Exhibit 10.7

PRIME MERIDIAN HOLDING COMPANY

2015 STOCK INCENTIVE COMPENSATION PLAN

(Amended by the Compensation Committee pursuant to Section 15(a), as of
October 12, 2017, to correct certain immaterial and non-substantive,
typographical and formatting matters).

1. Purpose. The purpose of the 2015 Stock Incentive Compensation Plan (“Plan”)
of Prime Meridian Holding Company (“Prime Meridian” or “Company”) is to provide
a means through which the Company and its subsidiary, Prime Meridian Bank
(“Bank”), may attract able persons to enter and remain in the employ or other
service of the Company and the Bank, and to provide a means whereby those
persons upon whom the responsibilities of the successful administration and
management of Prime Meridian and rest, and whose present and potential
contributions to the welfare of the Company are of importance, can acquire and
maintain stock ownership, thereby strengthening their commitment to the welfare
of the Company and promoting an identity of interest between Prime Meridian’s
shareholders and the Plan participants. Furthermore, the Plan is to be used to
provide Plan participants with additional incentive and reward opportunities
designed to enhance the profitable growth of the Company. The Plan provides for
the granting of the following forms of stock compensation: Incentive Stock
Options; Non-qualified Stock Options; Stock Appreciation Rights; Restricted
Stock Awards; Phantom Stock Unit Awards; and Performance Share Units, or any
combination of the foregoing.

2. Definitions. The following definitions shall be applicable throughout the
Plan.

(a) “Appreciation Date” shall mean the date designated by a Holder of Stock
Appreciation Rights for measurement of the appreciation in the value of rights
awarded to him, which date shall be the date notice of such designation is
received by the Committee, or its designee.

(b) “Award” shall mean, individually or collectively, any Incentive Stock
Option, Non-qualified Stock Option, Stock Appreciation Right, Restricted Stock
Award, Phantom Stock Unit Award, or Performance Share Unit Award.

(c) “Board” shall mean the Board of Directors of Prime Meridian.

(d) “Cause” shall mean the Company or the Bank having cause to terminate a
Participant’s employment under any existing employment agreement between the
Participant and the Company or the Bank or, in the absence of such an employment
agreement, upon: (i) the determination by the Committee that the Participant has
failed to perform his duties to Prime Meridian or the Bank (other than as a
result of his incapacity due to physical or mental illness or injury), which
failure amounts to an intentional and extended neglect of his duties to such
party; (ii) the Committee’s determination that the Participant has engaged in or
is about to engage in

conduct materially injurious to Prime Meridian or the Bank; or (iii) the
Participant having been convicted of a felony.

 

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(e) “Change in Control” shall, unless the Committee otherwise directs by
resolution adopted prior thereto, be deemed to occur if: (i) any “person” (as
that term is used in Sections 13 and 14(d)(2) of the Securities and Exchange Act
of 1934 [“Exchange Act”]) is or becomes the beneficial owner (as that term is
used in Section 13(d) of the Exchange Act), directly or indirectly, of fifty
percent (50%) or more of the voting stock; or (ii) during any 12-month period,
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof, unless the election or the
nomination for election by Prime Meridian’s shareholders of each new director
was approved by a vote of at least three-quarters of the directors then still in
office who were directors at the beginning of the period. Any merger,
consolidation or corporate reorganization in which the owners of Prime
Meridian’s capital stock entitled to vote in the election of directors (“Voting
Stock”) prior to said combination, own fifty percent (50%) or more of the
resulting entity’s voting stock shall not, by itself, be considered a Change in
Control.

(f) “Code” shall mean the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations under such section.

(g) “Committee” shall mean the Compensation Committee of the Board; which shall
be comprised of three or more Directors, all but one of whom must meet the
independence requirements under the NASDAQ Marketplace Rules (i.e. non-employee
outside directors who are free from any relationship that would interfere with
the exercise of his or her independent judgment).

(h) “Common Stock” shall mean the Common Stock of the Company, par value $0.01
per share.

(i) “Company” shall mean Prime Meridian Holding Company, a Florida corporation.

(j) “Date of Grant” shall mean the date on which the granting of an Award is
authorized or such other date as may be specified in such authorization.

(k) “Director Fees” shall mean annual retainers, monthly fees or committee
meeting fees for serving as directors of Prime Meridian or the Bank.

(l) “Disability” shall mean the complete and permanent inability by reason of
illness or accident to perform the duties of the occupation at which a
Participant was employed when such disability commenced or, if the Participant
was retired when such disability commenced, the inability to engage in any
substantial gainful activity, as determined by the Committee based upon medical
evidence acceptable to it.

(m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

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(n) “Fair Market Value” shall mean the average of: (i) the high and low prices
of the Common Stock on the principal national securities exchange on which the
Common Stock is traded for the ten (10) trading days immediately preceding the
date of determination, if the Common Stock is then traded on a national
securities exchange; or (ii) the last reported sale price of the Common Stock on
the NASDAQ National Market for the ten (10) trading days immediately preceding
the date of determination, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price last quoted by an
established quotation service for over-the-counter securities for the ten
(10) trading days immediately preceding the date of determination, if the Common
Stock is not reported on the NASDAQ National Market. However, if the Common
Stock is not publicly-traded at the time an Award is granted under the Plan,
“Fair Market Value” shall be deemed to be the fair value of the Common Stock as
determined by the Committee after taking into consideration all factors which it
deems appropriate, including, without limitation, recent sale and offer prices
of the Common Stock in private transactions negotiated at arm’s length.

