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Exhibit 10(b)
 
TRUSTCO BANK CORP NY

2010 DIRECTORS EQUITY INCENTIVE PLAN

December 21, 2010

 
 

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TrustCo Bank Corp NY

2010 DIRECTORS EQUITY INCENTIVE PLAN

December 21, 2010

TABLE OF CONTENTS
 
1.
Establishment, Purpose, and Effective Date of Plan
2
     
2.
Definitions
2
     
3.
Eligibility and Participation
4
     
4.
Administration
5
     
5.
Stock Subject to Plan
5
     
6.
Duration of Plan
6
     
7.
Stock Options
6
     
8.
Stock Appreciation Rights
8
     
9.
Restricted Stock
9
     
10.
Beneficiary Designation
10
     
11.
Rights of Director
10
     
12.
Change-in-Control
10
     
13.
Amendment, Modification and Termination of Plan
12
     
14.
Tax Withholding
13
     
15.
Indemnification
13
     
16.
Repricing
13
     
17.
Requirements of Law
14

 
 
 

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1.
Establishment, Purpose, and Effective Date of Plan.

 
 
(a)
Establishment. TrustCo Bank Corp NY, a New York corporation, hereby establishes
the “TRUSTCO BANK CORP NY 2010 DIRECTORS EQUITY INCENTIVE PLAN”.

 
 
(b)
Purpose. The purpose of this Plan is to advance the interest of stockholders and
the Company by attracting and retaining members of the Board and to encourage
them to acquire a larger ownership in the Company. The resulting increased
proprietary interest in the Company increases Directors’ incentives to continue
active service as Directors and to oversee the continued success and growth of
the Company.

 
 
(c)
Effective Date. The Plan shall become effective immediately upon its adoption by
the Board of Directors of the Company on  December 21, 2010 subject to approval
of the stockholders at the Company’s 2011 Annual Meeting of Stockholders.

 
2.
Definitions.

 
 
(a)
Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below.

 
 
(i)
“Award” means any Stock Option, Stock Appreciation Right or Restricted Stock
granted under the Plan.

 
 
(ii)
“Award Agreement” means the agreement that sets forth the terms, conditions and
limitations applicable to an Award.

 
 
(iii)
“Board” means the Board of Directors of the Company.

 
 
(iv)
“Cause” means conduct of a Participant that involves the commission of an act of
fraud, embezzlement or theft constituting a felony against the Company or any
Subsidiary as finally determined by a court of competent jurisdiction or an
unequivocal admission by the Participant.

 
 
(v)
“Code” means the Internal Revenue Code of 1986, as amended.

 
 
(vi)
“Committee” means the Compensation Committee of the Board or such other
committee appointed from time to time by the Board to administer the Plan. The
Committee shall consist of two or more members, each of whom shall qualify as a
“non-employee director,” as the term (or similar or successor term) is defined
by Rule 16b-3, and as an “outside director” within the meaning of Code
Section 162(m) and regulations thereunder.

 
 
(vii)
“Company” means TrustCo Bank Corp NY, a New York corporation.

 
 
(viii)
“Director” means a member of the Board or of the board of directors of Trustco
Bank.

 
 
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(ix)
“Disability” means a Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or can be expect to last for a
continuous period of not less than 12 months. The Participant also will be
deemed to have a “Disability” if determined to be totally disabled by the Social
Security Administration.

 
 
(x)
“Fair Market Value” means the closing price of the Stock as reported on the
Nasdaq Global Select Market, or such other system as may supersede it, on a
particular date. In the event that there are no Stock transactions on such date,
the Fair Market Value shall be determined as of the immediately preceding date
on which there were Stock transactions.

 
 
(xi)
“Option” means the right to purchase Stock at a stated price for a specified
period of time (subject to Section 29(c)). For purposes of the Plan an Option
may be either (1) a “Nonstatutory (Nonqualified) Stock Option,” or “NSO” or
(2) any other type of option encompassed by the Code. No Option under this Plan
may be an “Incentive Stock Option,” or “ISO” within the meaning of Section 422
of the Code.

 
 
(xii)
“Participant” means any Director designated by the Committee to participate in
the Plan, except that employees of the Company or its subsidiaries who are also
Directors shall not be eligible to receive grants under the Plan.

