MSB FINANCIAL CORP.

2008 STOCK COMPENSATION AND INCENTIVE PLAN

AS AMENDED AND RESTATED

 

1.

PURPOSE OF PLAN.

 

The purpose of this 2008 Stock Compensation and Incentive Plan, as amended and
restated, is to provide incentives and rewards to officers, employees and
directors that contribute to the success and growth of MSB Financial Corp., and
its Affiliates, and to assist these entities in attracting and retaining
directors, officers and other key employees with necessary experience and
ability required to aid the Company in increasing the long-term value of the
Company for the benefit of its shareholders.

 

2.

DEFINITIONS.

 

"Affiliate" means any "parent corporation" or "subsidiary corporation" of the
Company, as such terms are defined in Sections 424(e) and 424(f) of the Code.
The term Affiliate shall include the Bank.

 

"Award" means a Restricted Stock Award and/or a Stock Option, as set forth at
Section 6 of the Plan.

 

"Bank" means Millington Savings Bank, and any successors thereto.

 

"Beneficiary" means the person or persons designated by the Participant to
receive any benefits payable under the Plan in the event of such Participant's
death. Such person or persons shall be designated in writing by the Participant
and addressed to the Company or the Committee on forms provided for this purpose
by the Committee, and delivered to the Company or the Committee. Such
Beneficiary designation may be changed from time to time by similar written
notice to the Committee. A Participant's last will and testament or any codicil
thereto shall not constitute written designation of a Beneficiary. In the
absence of such written designation, the Beneficiary shall be the Participant's
surviving spouse, if any, or if none, the Participant's estate.

 

"Board of Directors" means the board of directors of the Company.

 

"Cause" means the personal dishonesty, incompetence, willful misconduct, breach
of fiduciary duty involving personal profits, intentional failure to perform
stated duties, willful violation of a material provision of any law, rule or
regulation (other than traffic violations and similar offense), or a material
violation of a final cease-and-desist order or any other action which results in
a substantial financial loss to the Company or its Affiliates.

 

"Change in Control" shall mean: (i) the sale of all, or a material portion, of
the assets of the Company or its Affiliates; (ii) the merger or recapitalization
of the Company whereby the Company is not the surviving entity; (iii) a change
in control of the Company, as otherwise defined or determined by the Office of
Thrift Supervision or regulations promulgated by it; or (iv) the acquisition,
directly or indirectly, of the beneficial ownership (within the meaning of that
term as it is used in Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) of twenty-five percent (25%) or more of the

 

 

1

 

--------------------------------------------------------------------------------

outstanding voting securities of the Company by any person, trust, entity or
group. This limitation shall not apply to the purchase of shares by underwriters
in connection with a public offering of Company stock, or the purchase of shares
of up to 25% of any class of securities of the Company by a tax-qualified
employee stock benefit plan which is exempt from the approval requirements, set
forth under 12 C.F.R. Section 574.3(c)(1)(vii) as now in effect or as may
hereafter be amended. The term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. A Change in Control shall not include a transaction
whereby the MHC shall merge into the Company or the Bank and a new Parent of the
Company or the Bank is formed.

 

"Code" means the Internal Revenue Code of 1986, as amended.

 

"Committee" means the Board of Directors of the Company or the administrative
committee designated, pursuant to Section 3 of the Plan, to administer the Plan.

 

"Common Stock" or "Shares" means shares of common stock of the Company.

 

"Company" means MSB Financial Corp., and any successor entity or any future
parent corporation of the Bank.

 

"Director" means a person serving as a member of the Board of Directors of the
Company from time to time.

 

"Director Emeritus" means a person serving as a director emeritus, advisory
director, consulting director or other similar position as may be appointed by
the Board of Directors of the Company or the Bank from time to time.

 

"Disability" means (a) with respect to Incentive Stock Options, the "permanent
and total disability" of the Employee as such term is defined at Section
22(e)(3) of the Code; and (b) with respect to other Awards, a condition of
incapacity of a Participant which renders that person unable to engage in the
performance of his or her duties by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
twelve (12) months.

 

"Effective Date" shall mean the date of stockholder approval of the Plan by the
stockholders of the Company.

 

"Eligible Participant" means an Employee or Outside Director who may receive an
Award under the Plan.

 

"Employee" means any person employed by the Company or an Affiliate. Directors
who are also employed by the Company or an Affiliate shall be considered
Employees under the Plan.

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

 

"Exercise Price" means the price at which an individual may purchase a share of
Common Stock pursuant to an Option.

 

 

2

 

--------------------------------------------------------------------------------

"Fair Market Value" means a) for a security traded on a national securities
exchange, including the Nasdaq Stock Market, the last reported sales price
reported on such date or, if the Common Stock was not traded on such date, on
the immediately preceding day on which the Common Stock was traded thereon or
the last previous date on which a sale is reported; b) if the Shares are not
traded on a national securities exchange, but are traded on the over-the-counter
market, if sales prices are not regularly reported for the Shares for the
trading day referred to in clause (a), and if bid and asked prices for the
Shares are regularly reported, the mean between the bid and the asked price for
the Shares at the close of trading in the over-the-counter market on the
applicable date, or if the applicable date is not a trading day, on the trading
day immediately preceding the applicable date; and (c) in the absence of such
markets for the Shares, the Fair Market Value shall be determined in good faith
by the Committee.

 

"Incentive Stock Option" means a Stock Option granted under the Plan, that is
intended to meet the requirements of Section 422 of the Code.

 

"MHC" means MSB Financial, MHC, the mutual holding company of the Bank.

 

"Non-Statutory Stock Option" means a Stock Option granted to an individual under
the Plan that is not intended to be and is not identified as an Incentive Stock
Option, or an Option granted under the Plan that is intended to be and is
identified as an Incentive Stock Option, but that does not meet the requirements
of Section 422 of the Code.