(o) “Holder” shall mean a Participant who has been granted an Award under the
Plan.

(p) “Incentive Stock Option” shall mean an Option granted by the Committee to a
Participant under the Plan which is designated by the Committee as an Incentive
Stock Option pursuant to Section 422 of the Code.

(q) “Measurement Period” shall mean a period of time within which performance is
measured for the purpose of determining whether an award of Performance Share
Units has been earned.

(r) “Non-qualified Stock Option” shall mean an Option granted by the Committee
to a Participant under the Plan which is not designated by the Committee as an
Incentive Stock Option, as contemplated by Section 422 of the Code.

(s) “Normal Termination” shall mean termination: (i) with respect to Prime
Meridian or the Bank, at retirement (excluding early retirement) pursuant to the
Company retirement plan then in effect; (ii) on account of Disability; (iii) a
resignation by the Participant with the written approval of the Committee; or
(iv) by Prime Meridian or the Bank without cause.

(t) “Option” shall mean an Award granted under Section 6 of the Plan.

(u) “Option Period” shall mean the period described in Section 6(c).

(v) “Participant” shall mean any person eligible to receive Awards under the
Plan who is regularly employed by Prime Meridian or the Bank or serving as a
director of Prime Meridian or the Bank.

(w) “Performance Goals” shall mean the performance objectives of Prime Meridian
and the Bank during a Measurement Period or Restricted Period established for
the purpose of determining whether, and to what extent, Awards will be earned
for a Measurement Period or Restricted Period.

 

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(x) “Performance Share Unit” shall mean a hypothetical investment equivalent,
equal to one share of Common Stock granted in connection with an Award made
under Section 8 of the Plan.

(y) “Phantom Stock Unit” shall mean a hypothetical investment equivalent, equal
to one share of Common Stock granted in connection with an Award made under
Section 9 of the Plan, or credited with respect to Awards of Performance Share
Units which have been deferred under Section 8.

(z) “Plan” shall mean the 2015 Stock Incentive Compensation Plan of Prime
Meridian Holding Company.

(aa) “Prime Meridian” shall mean Prime Meridian Holding Company.

(bb) “Restricted Period” shall mean, with respect to any share of Restricted
Stock, the period of time determined by the Committee during which such share of
Restricted Stock is subject to the restrictions set forth in Section 9 of the
Plan.

(cc) “Restricted Stock” shall mean shares of Common Stock issued or transferred
to a Participant subject to the restrictions set forth in Section 9 and any new,
additional, or different securities a Participant may become entitled to receive
as a result of adjustments made pursuant to Section 11.

(dd) “Restricted Stock Award” shall mean an Award granted under Section 9 of the
Plan.

(ee) “Securities Act” shall mean the Securities Act of 1933, as amended.

(ff) “Stock Appreciation Right” or “SAR” shall mean an Award granted under
Section 7 of the Plan.

(gg) “Valuation Date” shall mean the last day of a Measurement Period or the
date of death of a Participant, as applicable.

3. Effective Date, Duration, Shareholder Approval, and Termination of 2007 Stock
Option Plan. The Board of Directors of Prime Meridian at a meeting held on
April 9, 2015, recommended the Plan for the approval by the Company’s
shareholders at its 2015 Annual Meeting of Shareholders to be held on May 20,
2015. The Plan will be effective following the Company’s receipt of shareholder
approval and subsequent final adoption by the Board. The Plan shall continue in
effect for a term of ten (10) years thereafter unless sooner terminated under
Section 15 of the Plan. Upon the effective date of the Plan, no further awards
shall be granted under the Company’s 2007 Stock Option Plan. Any outstanding
stock option granted under the 2007 Stock Option Plan will governed under the
terms of the 2007 Stock Options Plan, but no new stock option grants will be
awarded under the 2007 Stock Option Plan.

 

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4. Administration. The Committee shall administer the Plan. A majority of the
members of the Committee shall constitute a quorum. The acts of a majority of
the members present at any meeting at which a quorum is present or acts approved
in writing by unanimous consent of the Committee shall be deemed the acts of the
Committee. Subject to the provisions of the Plan, the Committee shall have
exclusive power to:

(a) Select the persons to be Participants in the Plan;

(b) Determine the nature and extent of the Awards to be made to each
Participant;

(c) Determine the time or times when Awards will be made;

(d) Determine the duration of each Measurement Period;

(e) Determine the conditions to which the payment of Awards may be subject;

(f) Establish the Performance Goals for each Measurement Period;

(g) Prescribe the form or forms of agreement evidencing Awards; and

(h) Cause records to be established in which there shall be entered, from time
to time as Awards are made to Participants, the date of each Award, the number
of Incentive Stock Options, Non-qualified Stock Options, SARs, Phantom Stock
Units, Performance Share Units and Shares of Restricted Stock awarded by the
Committee to each Participant, the expiration date, the Measurement Period, and
the duration of any applicable Restricted Period.

The Committee shall also have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee’s interpretation of the Plan
or any Awards granted pursuant thereto and all decisions and determinations by
the Committee with respect to the Plan shall be final, binding, and conclusive
on all parties unless otherwise determined by the Committee.