 
 
(xiii)
“Period of Restriction” means the period during which the transfer of shares of
Restricted Stock is restricted pursuant to Section 9(g) of the Plan.

 
 
(xiv)
“Plan” means the TrustCo Bank Corp NY 2010 Directors Equity Incentive Plan as
set forth herein and any amendments hereto.

 
 
(xv)
“Previously-Acquired Share” means a share of Stock acquired by the Participant
or any beneficiary of the Participant, and if so acquired, such share of Stock
has been held for a period of not less than six months, or such shorter period
as the Committee may prescribe.

 
 
(xvi)
“Restricted Stock” means Stock granted to a Participant pursuant to Section 9 of
the Plan.

 
 
(xvii)
“Rule 16b-3” means Rule 16b-3 or any successor or comparable rule or rules
applicable to Awards granted under the Plan promulgated by the Securities and
Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934,
as amended. Rule 16b-3 generally provides exemptions from the short-swing profit
recovery provisions of Section 16(b) for transactions between an issuer and its
officers or directors, including the grant and exercise of options and other
equity-related awards.

 
 
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(xviii)
“Separation from Service” means a termination of the Participant’s service with
the Company and all of its controlled group members within the meaning of Code
Section 409A. Whether a Separation from Service has occurred is determined based
on whether the facts and circumstances indicate that the Company and Participant
reasonably anticipated that no further services would be performed after a
certain date or that the level of bona fide services the Participant would
perform after such date (including as an employee or as an independent
contractor) would permanently decrease to no more than 25% of the average level
of bona fide services performed (including as an employee or an independent
contractor) over the immediately preceding thirty-six month period (or the full
period of services to the Company if the Participant has been providing services
to the Company less than thirty-six months). For periods during which a
Participant is on a paid bona fide leave of absence (as defined in Treas. Reg.
§1.409A-1(h)(1)(i)) and has not otherwise terminated service with the Company,
the Participant is treated as providing bona fide services at a level equal to
the level of services that the Participant would have been required to perform
to receive the compensation paid with respect to such leave of absence. Periods
during which a Participant is on an unpaid bona fide leave of absence (as
defined in Treas. Reg. §1.409A-1(h)(1)(i)) and has not otherwise terminated
service with the Company are disregarded for purposes of this definition
(including for purposes of determining the applicable thirty-six month period).
There is no Separation from Service of a Participant with the Company (or any of
its controlled group members within the meaning of Code Section 409A) where
there is a simultaneous reemployment (or commencement of service) or continuing
employment (or service) of the Participant by the Company or any of controlled
group members within the meaning of Code Section 409A.

 
 
(xix)
“Stock” or “Common Stock” means the common stock of the Company.

 
 
(xx)
“Stock Appreciation Right” and “SAR” mean the right to receive a payment from
the Company equal to the excess of the Fair Market Value of a share of Stock at
the date of exercise over a specified price fixed by the Committee on the date
of grant, which shall not be less than 100% of the Fair Market Value of the
Stock on the date of grant, with respect to a number of shares of Stock fixed on
or before the date of grant.

 
 
(xxi)
“Subsidiary” means a corporation of which stock possessing 50% or more of the
total combined voting power of all classes of its stock entitled to vote
generally in the election of directors is owned in the aggregate by TrustCo Bank
Corp NY directly or indirectly through one or more subsidiaries.

 
 
(b)
Gender and Number. Except when otherwise indicated by the context, words in the
masculine gender when used in the Plan shall include the feminine gender, the
singular shall include the plural, and the plural shall include the singular.

 
3.
Eligibility and Participation.

 
 
(a)
Eligibility and Participation. The Committee may from time to time, subject to
the provisions of the Plan, grant Awards to Directors.

 
 
(b)
Participants Deemed to Accept Plan. By accepting any benefit under the Plan,
each Participant and each person claiming under or through any such Participant
shall be conclusively deemed to have indicated their acceptance and ratification
of, and consent to, all of the terms and conditions of the Plan and any action
taken under the Plan by the Board, the Committee or the Company, in any case in
accordance with the terms and conditions of the Plan.

 
 
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4.
Administration.

