
date permissible to enable the Restricted Stock to qualify as Performance-Based
Compensation.  In granting Restricted Stock that is intended to qualify as
Performance-Based Compensation, the Committee shall follow any procedures that
it determines to be necessary, advisable, or appropriate to ensure such
qualification.

 

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Section 6.06.                         Termination of Awards.

 

(a)                                 Each Award granted under the Plan shall set
forth a termination date, which shall be not later than ten years from the Grant
Date, subject to earlier termination as set forth in this Plan or the Award
Agreement.

 

(b)                                 The Committee shall establish the effect of
a Separation from Service on the rights and benefits under each Award and in so
doing may make distinctions based upon, among other factors, the cause of
termination and type of Award.  A Participant’s Separation from Service as a
Director shall not, unless otherwise expressly provided by the Committee,
accelerate or otherwise increase the number of Shares subject to an Award. 
Following Separation from Service, an Award may be exercised only in accordance
with the applicable Award Agreement and, unless otherwise expressly provided by
the Committee, only with respect to that number of Shares for which the Award
could have been exercised by the Participant on the date of Severance from
Service.

 

(c)                                  The Committee may cancel any unexpired or
unpaid Awards at any time, if the Participant is not in compliance with all
applicable provisions of this Plan or with any Award Agreement, or if the
Participant, whether or not he is currently employed by an Employer, engages in
any of the following activities without the prior written consent of the
Employer:

 

(1)                                 directly or indirectly renders services to
or for an organization, or engages in a business, that is, in the judgment of
the Committee, in competition with the Employer; or

 

(2)                                 discloses to anyone outside of the Employer,
or uses for any purpose other than the Employer’s business, any confidential or
proprietary information or material relating to the Employer, whether acquired
by the Participant during or after employment with the Employer.

 

The Committee may, in its discretion and as a condition to the exercise of an
Award, require a Participant to acknowledge in writing that he is in compliance
with all applicable provisions of the Plan and of any Award Agreement and has
not engaged in any activities referred to in clauses (1) and (2) above.

 

(d)                                 Subject to Section 6.09, (i) upon the
dissolution, liquidation, or sale of all or substantially all of the business,
properties, and assets of the Company, (ii) upon any reorganization, merger,
consolidation, sale, or exchange of securities in which the Company does not
survive, (iii) upon any sale, reorganization, merger, consolidation, or exchange
of securities in which the Company does survive and any of the Company’s
shareholders have the opportunity to receive cash, securities of another
corporation, partnership, or limited liability company and/or other property in
exchange for their capital stock of the Company, or (iv) upon any acquisition by
any person or group (as defined in Section 13d of the Exchange Act) of
beneficial ownership of more than 50% of the then outstanding Shares (each of
the events described in clauses (i), (ii), (iii) or (iv) is referred to herein
as an “Extraordinary Event”), the Plan and each outstanding Award shall
terminate, subject to any provision that has been made by the Committee through
a plan of reorganization or otherwise for the substitution, assumption,
settlement, or other continuation of the Awards.  If Awards are to terminate
(with no substitution, assumption, settlement, or other

 

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continuation) in such circumstances, each Participant shall have the right, by
giving notice at least ten days before the effective date of the Extraordinary
Event (“Effective Date”), to exercise on or before the Effective Date, in whole
or in part, any unexpired Award issued to the Participant, to the extent that
the Award is vested and exercisable as of the Effective Date.

 

Section 6.07.                         Rights as a Shareholder. Unless otherwise
provided by the Board or the Committee, a Participant shall have rights as a
shareholder with respect to Shares covered by an Award, including voting rights
or rights to dividends, only upon the date of issuance of a certificate to him
and, if payment is required, only after payment if full has been made for such
Shares.

 

Section 6.08.                         Limits on Exercise and Transfer.

 

(a)                                 Except as expressly provided in (or pursuant
to) Subsection (b), by applicable law, or by the Award Agreement, as the same
may be amended:

 

(1)                                 all Awards are non-transferable and shall
not be subject in any manner to sale, transfer, anticipation, alienation,
assignment, pledge, encumbrance, or charge;

 

(2)                                 Awards must be exercised only by the
Participant; and

 

(3)                                 amounts payable or shares issuable pursuant
to an Award must be delivered only to (or for the account of) the Participant.