5. Grant of Awards. The Committee may, from time to time, grant awards of
Options, Stock Appreciation Rights, Restricted Stock, Phantom Stock Units and/or
Performance Share Units to one or more Participants; provided, however, that:

(a) Subject to Section 11 of the Plan, the aggregate number of shares of Common
Stock made subject to Awards under this Plan shall be 500,000 shares of Common
Stock, provided however, that the amount awarded may not exceed fifteen percent
(15%) of Prime Meridian’s authorized and outstanding shares, as the authorized
and outstanding shares may increase in the future;

 

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(b) Such shares shall be deemed to have been used in payment of Awards whether
they are actually delivered or the Fair Market Value equivalent of such shares
is paid in cash. In the event any Option, SAR not attached to an Option,
Restricted Stock, Phantom Stock Unit or Performance Share Unit shall be
surrendered, terminate, expire, or be forfeited, the number of shares of Common
Stock no longer subject thereto shall thereupon be released and shall thereafter
be available for new Awards under the Plan to the fullest extent permitted by
the Exchange Act (if applicable at the time); and

(c) Common Stock delivered by the Company in settlement of Awards under the Plan
may be authorized and unissued Common Stock or Common Stock held in the treasury
of the Company or may be purchased on the open market or by private purchase at
prices no higher than the Fair Market Value at the time of purchase.

(d) Participants shall be limited to directors, officers, and employees of Prime
Meridian and the Bank who have received written notification from the Committee
that they have been selected to participate in the Plan.

6. Stock Options. One or more Incentive Stock Options or Non-qualified Stock
Options can be granted to any Participant; provided, however, that Incentive
Stock Options may be granted only to Participants who are officers or employees
of the Company or the Bank. Each Option so granted shall be subject to the
following conditions.

(a) Option price. In the case of an Incentive Stock Option or Non-qualified
Stock Option, the option price (“Option Price”) per share of Common Stock shall
be set by the Committee at the time of grant, but shall not be less than the
Fair Market Value of a share of Common Stock at the Date of Grant.

(b) Manner of exercise and form of payment. Options which have become
exercisable may be exercised by delivery of written notice of exercise to the
Committee accompanied by payment of the Option Price. The Option Price shall be
payable in cash and/or shares of Common Stock valued at the Fair Market Value at
the time the Option is exercised.

(c) Other terms and conditions. The Option shall become exercisable in such
manner and within such period or periods (“Option Period”), not to exceed ten
(10) years from its Date of Grant, and as otherwise set forth in the individual
Stock Option Agreement to be entered into in connection therewith.

(d) Expiration. Each Option shall lapse in the following situations:

(i) Ten (10) years after the Date of Grant;

(ii) Three (3) months following a Normal Termination or the death of an employee
or one (1) year following a director’s resignation from the Board or death;

 

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(iii) Any earlier time set forth in the Stock Option Agreement;

(iv) If the Holder terminates his relationship as an officer, employee, or
director with Prime Meridian or the Bank otherwise than by Normal Termination,
director resignation, or death or the Holder is terminated for Cause, the Option
shall lapse at the time of termination.

(e) Stock Option Agreement. Each Option granted under the Plan shall be
evidenced by a “Stock Option Agreement” between Prime Meridian and the Holder of
the Option containing such provisions as may be determined by the Committee, but
shall be subject to the following terms and conditions.

(i) Each Option or portion thereof that is exercisable shall be exercisable for
the full amount or for any part thereof, except as otherwise determined by the
terms of the individual Stock Option Agreement.

(ii) Each share of Common Stock purchased through the exercise of an Option
shall be paid for in full at the time of the exercise. Each Option shall cease
to be exercisable, as to any share of Common Stock, when the Holder purchases
the share or exercises a related SAR, or when the Option lapses.

(iii) Options shall not be transferable by the Holder except by will or the laws
of descent and distribution and shall be exercisable during the Holder’s
lifetime only by him or her.

(iv) Each Option shall become exercisable by the Holder in accordance with the
vesting schedule (if any) established by the Committee for the Award.

(v) Each Stock Option Agreement may contain an agreement that, upon demand by
the Committee for such a representation, the Holder shall deliver to the
Committee at the time of any exercise of an Option a written representation that
the shares to be acquired upon such exercise are to be acquired for investment
and not for resale or with a view to the distribution thereof. Upon such demand,
delivery of such representation prior to the delivery of any shares issued upon
exercise of an Option shall be a condition precedent to the right of the Holder
or such other person to purchase any shares. In the event certificates for
Common Stock are delivered under the Plan with respect to which such investment
representation has been obtained, the Committee may cause a legend or legends to
be placed on such certificates to make appropriate reference to such
representation and to restrict transfer in the absence of compliance with
applicable federal or state securities laws.

(f) Grants to 10% Holders of Company Voting Stock. Notwithstanding Section 6(a)
herein, if an Incentive Stock Option is granted to a Holder who owns Company
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or of Prime Meridian and the Bank, the period
specified in the Stock Option

 

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Agreement for which the Option thereunder is granted and at the end of which
such Option shall expire shall not exceed five (5) years from the Date of Grant
of such Option and the Option Price shall be at least one hundred ten percent
(110%) of the Fair Market Value (on the Date of Grant) of the Common Stock
subject to the Option.

(g) Limitation. To the extent the aggregate Fair Market Value (as determined as
of the Date of Grant) of Stock for which Incentive Stock Options are exercisable
for the first time by any Participant during any calendar year (under all plans
of the Company and the Bank) exceeds One Hundred Thousand Dollars ($100,000),
such excess Incentive Stock Options shall be treated as Non-qualified Stock
Options.

(h) Voluntary Surrender. The Committee may permit the voluntary surrender of all
or any portion of any Non-qualified Stock Option and its corresponding SAR, if
any, granted under the Plan to be conditioned upon the granting to the Holder of
a new Option for the same or a different number of shares as the Option
surrendered or require such voluntary surrender as a condition precedent to a
grant of a new Option to such Participant. Such new Option shall be exercisable
at the Option Price, during the exercise period, and in accordance with any
other terms or conditions specified by the Committee at the time the new Option
is granted, all determined in accordance with the provisions of the Plan without
regard to the Option Price, exercise period, or any other terms and conditions
of the Non-qualified Stock Option surrendered.