 
 
(a)
Administration. The Committee shall be responsible for the administration of the
Plan. The Committee, by majority action thereof (whether taken during a meeting
or by written consent), shall determine the type or types of Awards to be made
under the Plan and shall designate from time to time the Directors who are to be
recipients of such Awards. The Committee is authorized to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
provide for conditions and assurances deemed necessary or advisable to protect
the interests of the Company and to make all other determinations necessary or
advisable for the administration of the Plan but only to the extent not contrary
to the express provisions of the Plan. Determinations, interpretations, or other
actions made or taken by the Committee pursuant to the provisions of the Plan
shall be final and binding and conclusive for all purposes and upon all persons
whomsoever. To the extent deemed necessary or advisable for purposes of Rule
16b-3 or otherwise, the Board may act as the Committee hereunder.

 
 
(b)
Award Agreements. Each Award shall be embodied in an Award Agreement, which
shall contain such terms, conditions and limitations as shall be determined by
the Committee. The Award Agreement shall be delivered to and signed by the
Participant and the Company.

 
5.
Stock Subject to Plan.

 
 
(a)
Number of Shares Available for Awards. The total number of shares of Stock that
may be issued pursuant to Awards of Options and/or Restricted Stock under the
Plan may not exceed 250,000 and the total number of Awards of Stock Appreciation
Rights may not exceed the equivalent of 250,000 shares. Such number of shares
shall be subject to adjustment upon occurrence of any of the events indicated in
Section 5(d). The shares of Stock to be delivered under the Plan may consist, in
whole or in part, of authorized but unissued Stock or treasury Stock, not
reserved for any other purpose.

 
 
(b)
Reuse.

 
 
(i)
If, and to the extent an Option shall expire or terminate for any reason without
having been exercised in full (including, without limitation, cancellation and
re-grant), or in the event that an Option is exercised or settled in a manner
such that some or all of the shares of Stock related to the Option are not
issued to the Participant (or beneficiary) (including as the result of a
share-for-share exercise or the use of shares for withholding taxes), the shares
of Stock subject thereto which have not become outstanding shall (unless the
Plan shall have terminated) remain available for issuance under the Plan.

 
 
(ii)
If, and to the extent any Awards under the Plan are forfeited for any reason, or
settled in cash in lieu of Stock or in a manner such that some or all of the
shares of Stock related to the Award are not issued to the Participant (or
beneficiary) (including as a result of the use of shares for tax withholding),
such shares of Stock shall (unless the Plan shall have terminated) remain
available for issuance under the Plan.

 
 
(c)
Limitations on Awards to a Single Participant. Notwithstanding anything to the
contrary contained in the Plan, the following limitations shall apply to Awards
made hereunder:

 
 
(i)
no Participant may be granted, during any calendar year, Awards consisting of
Options or Restricted Stock for more than 5,000 shares of Common Stock, subject
to adjustment pursuant to the provisions of Section 5(d); and

 
 
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(ii)
no Participant may be granted, during any calendar year, Awards consisting of
Stock Appreciation Rights covering or relating to more than 5,000 shares of
Common Stock, subject to adjustment pursuant to the provisions of paragraph 5(d)
hereof.

 
 
(d)
Adjustment in Capitalization. In the event of any change in the outstanding
shares of Stock that occurs after ratification of the Plan by the stockholders
of the Company by reason of a Stock dividend or split, recapitalization, merger,
consolidation, combination, exchange of shares or other similar corporate
change, the aggregate number of shares of Stock available for issuance under
Section 5(a), subject to each outstanding Award and the other terms thereof, and
the limitations set forth in Section 5(c), shall be adjusted appropriately by
the number of shares the Committee determines, which determination shall be
conclusive; provided, however, that fractional shares shall be rounded to the
nearest whole share.

 
6.
Duration of Plan.

 
 
(a)
Duration of Plan. The Plan shall remain in effect, subject to the Board’s right
to earlier terminate the Plan pursuant to Section 17 hereof, until all Stock
subject to it shall have been purchased or acquired pursuant to the provisions
hereof. Notwithstanding the foregoing, no Award may be granted under the Plan on
or after December 21, 2020.

 
7.
Stock Options.

 
 
(a)
Grant of Options. Subject to the provisions of Sections 5 and 6, Options may be
granted to Participants at any time and from time to time as shall be determined
by the Committee. The Committee shall have complete discretion in determining
the number of Options granted to each Participant. The Committee may grant any
type of Option to purchase Stock that is permitted by law at the time of grant.

