EXHIBIT 10.12

 

CAMDEN NATIONAL CORPORATION

2003 STOCK OPTION AND INCENTIVE PLAN

 

SECTION 1: GENERAL PURPOSE OF THE PLAN; DEFINITIONS

 

The name of the plan is the Camden National Corporation 2003 Stock Option 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.

 

The following terms shall be defined as set forth below:

 

“Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

 

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

 

“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, Deferred Stock Awards, Restricted Stock
Awards, Unrestricted Stock Awards, Performance Share Awards and Dividend
Equivalent Rights.

 

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

 

“Change of Control” is defined in Section 17.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
Code, and related rules, regulations and interpretations.

 

“Committee” means the Committee of the Board referred to in Section 2.

 

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

 

“Deferred Stock Award” means Awards granted pursuant to Section 8.

 

“Dividend Equivalent Right” means Awards granted pursuant to Section 12.

 

“Effective Date” means the date on which the Plan is approved by stockholders as
set forth in Section 19.

 

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

 

“Fair Market Value” of the Stock on any given date means the fair market value
of the Stock determined in good faith by the Administrator; provided, however,
that if the Stock is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System (“NASDAQ”), NASDAQ National System
or a national securities exchange, the determination shall be made by reference
to market quotations. If there are no market quotations for such date, the
determination shall be made by reference to the last date preceding such date
for which there are market quotations.

 

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

 

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“Independent Director” means a member of the Board who is not also an employee
of the Company or any Subsidiary.

 

“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 10.

 

“Performance Cycle” means one or more periods of time, which may be of varying
and overlapping durations, as the Administrator 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 or Deferred Stock Award.

 

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

 

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

 

“Stock Appreciation Right” 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 2: ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES
AND DETERMINE AWARDS

 

(a) Committee. The Plan shall be administered by either the Board or a committee
of not less than two Independent Directors (in either case, the
“Administrator”).

 

(b) Powers of Administrator. The Administrator 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, Deferred Stock Awards, Unrestricted Stock 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

 

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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 Administrator) or dividends or deemed dividends on such
deferrals; and

 

(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 Administrator shall be binding on all
persons, including the Company and Plan grantees.

 

(c) Delegation of Authority to Grant Awards. The Administrator, in its
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Administrator’s authority and duties with respect to the granting of
Awards at Fair Market Value, 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
Administrator shall include a limitation as to the amount of Awards 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 Administrator may revoke or amend the terms of a
delegation at any time but such action shall not invalidate any prior actions of
the Administrator’s delegate or delegates that were consistent with the terms of
the Plan.

 

(d) Indemnification. Neither the Board nor the Committee, nor any member of
either or any delegatee thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with the Plan, and the members of the Board and the Committee (and any delegatee
thereof) shall be entitled in all cases to indemnification and reimbursement by
the Company in respect of any claim, loss, damage or expense (including, without
limitation, reasonable attorneys’ fees) arising or resulting therefrom to the
fullest extent permitted by law and/or under any directors’ and officers’
liability insurance coverage which may be in effect from time to time.

 

SECTION 3: STOCK 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 200,000 shares shall be
issued in the form of Unrestricted Stock Awards, Restricted Stock Awards, or
Performance Share Awards except to the extent such Awards are granted in lieu of
cash compensation or fees. For purposes of this limitation, the shares of Stock
underlying any Awards which are forfeited, canceled, 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. Subject to such overall limitation, shares of Stock may be
issued up to such maximum number 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 Administrator 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

 

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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 Administrator shall be final, binding and conclusive. No fractional
shares of Stock shall be issued under the Plan resulting from any such
adjustment, but the Administrator in its discretion may make a cash payment in
lieu of fractional shares.

 

The Administrator 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 Administrator 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.

 

(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 nonforfeitable as of
the effective time of the Sale Event, except as the Administrator 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 Administrator, 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 Administrator 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.

 

(d) Substitute Awards. The Administrator may grant Awards under the Plan in
substitution for stock and stock based awards held by employees, 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 Administrator may direct that the substitute awards
be granted on such terms and conditions as the Administrator considers
appropriate in the circumstances. Any substitute Awards granted under the Plan
shall not count against the share limitation set forth

 

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in Section 3(a).

 

SECTION 4: ELIGIBILITY

 

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 Administrator in its sole discretion.

 

SECTION 5: STOCK OPTIONS

 

Any Stock Option granted under the Plan shall be in such form as the
Administrator 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 28,
2013.