(i) Order of Exercise. Options granted under the Plan may be exercised in any
order, regardless of the Date of Grant or the existence of any other outstanding
Option.

(j) Notice of Disposition. Participants shall give prompt notice to Prime
Meridian of any disposition of Common Stock acquired upon exercise of an
Incentive Stock Option if such disposition occurs within either two (2) years
after the Date of Grant of such Option and/or one (1) year after the receipt of
such Common Stock by the Holder.

7. Stock Appreciation Rights. Any Option granted under the Plan may include a
SAR, either at the time of grant or by amendment except that in the case of an
Incentive Stock Option, such SAR shall be granted only at the time of grant of
the related Option. The Committee may also award to Participants SARs
independent of any Option. A SAR shall be subject to such terms and conditions
not inconsistent with the Plan as the Committee shall impose, including, but not
limited to, the following:

(a) Vesting. A SAR granted in connection with an Option shall become
exercisable, be transferable and shall lapse according to the same vesting
schedule, transferability and lapse rules that are established by the Committee
for the Option. A SAR granted independent of an Option shall become exercisable,
be transferable and shall lapse in accordance with a vesting schedule,
transferability, and lapse rules established by the Committee.

(b) Failure to Exercise. If on the last day of the Option Period (or in the case
of a SAR independent of an Option, the SAR period established by the Committee),
the Fair Market value

 

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of the Stock exceeds the Option Price, the Holder has not exercised the Option
or SAR, and neither the Option nor the SAR has lapsed, such SAR shall be deemed
to have been exercised by the Holder on such last day and Prime Meridian shall
make the appropriate payment therefor.

(c) Payment. The amount of additional compensation which may be received
pursuant to the award of one SAR is the excess, if any, of the Fair Market Value
of one share of Stock on the Appreciation Date over the Option Price, as defined
in Section 7(a) herein, in the case of a SAR granted in connection with an
Option, or the Fair Market Value of one (1) share of Stock on the Date of Grant,
in the case of a SAR granted independent of an Option. The Company shall pay
such excess in cash, in shares of Stock valued at Fair Market Value, or any
combination thereof, as determined by the Committee. Fractional shares shall be
settled in cash.

(d) Designation of Appreciation Date. A Participant may designate an
Appreciation Date at such time or times as may be determined by the Committee at
the time of grant by filing an irrevocable written notice with the Committee or
its designee, specifying the number of SARs to which the Appreciation Date
relates, and the date on which such SARs were awarded. Such time or times
determined by the Committee may take into account any applicable “window
periods” required by Rule 16b-3 under the Exchange Act.

(e) Expiration. Except as otherwise provided in the case of SARs granted in
connection with Options, the SARs shall expire on a date designated by the
Committee which is not later than ten (10) years after the date on which the SAR
was awarded.

8. Performance Shares.

(a) Award Grants. The Committee is authorized to establish Performance Share
programs to be effective over designated Measurement Periods of not less than
one (1) year nor more than three (3) years. At the beginning of each Measurement
Period, the Committee will establish in writing Performance Goals based upon
financial or other objectives for the Company for such Measurement Period and a
schedule relating the accomplishment of the Performance Goals to the Awards to
be earned by Participants. Performance Goals may include absolute or relative
growth in earnings per share or rate of return on shareholders’ equity or other
measurement of corporate performance and may be determined on an individual
basis or by categories of Participants. The Committee may adjust Performance
Goals or performance measurement standards as it deems equitable in recognition
of extraordinary or non-recurring events experienced during a Measurement Period
by the Company or the Bank. The Committee shall determine the number of
Performance Share Units to be awarded, if any, to each Participant who is
selected to receive an Award. The Committee may add new Participants to a
Performance Share program after its commencement by making pro rata grants.

(b) Determination of Award. At the completion of a Performance Share program, or
at other times as specified by the Committee, the Committee shall calculate the
amount earned with respect to each Participant’s award by multiplying the Fair
Market Value on the Valuation Date by the number of Performance Share Units
granted to the Participant and multiplying the amount so determined by a
performance factor representing the degree of attainment of the Performance
Goals.

 

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(c) Partial Awards. A Participant for less than a full Measurement Period,
whether by reason of commencement or termination of employment or otherwise,
shall receive such portion of an Award, if any, for that Measurement Period as
the Committee shall determine.

(d) Payment of Non-deferred Awards. The amount earned with respect to an Award
shall be fully payable in shares of Common Stock based on the Fair Market Value
on the Valuation Date; provided, however, that, at its discretion, the Committee
may vary such form of payment as to any Participant upon the specific request of
such Participant. Except as provided in subparagraph 8(e), payments of Awards
shall be made as soon as practicable after the completion of a Measurement
Period.

(e) Deferral of Payment. A Participant may file a written election with the
Committee to defer the payment of any amount otherwise payable pursuant to
subparagraph 8(d) on account of an Award to a period commencing at such future
date as specified in the election. Such election must be filed with the
Committee by the last day of the month which is two-thirds of the way through
but in no event later than the last day of the month which is six-months before
the end of the Measurement Period during which the Award is earned, unless the
Committee specifies an earlier filing date.

(f) Separate Accounts. At the conclusion of each Measurement Period, the
Committee shall cause a separate account to be maintained in the name of each
Participant with respect to whom all or a portion of an Award of Performance
Share Units earned under the Plan has been deferred. All amounts credited to
such account shall be fully vested at all times.