 
 
(b)
Option Price. No Option granted pursuant to the Plan shall have an Option
exercise price that is less than the Fair Market Value of the Stock on the date
the Option is granted.

 
 
(c)
Exercise of Options. Options awarded under the Plan shall be exercisable at such
times and be subject to such restrictions and conditions as the Committee shall
approve, either at the time of grant of such Options or pursuant to a general
determination, and which need not be the same for all Participants. The
Committee shall determine the period of time during which an Option may be
exercised, which such period shall be specifically set forth in the Award
Agreement; provided, however, that no Option shall be exercisable after ten
years from the date of grant.

 
 
(d)
Payment. Options shall be exercised by the delivery of a written notice of
exercise to the Company, setting forth the number of shares of Stock with
respect to which the Option is to be exercised, accompanied by full payment for
the Stock. The Option exercise price upon exercise of any Option shall be
payable to the Company in full:

 
 
(i)
in cash or its equivalent (including, for this purpose, the proceeds from a
third-party broker-assisted cashless exercise);

 
 
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(ii)
by tendering Previously-Acquired Shares having an aggregate Fair Market Value at
the time of exercise equal to the total Option price;

 
 
(iii)
by any other means which the Committee determines to be consistent with the
Plan’s purpose and applicable law; or

 
 
(iv)
by a combination of (i), (ii), and (iii), above.

 
The Company may not sponsor, or assist in any material way, any “cashless”
exercise program pursuant to which payment for Options to be exercised is made
by surrendering other Options. The prohibition of the immediately preceding
sentence does not apply to third-party, broker-assisted “cashless” exercise
programs as described in clause (i) above  that the Company does not sponsor or
assist and payment of the exercise price of Options by tender of
Previously-Acquired Shares as described in clause (ii) above.
 
 
(e)
Termination of Service Due to Death or Disability. In the event the service of a
Participant to the Board is terminated by reason of death or Disability any
outstanding Options shall vest 100% and be deemed exercisable in full as of such
termination. Such options may be exercised at any time prior to the expiration
date of the Options or within three years after such date of termination,
whichever period is the shorter.

 
 
(f)
Termination of Service other than Due to Death or Disability and other than for
Cause. If the service of the Participant shall terminate for any reason other
than death or Disability, or involuntarily for Cause, the rights under any
then-outstanding Option granted pursuant to the Plan shall terminate upon the
expiration date of the Option or one month after such date of termination of
service, whichever first occurs; provided, however, that no vesting of any
Options that are not vested as of the date of termination of service shall occur
after such date of termination.

 
 
(g)
Termination of Service for Cause. Where a Participant’s termination of service
is involuntarily for Cause, the Participant’s rights under all Options (whether
or not such Options are vested) shall terminate immediately upon such
termination.

 
 
(h)
Nontransferability of Options. Except as provided below, no Option granted under
the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of descent and distribution.
Further, all Options granted to a Participant under the Plan shall be
exercisable during his lifetime only by such Participant. Notwithstanding the
foregoing, the Committee may, in its discretion, authorize all or a portion of
the Options granted to a Participant to be on terms which permit transfer by
such Participant to:

 
 
(i)
the spouse, children or grandchildren of the Participant (“Immediate Family
Members”);

 
 
(ii)
a trust or trusts for the exclusive benefit of such Immediate Family Members; or

 
 
(iii)
a partnership in which such Immediate Family Members are the only partners;

 
provided, however, that with respect to any of the foregoing permissible
transfers:
 
 
 
(i)          there may be no consideration for such transfer;

 
 
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(ii)         the Award Agreement pursuant to which such Options are granted
expressly provides for transferability in a manner consistent with this
Section 7(g); and

 
 
 
(iii)        subsequent transfers of transferred Options shall be prohibited
except those in accordance with Section 14. Following transfer, any such Options
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of Section 14 hereof
the term “Participant” shall be deemed to refer to the transferee. The
provisions of Sections 7 and 16 relating to the period of exercisability and
expiration of the Option shall continue to be applied with respect to the
original Participant, and the Options shall be exercisable by the transferee
only to the extent, and for the periods, set forth in said Sections 7 and 16.