 

(a) Stock Options Granted to Employees, Independent Directors and Key Persons.
The Administrator 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
Administrator shall deem desirable. If the Administrator 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 Administrator 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
Administrator at the time of grant but shall not be less than 100 percent of the
Fair Market Value on the date of grant in the case of Incentive Stock Options,
or 85 percent of the Fair Market Value on the date of grant, in the case of
Non-Qualified Stock Options (other than options granted in lieu of cash
compensation). 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
Administrator, but no Stock Option shall be exercisable more than 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 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 Administrator at or after the grant date. The Administrator
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 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
Administrator;

 

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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 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; or

 

(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 Administrator shall
prescribe as a condition of such payment procedure.

 

Payment instruments will be received subject to collection. The delivery of
certificates representing 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.

 

(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) Reload Options. At the discretion of the Administrator, Options granted
under the Plan may include a “reload” feature pursuant to which an optionee
exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with such other terms as
the Administrator may provide) to purchase that number of shares of Stock equal
to the sum of (i) the number delivered to exercise the original Option and (ii)
the number withheld to satisfy tax liabilities, with an Option term equal to the
remainder of the original Option term unless the Administrator otherwise
determines in the Award agreement for the original Option grant.

 

(c) 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 Administrator,
in its sole discretion, may provide in the Award agreement regarding a given
Option that the optionee may transfer his Non-Qualified Stock Options to members
of his 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 6. STOCK 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 85 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 Administrator
having the right to determine the form of payment.

 

(b) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation Rights
may be granted by the Administrator in tandem with, or independently of, any
Stock Option granted pursuant to Section 5 of the Plan. In

 

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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 Administrator, 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.

 

SECTION 7. RESTRICTED 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
Administrator, shares of Stock subject to such restrictions and conditions as
the Administrator may determine at the time of grant (“Restricted Stock”).
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 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 Administrator, and such terms and
conditions may differ among individual Awards and grantees.

 

(b) Rights as a Stockholder. 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. Unless the Administrator 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(d) below, and the grantee shall be required, as a condition of the
grant, to deliver to the Company a stock power endorsed in blank.

 

(c) 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. If a grantee’s employment (or
other service relationship) with the Company and its Subsidiaries terminates for
any reason, the Company shall have the right to repurchase Restricted Stock that
has not vested at the time of termination at its original purchase price, from
the grantee or the grantee’s legal representative.

 

(d) Vesting of Restricted Stock. The Administrator 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 right of repurchase or forfeiture 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.” Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 15 below, in
writing after the Award agreement is issued, a grantee’s rights in any shares of
Restricted Stock that have not vested shall automatically terminate upon the
grantee’s termination of employment (or other service relationship) with the
Company and its Subsidiaries and such shares shall be subject to the Company’s
right of repurchase as provided in Section 7(c) above.

 

(e) 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.

 

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SECTION 8. DEFERRED STOCK AWARDS

 

(a) Nature of Deferred Stock Awards. A Deferred Stock Award is an Award of
phantom stock units to a grantee, subject to restrictions and conditions as the
Administrator 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 Deferred Stock
Award is contingent on the grantee executing the Deferred Stock Award agreement.
The terms and conditions of each such agreement shall be determined by the
Administrator, and such terms and conditions may differ among individual Awards
and grantees. At the end of the deferral period, the Deferred Stock Award, to
the extent vested, shall be paid to the grantee in the form of shares of Stock.

 

(b) Election to Receive Deferred Stock Awards in Lieu of Compensation. The
Administrator 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 Deferred Stock Award. Any such election shall be
made in writing and shall be delivered to the Company no later than the date
specified by the Administrator and in accordance with rules and procedures
established by the Administrator. The Administrator 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
Administrator 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 Deferred Stock Award, subject to such terms and conditions as the
Administrator may determine.

 

(d) Restrictions. A Deferred Stock Award 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 Administrator either
in the Award agreement or, subject to Section 15 below, in writing after the
Award agreement is issued, a grantee’s right in all Deferred Stock Awards that
have not vested shall automatically terminate upon the grantee’s termination of
employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.

 

SECTION 9. UNRESTRICTED STOCK AWARDS

 

Grant or Sale of Unrestricted Stock. The Administrator may, in its sole
discretion, grant (or sell at such purchase price determined by the
Administrator) 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.