(g) Election of Form of Investment. Within sixty (60) days from the end of each
Award Period, and at such time or times, if any, as the Committee may permit, a
Participant may file a written election with the Committee of the percentage of
the deferred portion of any Award of Performance Share Units which is to be
expressed in the form of dollars and credited with interest, the percentage of
such Award which is to be expressed in the form of Phantom Stock Units and the
percentage of such Award which is to be deemed invested in any other
hypothetical investment equivalent from time to time made available under the
Plan by the Committee. In the event a Participant fails to file an election
within the time prescribed, one hundred percent (100%) of the deferred portion
of such Participant’s Award shall be expressed in the form of Phantom Stock
Units.

(h) Interest Portion. The amount of interest credited with respect to the
portion of an Award credited to the Participant’s account which is deferred and
credited with interest (the “Interest Portion”) shall be equal to the amount
such portion would have earned had it been credited with interest from the last
day of the Measurement Period with respect to which the Award was made until the
seventh (7th) business day preceding the date as of which payment is made,
compounded annually, at the Company’s rate of return on shareholders’ equity for
each fiscal year that payment is deferred, or at such other rate as the
Committee may from time to

 

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time determine. The Committee may, in its sole discretion, credit interest on
amounts payable prior to the date on which the Company’s rate of return on
shareholders’ equity becomes ascertainable at the rate applicable to deferred
amounts during the year immediately preceding the year of payment.

(i) Phantom Stock Unit Portion. With respect to the portion of an Award credited
to the Participant’s account which is deferred and expressed in the form of
Phantom Stock Units (the “Phantom Stock Unit Portion”), the number of Phantom
Stock Units so credited shall be equal to the result of dividing (i) the Phantom
Stock Unit Portion by (ii) the Fair Market Value on the date the Measurement
Period ended.

(j) Dividend Equivalents. Within thirty (30) days from the payment of a dividend
by Prime Meridian on its Common Stock, the Phantom Stock Unit Portion of each
Participant’s account shall be credited with additional Phantom Stock Units the
number of which shall be determined by (i) multiplying the dividend per share
paid on the Company’s Common Stock by the number of Phantom Stock Units credited
to his or her account at the time such dividend was declared, then (ii) dividing
such amount by the Fair Market Value on the payment date for such dividend.

(k) Payment of Deferred Awards. Payment with respect to amounts credited to the
account of a Participant shall be made in a series of annual installments over a
period of ten (10) years, or such other period as the Committee may direct, or
as the Committee may allow the Participant to elect, in either case at the time
of the original deferral election. Except as otherwise provided by the
Committee, each installment shall be withdrawn proportionately from the Interest
Portion and from the Phantom Stock Unit Portion of a Participant’s account based
on the percentage of the Participant’s account which he originally elected to be
credited with interest and with Phantom Stock Units, or, if a later election has
been permitted by the Committee and is then in effect, based on the percentage
specified in such later election. Payments shall commence on the date specified
by the Participant in his deferral election, unless the Committee in its sole
discretion, at the time of the original deferral election, determines that
payment shall be made over a shorter period or in more frequent installments, or
commence on an earlier date, or any or all of the above. If a Participant dies
prior to the date on which payment with respect to all amounts credited to his
account shall have been completed, payment with respect to such amounts shall be
made to the Participant’s estate in a series of annual installments over a
period of five (5) years, unless the Committee in its sole discretion determines
that payment shall be made over a shorter period or in more frequent
installments, or both. To the extent practicable, each installment payable
hereunder shall approximate that part of the amount then credited to the
Participant’s or his estate’s account which, if multiplied by the number of
installments remaining to be paid would be equal to the entire amount then
credited to the Participant’s account.

(l) Composition of Payment. The Committee shall cause all payments with respect
to deferred Awards to be made in a manner such that not more than one-half of
the value of each installment shall consist of Common Stock. To that end,
payment with respect to the Interest Portion and the Phantom Stock Unit Portion
of a Participant’s account shall be paid in cash and Common Stock as the
Committee shall determine in its sole discretion. The determination of any

 

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amount to be paid in cash for Phantom Stock Units shall be made by multiplying
(i) the Fair Market Value of one share of Common Stock on the date as of which
payment is made, by (ii) the number of Phantom Stock Units for which payment is
being made. The determination of the number of shares of Common Stock, if any,
to be distributed with respect to the Interest Portion of a Participant’s
account shall be made by dividing (i) one-half of the value of such portion on
the date as of which payment is made, by (ii) the Fair Market Value of one
(1) share of Common Stock on such date. Fractional shares shall be paid in cash.

(m) Alternative Investment Equivalents. If the Committee shall have permitted
Participants to elect to have deferred Awards of Performance Share Units
invested in one or more hypothetical investment equivalents other than interest
or Phantom Stock Units, such deferred Awards shall be credited with hypothetical
investment earnings at such rate, manner and time as the Committee shall
determine. At the end of the deferral period, payment shall be made in respect
of such hypothetical investment equivalents in such manner and at such time as
the Committee shall determine.

(n) Adjustment of Performance Goals. The Committee may, during the Measurement
Period, make such adjustments to Performance Goals as it may deem appropriate,
to compensate for, or reflect, any significant changes that may have occurred
during such Measurement Period in: (i) applicable accounting rules or principles
or changes in the Company’s method of accounting or in that of any other
corporation whose performance is relevant to the determination of whether an
Award has been earned; or (ii) tax laws or other laws or regulations that alter
or affect the computation of the measures of Performance Goals used for the
calculation of Awards.