 
 
(i)
Restrictions on Stock Transferability. The Committee shall impose such
restrictions on any shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without limitation,
restrictions under the applicable Federal securities law, under the requirements
of any stock exchange upon which such shares of Stock are then listed and under
any blue sky or state securities laws applicable to such shares.

 
8.
Stock Appreciation Rights.

 
 
(a)
Grant of Stock Appreciation Rights. Subject to the provisions of Sections 5 and
6, Stock Appreciation Rights (“SARs”) may be granted to Participants at any time
and from time to time as shall be determined by the Committee.

 
 
(b)
Exercise of SARs.  SARs may be exercised upon whatever terms and conditions the
Committee, in its sole discretion, imposes upon the SARs.

 
 
(c)
Price.  No SAR granted pursuant to the Plan shall have a price that is less than
the Fair Market Value of the Stock on the date the SAR is granted.

 
 
(d)
Payment of SAR Amount. Upon exercise of the SAR, the holder shall be entitled to
receive payment of an amount (subject to Section 8(f) below) determined by
multiplying:

 
 
(i)
the difference between the Fair Market Value of a share of Stock at the date of
exercise over the price fixed by the Committee at the date of grant, by

 
 
(ii)
the number of shares with respect to which the Stock Appreciation Right is
exercised.

 
 
(e)
Form and Timing of Payment. Payment for SARs shall be made in cash. Such payment
shall be made as soon as reasonably practicable following the date of exercise
of such SARs.

 
 
(f)
Limit of Appreciation. At the time of grant, the Committee may establish in its
sole discretion, a maximum amount per share which will be payable upon exercise
of an SAR.

 
 
(g)
Term of SAR. The term of an SAR granted under the Plan shall not exceed ten
years from the date of grant.

 
 
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(h)
Termination of Service. In the event the service of a Participant is terminated,
any SARs outstanding shall terminate in the same manner as specified for Options
under Sections 7(f), 7(g) and 29(g) herein.

 
 
(i)
Nontransferability of SARs. No SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
SARs granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.

 
9.
Restricted Stock.

 
 
(a)
Grant of Restricted Stock. Subject to the provisions of Sections 5 and 6, the
Committee, at any time and from time to time, may grant shares of Restricted
Stock under the Plan to such Participants and in such amounts as it shall
determine. Subject to the terms and conditions of this Section 9 and the Award
Agreement, upon delivery of shares of Restricted Stock to a Participant, or
creation of a book entry evidencing a Participant’s ownership of Shares of
Restricted Stock, the Participant shall have all of the rights of a shareholder
with respect to such Restricted Shares, subject to the terms and restrictions
set forth in this Section 9 or the applicable Award Agreement or as determined
by the Committee.

 
 
(b)
Other Restrictions. The Committee shall impose such other restrictions on any
shares of Restricted Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, restrictions under applicable Federal or state
securities laws and may add a legend to the certificates representing Restricted
Stock to give appropriate notice of such restrictions.

 
 
(c)
Rights as a Shareholder. During the Period of Restriction, Participants holding
shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those shares during the Period of Restriction and shall be
entitled to receive all dividends and other distributions paid with respect to
those shares while they are so held. If any dividends or distributions are paid
in shares of Stock, the shares shall be subject to the same restrictions on
transferability as the shares of Restricted Stock with respect to which they
were paid.

 
 
(d)
Termination of Service Due to Death or Disability. In the event the service of a
Participant to the Board is terminated by reason of death or Disability, the
Period of Restriction applicable to the Restricted Stock pursuant to Subsection
9(g) hereof shall automatically terminate upon such Separation from Service.

 
 
(e)
Termination of Service other than Due to Death or Disability. If the service of
the Participant shall terminate for any reason other than death or Disability,
then any shares of Restricted Stock still subject to the Period of Restriction
at the date of such Separation from Service automatically shall be forfeited and
returned to the Company.

 
 
(f)
Delivery of Shares. Subject to the other provisions of the Plan, after the last
day of the Period of Restriction applicable to a Participant’s shares of
Restricted Stock (whether through the lapse of time or early termination as
provided above), and after all conditions and restrictions applicable to such
shares of Restricted Stock have been satisfied or lapse (including satisfaction
of any applicable withholding tax obligations), pursuant to the applicable Award
Agreement, such shares of Restricted Stock shall become freely transferable by
such Participant.