 

In addition, the Shares shall be subject to the restrictions, if any, imposed in
the applicable Award Agreement.

 

(b)                                 The exercise and transfer restrictions in
Subsection (a) shall not apply to:

 

(1)                                 transfers to the Company;

 

(2)                                 the designation of a beneficiary to receive
benefits if the Participant dies or, if the Participant has died, transfers to
or exercises by the Participant’s beneficiary, or, in the absence of a validly
designated beneficiary, transfers by will or the laws of descent and
distribution; or

 

(3)                                 if the Participant has suffered a
disability, transfers or exercises on behalf of the Participant by the
Participant’s duly authorized legal representative in accordance with the
applicable Award Agreement.

 

Section 6.09.                         Acceleration of Awards.

 

(a)                                 Notwithstanding the provisions of Article VI
or any provision to the contrary contained in a particular Award Agreement, the
Committee, in its sole discretion, may accelerate the vesting and exercisability
of all or any portion of any Award then outstanding.  The decision by the
Committee to accelerate an Award or to decline to accelerate an Award shall be
final.  In the event of the acceleration of the exercisability of Awards as the
result of a decision by the Committee pursuant to this Section, each outstanding
Award so accelerated shall be exercisable for a period from and after the date
of such acceleration and upon such other terms and conditions

 

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as the Committee may determine in its sole discretion, provided that such terms
and conditions (other than terms and conditions relating solely to the
acceleration of exercisability and the related termination of an Award) may not
materially adversely affect the rights of any Participant without the consent of
that Participant.  Any outstanding Award that has not been exercised by the
holder at the end of such period shall terminate automatically at that time.

 

(b)                                 If the vesting of an Award has been
accelerated in anticipation of an event, and the Committee or the Board later
determines that the event will not occur, the Committee may rescind the effect
of the acceleration as to any then outstanding and unexercised or otherwise
unvested Awards.

 

Section 6.10.                         Substitute Awards.  If the Company at any
time should succeed to the business of another entity through a merger,
consolidation, corporate reorganization or exchange, or through the acquisition
of stock or assets of such entity or its subsidiaries or otherwise, Awards may
be granted under the Plan to option holders of such entity or its subsidiaries,
in substitution for options to purchase shares in such entity held by them at
the time of succession.  The Committee, in its sole and absolute discretion,
shall determine the extent to which such substitute Awards shall be granted (if
at all), the person or persons to receive such substitute Awards (who need not
be all option holders of such entity), the number of Awards to be received by
each such person, the exercise price of such Award, and the other terms and
conditions of such substitute Awards.

 

ARTICLE VII
WITHHOLDING OF TAXES

 

The Company (or a Subsidiary) may deduct and withhold from the wages, salary,
bonus, and other income paid by the Company (or Subsidiary) to the Participant
the requisite tax upon the amount of taxable income, if any, recognized by the
Participant in connection with the exercise in whole or in part of any Award,
the lapse of restrictions with respect to Restricted Stock, or the sale of the
Shares issued to the Participant upon the exercise of an Award, as may be
required from time to time under any federal or state tax laws and regulations. 
This withholding of tax shall be made from the Company’s (or Subsidiary’s)
concurrent or next payment of wages, salary, bonus, or other income to the
Participant or by payment to the Company by the Participant of the required
withholding tax, as the Committee may determine; provided, however, that, in the
sole discretion of the Committee, the Participant may pay such tax by reducing
the number of Shares or amount of cash issued upon exercise of an Award (for
which purpose such Shares shall be valued at Fair Market Value at the time of
exercise).  Notwithstanding the foregoing, the Company shall not be obligated to
issue certificates representing the Shares to be acquired through the exercise
of an Award, if the Participant fails to provide the Company with adequate
assurance that the Participant will pay such amounts to the Company as required
herein.  Participants shall notify the Company in writing of any amounts
included as income in the Participants’ federal income tax returns in connection
with an Award.  Any Shares or cash withheld by the Company to satisfy a
Participant’s withholding tax obligation in connection with an Award shall not
exceed the number of Shares or amount of cash necessary to satisfy the minimum
required levels of withholding under applicable law.