9. Restricted Stock Awards and Phantom Stock Units.

(a) Award of Restricted Stock and Phantom Stock Units. The Committee shall have
the authority: (1) to grant Restricted Stock and Phantom Stock Unit Awards;
(2) to issue or transfer Restricted Stock to Participants; and (3) to establish
terms, conditions, and restrictions applicable to such Restricted Stock and
Phantom Stock Units, including the Restricted Period, that may differ with
respect to each grantee, the time or times at which Restricted Stock or Phantom
Stock Units shall be granted or become vested and the number of shares or units
to be covered by each grant.

The Holder of a Restricted Stock Award shall execute and deliver to the
Secretary of Prime Meridian an agreement with respect to Restricted Stock and
escrow agreement satisfactory to the Committee and the appropriate blank stock
powers with respect to the Restricted Stock covered by such agreements and shall
pay to the Company, as the purchase price of the shares of Common Stock subject
to such Award, the aggregate par value of such shares of Common Stock within
sixty (60) days following the making of such Award. If a Participant shall fail
to execute the agreement, escrow agreement and stock powers or shall fail to pay
such purchase price within such period, the Award shall be null and void.
Subject to the restrictions set forth in Section 9(b), the Holder shall
generally have the rights and privileges of a shareholder as to such Restricted
Stock, including the right to vote such Restricted Stock. At the discretion of
the Committee, cash and stock dividends with respect to the Restricted Stock may
be either currently

 

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paid or withheld by the Company for the Holder’s account, and interest may be
paid on the amount of cash dividends withheld at a rate and subject to such
terms as determined by the Committee. Cash or stock dividends so withheld by the
Committee shall not be subject to forfeiture.

In the case of a Restricted Stock Award, the Committee shall then cause stock
certificates registered in the name of the Holder to be issued and deposited
together with the stock powers with an escrow agent to be designated by the
Committee. The Committee shall cause the escrow agent to issue to the Holder a
receipt evidencing any stock certificate held by it registered in the name of
the Holder.

In the case of a Phantom Stock Units Award, no shares of Stock shall be issued
at the time the Award is made, and the Company will not be required to set aside
a fund for the payment of any such Award. The Committee shall, in its sole
discretion, determine whether to credit to the account of, or to currently pay
to, each Holder of an Award of Phantom Stock Units an amount equal to the cash
dividends paid by the Company upon one share of Stock for each Phantom Stock
Unit then credited to such Holder’s account (“Dividend Equivalents”). Dividend
Equivalents credited to Holder’s account shall be subject to forfeiture and may
bear interest at a rate and subject to such terms as determined by the
Committee.

(b) Restrictions. Restricted Stock awarded to a Participant shall be subject to
the following restrictions until the expiration of the Restricted Period:
(1) the Holder shall not be entitled to delivery of the stock certificate;
(2) the shares shall be subject to the restrictions on transferability set forth
in the grant; (3) the shares shall be subject to forfeiture to the extent
provided in subparagraph (d) herein and, to the extent such shares are
forfeited, the stock certificates shall be returned to the Company, and all
rights of the Holder to such shares and as a shareholder shall terminate without
further obligation on the part of the Company.

Phantom Stock Units awarded to any Participant shall be subject to the following
restrictions until the expiration of the Restricted Period: (1) the units shall
be subject to forfeiture to the extent provided in subparagraph (d) herein, and
to the extent such units are forfeited, all rights of the Holder to such units
shall terminate without further obligation on the part of the Company; and
(2) any other restrictions which the Committee may determine in advance are
necessary or appropriate.

The Committee shall have the authority to remove any or all of the restrictions
on the Restricted Stock and Phantom Stock Units whenever it may determine that,
by reason of changes in applicable laws or other changes in circumstances
arising after the date of the Restricted Stock Award or Phantom Stock Award,
such action is appropriate.

(c) Restricted Period. The Restricted Period of Restricted Stock and Phantom
Stock Units shall commence on the Date of Grant and shall expire from time to
time as to that part of the Restricted Stock and Phantom Stock Units indicated
in a schedule established by the Committee with respect to the Award.

 

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(d) Forfeiture Provisions. In the event a Holder terminates employment or
service as a director during a Restricted Period, that portion of the Award with
respect to which restrictions have not expired (“Non-Vested Portion”) shall be
treated as follows.

(i) For a resignation or discharge the Non-Vested Portion of the Award shall be
completely forfeited.

(ii) For a Normal Termination the Non-Vested Portion of the Award shall be
prorated for service during the Restricted Period and shall be received as soon
as practicable following termination.

(iii) Upon a Participant’s death the Non-Vested Portion of the Award shall be
prorated for service during the Restricted Period and paid to the Participant’s
estate as soon as practicable following the Participant’s death.

(e) Delivery of Restricted Stock and Settlement of Phantom Stock Units. Upon the
expiration of the Restricted Period with respect to any shares of Common Stock
covered by a Restricted Stock Award, a stock certificate evidencing the shares
of Restricted Stock which have not then been forfeited and with respect to which
the Restricted Period has expired (to the nearest full share) shall be delivered
without charge to the Holder, or his estate, free of all restrictions under the
Plan.