 
 
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(g)
Nontransferability During Period of Restriction. Except as provided in Section
9(f) hereof, the shares of Restricted Stock granted hereunder may not be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated for such
period of time as shall be determined by the Committee and shall be specified in
the Award Agreement for the grant of the Restricted Stock, or upon earlier
satisfaction of other conditions, as specified by the Committee in its sole
discretion and set forth in the Award Agreement for the grant of the Restricted
Stock.

 
10.
Beneficiary Designation.

 
Each Participant under the Plan may name, from time to time, any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his death before he receives any
or all of such benefit. Each designation will revoke all prior designations by
the same Participant, shall be in a form prescribed by the Committee, and will
be effective only when filed by the Participant in writing with the Committee
during his lifetime. In the absence of any such designation, benefits remaining
unpaid at the Participant’s death shall be paid to his estate.
 
11.
Rights of Director.

 
 
(a)
Directorship. Neither the Plan nor any Award will confer upon a Participant any
right with respect to continuing the Participant’s service as a Director with
the Company, nor will they interfere in any way with the Participant’s right or
the Company’s right (or the right of the Company’s stockholders) to terminate
such relationship at any time, with or without cause, to the extent permitted by
applicable law.

 
 
(b)
Participation. No Director shall have a right to be selected as a Participant,
or, having been so selected, to be selected again as a Participant.

 
12.
Change-in-Control.

 
 
(a)
In General. Except as expressly provided otherwise in an Award Agreement, in the
event of a Change-in-Control of the Company as defined in Section 16(b) below,
all Awards under the Plan shall vest 100%, whereupon all Options shall become
exercisable in full, SARs shall be paid out based on the terms thereof and the
restrictions applicable to Restricted Stock shall terminate.

 
 
(b)
Definition. For purposes of the Plan, a “Change-in-Control” shall mean any one
or more of the following:

 
 
(i)
any individual, corporation (other than the Company or Trustco Bank, which, for
purposes of this Section 16(b), are collectively referred to as the
“Companies”), partnership, trust, association, pool, syndicate, or any other
entity or group of persons acting in concert becomes the beneficial owner, as
that concept is defined in Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, of securities of either of
the Companies possessing 20% or more of the voting power for the election of
directors of either of the Companies; or

 
 
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(ii)
there shall be consummated any consolidation, merger or other business
combination involving either of the Companies or the securities of either of the
Companies in which holders of voting securities immediately prior to such
consummation own, as a group, immediately after such consummation, voting
securities of either of the Companies (or, if either of the Companies does not
survive such transaction, voting securities of the entity or entities surviving
such transaction) having 60% or less of the total voting power in an election of
directors of either of the Companies (or such other surviving entity or
entities); or

 
 
(iii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the directors of either of the Companies cease for any
reason to constitute at least a majority thereof unless the election, or
nomination for election by either of the Companies’ shareholders, of each new
director of either of the Companies was approved by a vote of at least
two-thirds of the directors of either of the Companies then still in office who
were directors of either of the Companies at the beginning of any such period;
or

 
 
(iv)
removal by the stockholders of all or any of the incumbent directors of either
of the Companies other than a removal for cause; or

 
 
(v)
there shall be consummated at any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or substantially
all, of the assets of either of the Companies to a party which is not controlled
by or under common control with either of the Companies; or

 
 
(vi)
an announcement of any of the events described in subparagraphs (i) through (v)
above, including but not limited to a press release, public statement or filing
with federal or state regulators.