 

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ARTICLE VIII
COMPLIANCE WITH LAWS

 

Section 8.01.                         General.  The Plan, the granting and
vesting of Awards under the Plan, the offer, issuance, and delivery of the
Shares, and the payment of money under the Plan or under Awards are subject to
compliance with all applicable federal and state laws, rules, and regulations
(including but not limited to state and federal securities laws and federal
margin requirements) and to such approvals by any listing, regulatory, or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith.  A person acquiring any
securities under the Plan shall, if requested by the Company, provide such
assurances and representations to the Company as the Committee may deem
necessary or desirable to assure compliance with all applicable legal and
accounting requirements.

 

Section 8.02.                         Compliance with Securities Laws.  No
Participant shall sell, pledge, or otherwise transfer Shares acquired pursuant
to an Award or any interest in such Shares except in accordance with the express
terms of the Plan and the applicable Award Agreement.  Any attempted transfer in
violation of this Section shall be void and of no effect.  Without in any way
limiting the provisions set forth above, no Participant shall make any
disposition of all or any portion of Shares acquired or to be acquired pursuant
to an Award, except in compliance with all applicable federal and state
securities laws. Notwithstanding anything else herein to the contrary, the
Company has no obligation to register the Shares or file any registration
statement under either federal or state securities laws.

 

ARTICLE IX
EFFECTIVENESS, TERMINATION AND AMENDMENTS

 

Section 9.01.                         Effective Date. The Plan shall become
effective on the date it is approved by the Company’s shareholders, which shall
be considered the date of its adoption for purposes of Treasury Regulation
§1.422-2(b)(2)(i). No Awards shall be made under the Plan prior to its effective
date. If the Company’s shareholders fail to approve the Plan within 12 months
following its adoption by the Board, the Plan will be of no further force or
effect.

 

Section 9.02.                         Duration of the Plan. The Plan shall
remain in effect until all Shares subject to it are distributed, all Awards have
expired or terminated, the Plan is terminated pursuant to Section 9.03, or the
tenth (10th) anniversary of the effective date of the Plan, whichever occurs
first (the “Termination Date”). Awards made before the Termination Date shall
continue to be outstanding in accordance with their terms and the terms of the
Plan unless otherwise provided in the applicable Agreements.

 

Section 9.03.                         Amendment and Termination of the Plan. The
Board may at any time terminate, suspend or amend the Plan. Adjustments
contemplated by Section 5.04 shall not be deemed to be amendments for purposes
of the foregoing. The Company shall submit any amendment of the Plan to its
shareholders for approval only to the extent required by applicable laws or
regulations or the rules of any securities exchange on which the Shares may then
be listed. Subject to Sections 6.06 and 6.09, no termination, suspension, or
amendment of the Plan may materially impair the rights of any Participant under
a previously granted Award without the

 

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Participant’s consent, unless such action is necessary to comply with applicable
law or stock exchange rules.

 

Section 9.04.                         Amendment of Awards. Subject to
Section 9.05, the Committee may unilaterally amend the terms of any Award
Agreement evidencing an Award previously granted, except that no such amendment
may materially impair the rights of any Participant under the applicable Award
without the Participant’s consent, unless such amendment is necessary to comply
with applicable law or stock exchange rules or any compensation recovery policy
as provided in Article X.

 

Section 9.05.                         No Option or SAR Repricing. Except as
provided in Section 5.04, no Option or Stock Appreciation Right Award granted
under the Plan may be (a) amended to decrease the exercise price thereof,
(b) cancelled in conjunction with the grant of any new Option or Stock
Appreciation Right Award with a lower exercise price, (c) cancelled in exchange
for cash, other property or the grant of any Restricted Stock Award at a time
when the per share exercise price of the Option or Stock Appreciation Right
Award is greater than the current Fair Market Value of a Share, or (d) otherwise
subject to any action that would be treated under accounting rules as a
“repricing” of such Option or Stock Appreciation Right Award, unless such action
is first approved by the Company’s shareholders.