Upon the expiration of the Restricted Period with respect to any Phantom Stock
Units covered by a Phantom Stock Unit Award, Prime Meridian shall deliver to the
Holder or his estate without any charge one share of Common Stock for each
Phantom Stock Unit which has not then been forfeited and with respect to which
the Restricted Period has expired (“vested unit”) and cash equal to any Dividend
Equivalents credited with respect to each such vested unit and the interest
thereon, if any; provided, however, that the Committee may, in its sole
discretion, elect to pay cash or part cash and part Common Stock in lieu of
delivering only Common Stock for vested units. If cash payment is made in lieu
of delivering Common Stock, the amount of such payment shall be equal to the
Fair Market Value for the date on which the Restricted Period lapsed with
respect to such vested unit.

(f) Payment for Restricted Stock. Except as provided in subparagraph 9(a)
herein, a Holder shall not be required to make any payment for Common Stock
received pursuant to a Restricted Stock Award.

10. General.

(a) Additional Provisions of an Award. The award of any benefit under the Plan
may also be subject to such other provisions (whether or not applicable to the
benefit awarded to any other Participant) as the Committee determines
appropriate including, without limitation, provisions to assist the Participant
in financing the purchase of Common Stock through the exercise of Options,
provisions for the forfeiture of or restrictions on resale or other disposition
of shares acquired under any form of benefit, provisions giving the Company the
right to repurchase

 

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shares acquired under any form of benefit in the event the Participant elects to
dispose of such shares, and provisions to comply with federal and state
securities laws and federal and state income tax withholding requirements.

(b) Privileges of Stock Ownership. Except as otherwise specifically provided in
the Plan, no person shall be entitled to the privileges of stock ownership in
respect of shares of Common Stock which are subject to Options or Restricted
Stock Awards, Performance Share Unit Awards or Phantom Stock Unit Awards
hereunder until such shares have been issued to that person upon exercise of an
Option according to its terms, or upon sale or grant of those shares in
accordance with a Restricted Stock Award, Performance Share Unit Award, or
Phantom Stock Unit Award.

(c) Government and Other Regulations. The obligation of the Company to make
payment of Awards in Common Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. The Company shall be under no obligation to
register under the Securities Act any of the shares of Common Stock issued under
the Plan. If the shares issued under the Plan may in certain circumstances be
exempt from registration under the Securities Act, the Company may restrict the
transfer of such shares in such manner as it deems advisable to ensure the
availability of any such exemption.

(d) Tax Withholding. Notwithstanding any other provision of the Plan, Prime
Meridian or the Bank, as appropriate, shall have the right to deduct from all
Awards, to the extent paid in cash, all federal, state, or local taxes as
required by law to be withheld with respect to such Awards and, in the case of
Awards paid in Common Stock, the Holder or other person receiving such Common
Stock may be required to pay to the Company or the Bank, as appropriate prior to
delivery of such Common Stock, the amount of any such taxes that Prime Meridian
or the Bank is required to withhold, if any, with respect to the Award of such
Common Stock. Subject in particular cases to the disapproval of the Committee,
the Company may accept shares of Common Stock of equivalent Fair Market Value in
payment of such withholding tax obligations if the Holder of the Award elects to
make payment in such manner at least six months prior to the date such tax
obligation is determined.

(e) Claim to Awards and Employment Rights. No employee or other person shall
have any claim or right to be granted an Award under the Plan nor, having been
selected for the grant of an Award, to be selected for a grant of any other
Award. Neither this Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of
Prime Meridian or the Bank.

(f) Payments Upon Death of Participant. Upon the death of a Participant in the
Plan, Prime Meridian shall pay the amounts payable with respect to an Award of
Performance Share Units, Phantom Share Units, or Restricted Stock, if any, due
under the Plan to the Participant’s estate.

(h) Payments to Persons Other than Participants. If the Committee shall find
that any person to whom any amount is payable under the Plan is unable to care
for his affairs because of illness or accident, or is a minor, or has died, then
any payment due to such person or his estate

 

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(unless a prior claim therefor has been made by a duly appointed legal
representative), may, if the Committee so directs the Company, be paid to his
spouse, child, relative, an institution maintaining or having custody of such
person, or any other person deemed by the Committee to be a proper recipient on
behalf of such person otherwise entitled to payment. Any such payment shall be a
complete discharge of the liability of the Committee and the Company therefor.

(i) No Liability of Committee Members. No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by such
member or on his behalf in his or her capacity as a member of the Committee nor
for any mistake of judgment made in good faith, and the Company shall indemnify
and hold harmless each member of the Board and each other employee, officer or
director of Prime Meridian or the Bank to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim) arising out of any act or omission to act in
connection with the Plan unless arising out of such person’s own fraud or bad
faith; provided, however, that approval of the Board shall be required for the
payment of any amount in settlement of a claim against any such person. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under Prime Meridian’s
Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.

(j) Governing Law. The Plan will be administered in accordance with federal
laws, or in the absence thereof, the laws of the State of Florida.

(k) Funding. No provision of the Plan shall require Prime Meridian, for the
purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Company maintain separate bank
accounts, books, records, or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes. Holders shall have
no rights under the Plan other than as unsecured general creditors of the
Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other employees under general law.

(l) Non-transferability. A person’s rights and interest under the Plan,
including amounts payable, may not be sold, assigned, donated, or transferred or
otherwise disposed of, mortgaged, pledged, or encumbered except by will or the
laws of descent and distribution.

(m) Reliance on Reports. Each member of the Committee shall be fully justified
in relying, acting or failing to act, and shall not be liable for having so
relied, acted or failed to act in good faith, upon any report made by the
independent public accountant or attorney of Prime Meridian and the Bank and
upon any other information furnished in connection with the Plan by any person
or persons other than himself.