 
 
(c)
Compliance with Section 409A. Notwithstanding any other provisions of the Plan
or any Award Agreement to the contrary, if a Change-in-Control that is not a
“Qualified Change-in-Control” (as defined below) occurs, and payment or
distribution of an Award constituting deferred compensation subject to
Section 409A of the Code would otherwise be made or commence on the date of such
Change-in-Control (pursuant to the Plan, the Award Agreement or otherwise),
(i) the vesting of such Award shall accelerate in accordance with the Plan and
the Award Agreement, (ii) such payment or distribution shall not be made or
commence prior to the earliest date on which Code Section 409A permits such
payment or distribution to be made or commence without additional taxes or
penalties under Section 409A, and (iii) in the event any such payment or
distribution is deferred in accordance with the immediately preceding clause
(ii), such payment or distribution that would have been made prior to the
deferred payment or commencement date, but for Code Section 409A, shall be paid
or distributed on such earliest payment or commencement date, together, if
determined by the Committee, with interest at the rate established by the
Committee. The Committee shall not extend the period to exercise an Option or
SAR to the extent that such extension would cause the Option or SAR to become
subject to Code Section 409A. Additionally, the Committee shall not take any
action pursuant to this Section 16 that would cause an Award that is otherwise
exempt from Code Section 409A to become subject to Code Section 409A, or that
would cause an Award that is subject to Code Section 409A to fail to satisfy the
requirements of Code Section 409A.

 
 
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(d)
Qualified Change-in-Control Defined. For purposes hereof, a “Qualified
Change-in-Control” means a Change-in-Control that qualifies as a change in
ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company, within the meaning of Code
Section 409A(a)(2)(A)(v) and the regulations promulgated thereunder.

 
13.
Amendment, Modification and Termination of Plan.

 
 
(a)
Amendment, Modification, and Termination. The Board may, at any time and with or
without prior notice, amend, alter, suspend, or terminate the Plan, and the
Committee may, to the extent permitted by the Plan, amend the terms of any Award
theretofore granted, including any Award Agreement, in each case, retroactively
or prospectively; provided, however, that no such amendment, alteration,
suspension, or termination of the Plan shall be made which, without first
obtaining approval of the shareholders of the Company (where such approval is
necessary to satisfy (i) the then-applicable requirements of Rule 16b-3 and
(ii) any applicable law, regulation or rule (including the applicable
regulations and rules of the SEC and any national securities exchange)), would:

 
 
(i)
except as is provided in Section 5(d), increase the maximum number of Shares
that may be sold or awarded under the Plan or increase the maximum limitations
set forth in Section 5(a);

 
 
(ii)
except as is provided in Section 5(d), decrease the minimum Option Price or
Grant Price requirements of Sections 7(b) and 2(a)(xxiv), respectively;

 
 
(iii)
change the class of persons eligible to receive Awards under the Plan;

 
 
(iv)
extend the duration of the Plan or the period during which Options or SARs may
be exercised under Section 7 or Section 8, as applicable; or;

 
 
(v)
otherwise require shareholder approval to comply with any applicable law,
regulation or rule (including the applicable regulations and rules of the SEC
and any national securities exchange).

 
In addition, (A) no such amendment, alteration, suspension or termination of the
Plan or any Award theretofore granted, including any Award Agreement, shall be
made which would materially impair the previously accrued rights of a
Participant under any outstanding Award without the written consent of such
Participant, provided, however, that the Board may amend or alter the Plan and
the Committee may amend or alter any Award, including any Agreement, either
retroactively or prospectively, without the consent of the applicable
Participant, (x) so as to preserve or come within any exemptions from liability
under Section 16(b) of the Exchange Act, pursuant to the rules and releases
promulgated by the SEC (including Rule 16b-3) or (y) if the Board or the
Committee determines in its discretion that such amendment or alteration either
(I) is required or advisable for the Company, the Plan or the Award to satisfy,
comply with or meet the requirements of any law, regulation, rule or accounting
standard or (II) is not reasonably likely to significantly diminish the benefits
provided under such Award, or that such diminishment has been or will be
adequately compensated, and (B) any amendment or modification of any Award or
Award Agreement must comply with Section 21.
 
 
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(b)
Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The Board or the Committee shall make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including the events described in Section 5(d)) affecting
the Company or the financial statements of the Company or of changes in
applicable laws, regulations, or accounting principles in order to prevent
unintended dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan. Additionally, neither the Board
nor the Committee shall make any adjustment pursuant to this Section 17 that
would cause an Award that is otherwise exempt from Code Section 409A to become
subject to Code Section 409A, or that would cause an Award that is subject to
Code Section 409A to fail to satisfy the requirements of Code Section 409A. The
determination of the Committee as to the foregoing adjustments shall be
conclusive and binding on Participants under the Plan.