 

ARTICLE X
CLAWBACK OF AWARDS

 

Section 10.01.                  Forfeiture 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 Participant who is one
of the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, to the extent required by such Section 304, shall
reimburse the Company for (a) 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 Securities and Exchange Commission, as the case may
be, of the financial document embodying such financial reporting requirement,
and (b) any profits received from the sale of securities of the Company during
that 12-month period.

 

Section 10.02.                  Repayment as a Result of Improper Conduct. If an
Award has been paid to an executive officer of the Company or to his or her
spouse or beneficiary, and the Committee later determines either (a) that
financial results used to determine the amount of that Award must be materially
restated and that the executive officer engaged in fraud or intentional
misconduct related thereto, or (b) that recovery or repayment of the Award is
required by applicable law, the Company will seek repayment or recovery, as
appropriate, of the Award to the extent overpaid notwithstanding any contrary
provision of the Plan. In addition, the Committee may provide that any Award,
including any Shares subject to or issued under an Award, is subject to any
other recovery, recoupment, clawback and/or other forfeiture policy maintained
by the Company from time to time.

 

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ARTICLE XI
INDEMNIFICATION

 

In addition to such other rights of indemnification as they may have as members
of the Board, the members of the Committee shall be indemnified by the Company
to the fullest extent permitted by law against reasonable expenses, including
attorneys’ fees, actually and necessarily incurred in connection with the
defense of any action, suit, or proceeding, or in connection with any appeal
thereof, to which they or any of them may be a party by reason of any act or
failure to act under or in connection with the Plan or any Award, and against
all amounts paid by them in satisfaction of a judgment in any such action, suit,
or proceeding except in relation to matters as to which it shall be adjudged in
such action, suit, or proceeding that such Committee member is not entitled to
indemnification under applicable law; provided, however, within 60 days after
institution of any such action, suit, or proceeding, such Committee member shall
in writing offer the Company the opportunity, at the Company’s expense, to
handle and defend the same, and such Committee member shall cooperate with and
assist the Company in the defense of any such action, suit, or proceeding.  The
Company shall not be obligated to indemnify any Committee member with regard to
the settlement of any action, suit, or proceeding to which the Company did not
give its prior written consent.

 

ARTICLE XII
NOT AN EMPLOYMENT OR CONSULTING AGREEMENT

 

Nothing contained in the Plan or in any Award Agreement shall confer, intend to
confer, or imply any right of employment or right to continued employment by, or
rights to a continued relationship with, the Company (or any affiliate) in favor
of any Participant or limit the ability of the Company (or any affiliate) to
terminate, with or without cause, in its sole and absolute discretion, the
employment of any Participant, subject to the terms of any written employment to
which a Participant is a party.  In addition, nothing contained in the Plan or
in any Award Agreement shall preclude any lawful action by the Company or the
Board.  Status as an eligible person under the Plan shall not be construed as a
commitment that any Award will be granted to the eligible person.

 

ARTICLE XIII
MISCELLANEOUS

 

Section 13.01.                  Non-Exclusivity of Plan.  Nothing in the Plan
shall limit or be deemed to limit the authority of the Board or the Committee to
grant awards or authorize any other compensation, with or without reference to
the Shares, under any other plan or independent authority.

 

Section 13.02.                  No Restriction on Corporate Powers.  The
existence of the Plan and the Awards granted hereunder shall not affect or
restrict in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company’s capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting the Company’s capital stock or the
rights thereof, the dissolution or

 

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liquidation of the Company or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding.

 

Section 13.03.                  No Fiduciary Duties.  Neither the provisions of
this Plan (or of any related documents), nor the creation or adoption of this
Plan, nor any action taken pursuant to the provisions of this Plan shall create,
or be construed to create, a trust of any kind or a fiduciary relationship
between the Company and any Participant or other person.

 

* * * * *

 

Approved and adopted by the shareholders of German American Bancorp, Inc. on
May 16, 2019.

 

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