 

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(n) Relationship to Other Benefits. No payment under the Plan shall be taken
into account in determining any benefits under any pension, retirement, profit
sharing, group insurance or other benefit plan of Prime Meridian or the Bank
except as otherwise specifically provided.

(o) Expenses. The expenses of administering the Plan shall be borne by Prime
Meridian and the Bank.

(p) Pronouns. Masculine pronouns and other words of masculine gender shall refer
to both men and women.

(q) Titles and Headings. The titles and headings of the sections in the Plan are
for convenience of reference only, and in the event of any conflict, the text of
the Plan, rather than such titles or headings shall control.

11. Changes in Capital Structure. Unless the Committee specifically determines
otherwise, options, SARs, Restricted Stock Awards, Phantom Stock Unit Awards,
Performance Share Unit Awards, and any agreements evidencing such Awards, and
Performance Goals, shall be subject to adjustment or substitution as to the
number, price, or kind of a share of Common Stock or other consideration subject
to such Awards or as otherwise determined by the Committee to be equitable:
(i) in the event of changes in the outstanding Common Stock or in the capital
structure of the Company by reason of stock dividends, stock splits,
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges, or other relevant changes in capitalization occurring after the Date
of Grant of any such Award; or (ii) in the event of any change in applicable
laws or any change in circumstances which results in or would result in any
substantial dilution or enlargement of the rights granted to, or available for,
Participants in the Plan, or which otherwise warrants equitable adjustment
because it interferes with the intended operation of the Plan. In addition,
unless the Committee specifically determines otherwise, in the event of any such
adjustments or substitution, the aggregate number of shares of Common Stock
available under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any adjustment in Incentive Stock Options
under this Section 11 shall be made only to the extent not constituting a
“modification” within the meaning of Section 424(h)(3) of the Code, and any
adjustments under this Section 11 shall be made in a manner which does not
adversely affect the exemption provided pursuant to Rule 16b-3 under the
Exchange Act. The Company shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding for
all purposes.

12. Effect of Change in Control.

(a) In the event of a Change in Control, notwithstanding any vesting schedule
provided for hereunder or by the Committee with respect to an Award of Options,
SARs, Phantom Stock Units, or Restricted Stock, such Option or SAR shall become
immediately exercisable with respect to one hundred percent (100%) of the shares
subject to such Option or SAR, and the Restricted Period shall expire
immediately with respect to one hundred percent (100%) of the Phantom Stock
Units or shares of Restricted Stock subject to Restrictions; provided, however,
that to the extent that so accelerating the time an Incentive Stock Option may
first be exercised

 

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would cause the limitation provided in Section 6(g) herein to be exceeded, such
Options shall instead first become exercisable in so many of the next following
years as is necessary to comply with such limitation.

(b) In the event of a Change in Control, all incomplete Measurement Periods in
effect on the date the Change in Control occurs shall end on the date of such
change, and the Committee shall: (i) determine the extent to which Performance
Goals with respect to each such Measurement Period have been met based upon such
audited or unaudited financial information then available as it deems relevant;
(ii) cause to be paid to each Participant partial or full Awards with respect to
Performance Goals for each such Measurement Period based upon the Committee’s
determination of the degree of attainment of Performance Goals; and (iii) cause
all previously deferred Awards to be settled in full as soon as possible.

(c) The obligations of the Company under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation,
or other reorganization of the Company, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Company. The Company agrees that it will make appropriate provisions for the
preservation of Participant’s rights under the Plan in any agreement or plan
which it may enter into or adopt to effect any such merger, consolidation,
reorganization or transfer of assets.

13. Payment to Specified Employee. Notwithstanding anything herein to the
contrary, to the extent that the Participant is determined to be a specified
employee as described in Section 409A(2)(B) of the Code, then payments to the
Participant may not be made before the date that is six (6) months after the
Participant’s separation from service.

14. Non-exclusivity of the Plan. Neither the adoption of this Plan by the Board
nor the submission of this Plan to the shareholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under this
Plan, and such arrangements may be either applicable generally or only in
specific cases.

15. Amendments and Termination.

(a) The Committee may, without further action by the shareholders and without
receiving further consideration from the Participants, amend this Plan or
condition or modify awards under this Plan in response to changes in securities
or other laws or rules, regulations or regulatory interpretations thereof
applicable to this Plan, or to comply with applicable self-regulatory
organization rules or requirements.

 

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(b) The Committee may at any time and from time to time terminate or modify or
amend the Plan in any respect, except that, without shareholder approval, the
Committee may not materially amend the Plan, including, but not limited to, the
following:

(i) materially increase the number of shares of Common Stock to be issued under
the Plan (other than pursuant to Sections 11 and 15[a] of the Plan);

(ii) materially increase benefits to Participants, including any material change
that permits a repricing (or decrease in exercise price) of outstanding Options,
or reduces the price at which Options may be offered, or extends the duration of
the Plan;

(iii) materially expand the class of participants eligible to participate in the
Plan; and

(iv) expand the types of Options or other Awards provided under the Plan.

(c) The termination or any modification or amendment of the Plan, except as
provided in subsection (a), shall not without the consent of a Participant,
affect his or her rights under an award previously granted to him or her.

This 2015 Stock Incentive Compensation Plan was presented to and approved by the
shareholders holding a majority of the outstanding shares of Prime Meridian’s
common stock voted at the Annual Meeting of Shareholders held on May 20, 2015.

PRIME MERIDIAN HOLDING COMPANY

 

/s/ Jill Macmillan

      

/s/ Richard W. Weidner

Jill Macmillan        Richard A. Weidner Corporate Secretary        Chairman of
the Board

 

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