 
14.
Tax Withholding.

 
 
(a)
Tax Withholding. The Company shall deduct or withhold, or require a Participant
to remit to the Company, an amount sufficient to satisfy Federal, state, and
local taxes, domestic or foreign, required by law or regulation to be withheld
with respect to any taxable event arising as a result of the Plan.

 
 
(b)
Share Withholding. With respect to withholding required upon the exercise of
Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any
other taxable event arising as a result of awards granted hereunder,
Participants may elect to satisfy the withholding requirement, in whole or in
part, by having the Company withhold shares of Stock having a Fair Market Value
on the date the tax is to be determined equal to the minimum statutory
withholding that would be imposed on the transaction. All such elections shall
be irrevocable, made in writing, signed by the Participant, and shall be subject
to any restrictions or limitations that the Committee, in its sole discretion,
deems appropriate.

 
15.
Indemnification.

 
Each Person who is or shall have been a member of the Committee or of the Board
shall be indemnified and held harmless by the Company against and from any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by
him in connection with or resulting from any claim, action, suit, or proceeding
to which he may be a party or in which he may be involved by reason of any
action taken or failure to act under the Plan and against and from any and all
amounts paid by him in settlement thereof, with the Company’s approval, or paid
by him in satisfaction of any judgment in any such action, suit, or proceeding
against him, provided he shall give the Company an opportunity, at its own
expense, to handle and defend the same before he undertakes to handle and defend
it on his own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company’s Certificate 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.
 
 
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16.
Repricing.

 
Notwithstanding any provision of the Plan to the contrary, neither the Board nor
a Committee may authorize the repricing of an Award without the prior approval
of the Company’s shareholders. For this purpose, the term “repricing” shall mean
any of the following or any other action that has the same effect: (a) to lower
the exercise price or price per share of an Award after it is granted, (b) to
purchase for cash or shares an outstanding Award at a time when its exercise
price or price per share exceeds the Fair Market Value of the Stock, (c) to take
any other action that is treated as a repricing under generally accepted
accounting principles or (d) to cancel an Award at a time when its exercise
price or price per share exceeds the Fair Market Value of the Stock in exchange
for another Award or Company equity. For purposes of this Section 21, however,
an adjustment pursuant to Section 5(d) shall not be deemed to be a repricing.
 
17.
Requirements of Law.

 
 
(a)
Requirements of Law. The granting of Awards and the issuance of shares of Stock
upon the exercise of an Option shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

 
 
(b)
Governing Law. The Plan and all Award Agreements and other agreements hereunder
shall be construed in accordance with and governed by the laws of the State of
New York, without giving effect to the choice of law principles thereof, except
to the extent superseded by applicable United States federal law. Unless
otherwise provided in the Award Agreement, Participants are deemed to submit to
the exclusive jurisdiction and venue of the federal or state courts of New York,
to resolve any and all issues that may arise out of or relate to the Plan or any
related Award Agreement.

 
 
(c)
Code Section 409A. Anything under the Plan or an Award Agreement to the contrary
notwithstanding, to the extent applicable, it is intended that any Awards under
the Plan which provide for a “deferral of compensation” subject to Section 409A
of the Code and rules, regulation and guidance issued thereunder (collectively,
Code Section 409A) shall comply with the provisions of Code Section 409A and the
Plan and all applicable Awards shall be construed and applied in a manner
consistent with this intent. In furtherance thereof, any amount constituting a
“deferral of compensation” under Treasury Regulation Section 1.409A-1(b) that is
payable to a Participant upon a Separation from Service of the Participant
(within the meaning of Treasury Regulation Section 1.409A-1(h)) (other than due
to the Participant’s death), occurring while the Participant shall be a
“specified employee” (within the meaning of Treasury Regulation Section
1.409A-1(i)) of the Company or applicable Subsidiary, shall not be paid until
the earlier of (x) the date that is six months following such Separation from
Service or (y) the date of the Participant’s death following such Separation
from Service.

 
 
(d)
Plan Unfunded. The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the issuance of Shares or the payment of cash upon exercise or
payment of any Award. Proceeds from the sale of shares of Stock pursuant to
Options or other Awards granted under the Plan shall constitute general funds of
the Company.

 
 
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