 

SECTION 10. PERFORMANCE SHARE AWARDS

 

(a) Nature of Performance Share Awards. A Performance Share Award is an Award
entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Administrator may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. The Administrator 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 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
Administrator).

 

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(c) Termination. Except as may otherwise be provided by the Administrator either
in the Award agreement or, subject to Section 15 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 Administrator may in its sole discretion accelerate, waive or, subject to
Section 15, amend any or all of the goals, restrictions or conditions applicable
to a Performance Share Award.

 

SECTION 11. PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

 

Notwithstanding anything to the contrary contained herein, if any Restricted
Stock Award, Deferred Stock 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 any
or all of the following: (i) the Company’s return on equity, assets, capital or
investment: (ii) pre-tax or after-tax profit levels of the Company or any
Subsidiary, a division, an operating unit or a business segment of the Company,
or any combination of the foregoing; (iii) cash flow, funds from operations or
similar measure; (iv) total shareholder return; (v) changes in the market price
of the Stock; (vi) sales or market share; or (vii) earnings per share.

 

(b) 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.

 

(c) 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.

 

(d) 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).

 

SECTION 12: DIVIDEND 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

 

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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.

 

(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 Administrator either
in the Award agreement or, subject to Section 15 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.

 

SECTION 13. TAX WITHHOLDING

 

(a) Payment by Grantee. 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
Administrator regarding payment of, any Federal, state, or local taxes of any
kind required by law to be withheld with respect to such income. 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 stock certificates to any grantee is subject to
and conditioned on tax obligations being satisfied by the grantee.

 

(b) Payment in Stock. Subject to approval by the Administrator, a grantee may
elect to have the minimum required tax withholding obligation satisfied, in
whole or in part, by (i) 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, or (ii) 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.

 

SECTION 14. TRANSFER, LEAVE OF ABSENCE, ETC.

 

For purposes of the Plan, the following events shall not be deemed a termination
of employment:

 

(a) a transfer to the employment of the Company from a Subsidiary or from the
Company to a Subsidiary, or from one Subsidiary to another; or

 

(b) an approved leave of absence for military service or for sickness, or for
any other purpose approved by the Company, if the employee’s right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.

 

SECTION 15. AMENDMENTS AND TERMINATION

 

The Board may, at any time, amend or discontinue the Plan and the Administrator
may, at any time, amend or cancel any outstanding Award for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Award without the holder’s
consent. Except as provided in Section 3(b) or 3(c), in no event may the
Administrator exercise its discretion to reduce the exercise price of
outstanding Stock Options or effect repricing through cancellation and
re-grants. If and to the extent determined by the Administrator to be required
by the relevant securities exchange or by the Code to ensure that Incentive
Stock Options granted under the Plan are qualified under Section 422 of the Code
or to ensure that compensation earned under Awards qualifies as
performance-based compensation under Section 162(m) of the

 

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Code, if and to the extent intended to so qualify, Plan amendments shall be
subject to approval by the Company stockholders entitled to vote at a meeting of
stockholders. Nothing in this Section 15 shall limit the Administrator’s
authority to take any action permitted pursuant to Section 3(c).

 

SECTION 16. STATUS 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 those of a general creditor of the
Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Administrator
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 17. CHANGE OF CONTROL PROVISIONS

 

Upon the occurrence of a Change of Control as defined in this Section 17:

 

(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, Deferred Stock
Award 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.

 

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

 

(i) 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 25 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

 

(ii) 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

 

(iii) 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

 

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(iv) 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 25 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 25 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).

 

SECTION 18. GENERAL PROVISIONS

 

(a) No Distribution; Compliance with Legal Requirements. The Administrator 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 Administrator may require the placing of such stop-orders
and restrictive legends on certificates for Stock and Awards as it deems
appropriate.

 

(b) 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 mailed such certificates in the United
States mail, addressed to the grantee, at the grantee’s last known address on
file with the Company.

 

(c) Other Compensation Arrangements; No Employment Rights. Nothing contained in
this Plan shall prevent the Board from adopting other or additional compensation
arrangements, including trusts, and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of this Plan and
the grant of Awards do not confer upon any employee any right to continued
employment with the Company or any Subsidiary.

 

(d) 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.

 

(e) 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 on a form provided for that purpose by the
Administrator and shall not be effective until received by the Administrator. If
no beneficiary has been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall be the
grantee’s estate.

 

SECTION 19. EFFECTIVE 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 20. GOVERNING LAW

 

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.

 

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