 

"Option" or "Stock Option" means an Incentive Stock Option or a Non-Statutory
Stock Option, as applicable.

 

"Outside Director" means a member of the Board of Directors of the Company who
is not also an Employee.

 

"Parent" means any present or future corporation which would be a "parent
corporation" of the Bank or the Company as defined in Sections 424(e) and (g) of
the Code.

 

"Participant" means an individual who is granted an Award pursuant to the terms
of the Plan; provide, however, upon the death of a Participant, the term
"Participant" shall also refer to a Beneficiary designated in accordance with
the Plan.

 

"Plan" means this MSB Financial Corp. 2008 Stock Compensation and Incentive
Plan, as amended and restated.

 

"Restricted Stock Award" means an Award of Shares granted to a Participant
pursuant to Section 6.5 of the Plan.

 

"Trust" shall mean any grantor trust established by the Company for purposes of
administration of the Plan.

 

"Trustee" shall mean the trustee or trustees of any Trust established by the
Company for purposes of administration of the Plan. The Committee shall serve as
the Trustee unless or until the Committee shall otherwise appoint a Trustee or
successor trustee.

 

 

 

3

 

--------------------------------------------------------------------------------

3.   ADMINISTRATION.

 

 

(a)

Committee. The Committee shall administer the Plan. The Committee shall consist
of two or more disinterested directors of the Company, who shall be appointed by
the Board of Directors. A member of the Board of Directors shall be deemed to be
disinterested only if he or she satisfies: (i) such requirements as the
Securities and Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule 16b-3 (or its
successor) of the Exchange Act and (ii) and to the extent deemed appropriate by
the Board of Directors, such requirements as the Internal Revenue Service may
establish for outside directors acting under plans intended to qualify for
exemption under Section 162(m)(4)(C) of the Code; provided, however, a failure
to comply with the requirements of subparagraphs (i) and (ii) shall not
disqualify any actions taken by the Committee. A majority of the entire
Committee shall constitute a quorum and the action of a majority of the members
present at any meeting at which a quorum is present shall be deemed the action
of the Committee. In no event may the Committee revoke outstanding Awards
without the consent of the Participant. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on all persons
affected thereby.

 

 

(b)

Authority of Committee. Subject to paragraph (a) of this Section 3, the
Committee shall:

 

 

(i)

select the individuals who are to receive grants of Awards under the Plan;

 

(ii)

determine the type, number, vesting requirements, acceleration of vesting and
other features and conditions of Awards made under the Plan;

 

(iii)

interpret the Plan and Award Agreements (as defined below); and

 

(iv)

make all other decisions and determinations that may be required or as the
Committee deems necessary or advisable related to the operation of the Plan.

 

 

(c)

Awards. Each Award granted under the Plan shall be evidenced by a written
agreement (i.e., an "Award Agreement"). Each Award Agreement shall constitute a
binding contract between the Company or an Affiliate and the Participant, and
every Participant, upon acceptance of an Award Agreement, shall be bound by the
terms and restrictions of the Plan and the Award Agreement. The terms of each
Award Agreement shall be set in accordance with the Plan, but each Award
Agreement may also include any additional provisions and restrictions determined
by the Committee. In particular, and at a minimum, the Committee shall set forth
in each Award Agreement:

 

 

(i)

the type of Award granted;

(ii)

the Exercise Price for any Option;

(iii)

the number of shares or rights subject to the Award;

 

(iv)

the expiration date of the Award;

 

(v)

the manner, time and rate (cumulative or otherwise) of exercise or vesting of
the Award; and

 

(vi)

the restrictions, if any, placed on the Award, or upon shares which may be
issued upon the exercise or vesting of the Award.

 

 

4

 

--------------------------------------------------------------------------------

The Chairman of the Committee and/or the President of the Company are hereby
authorized to execute Award Agreements on behalf of the Company or an Affiliate
and to cause them to be delivered to the Participants granted Awards under the
Plan.

 

 

(d)

Six-Month Holding Period. Subject to vesting requirements, if applicable, except
in the event of death or Disability of the Participant or a Change in Control of
the Company, a minimum of six months must elapse between the date of the grant
of an Option and the date of the sale of the Common Stock received through the
exercise of such Option.

 

4.

ELIGIBILITY.

 

Subject to the terms of the Plan, Employees and Outside Directors, as the
Committee shall determine from time to time, shall be eligible to receive Awards
in accordance with the Plan.

 

5.

SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS.

 

5.1       Shares Available. Subject to the provisions of Section 7, the Common
Stock that may be delivered under this Plan shall be shares of the Company's
authorized but unissued Common Stock, shares of Common Stock purchased in the
open-market by the Company or any Trust established for purposes of
administration of the Plan and any shares of Common Stock held as treasury
shares.

 

5.2       Share Limits. The maximum number of shares of Common Stock that may be
delivered pursuant to Awards granted under this Plan (the "Share Limit") equals
385,574 shares. The following limits also apply with respect to Awards granted
under this Plan:

 

 

(a)

The maximum number of shares of Common Stock that may be delivered pursuant to
the exercise of Stock Options granted under this Plan is 275,410 shares.

 

 

(b)

The maximum number of shares of Common Stock that may be delivered pursuant to
Restricted Stock Awards granted under this Plan is 110,164 shares.

 

5.3       Awards Settled in Cash, Reissue of Awards and Shares. To the extent
that an Award is settled in cash or a form other than shares of Common Stock, or
if shares of Common Stock are withheld from an Award for tax purposes, then the
shares that would have been delivered had there been no such cash or other
settlement shall be counted against the shares available for issuance under this
Plan. Shares that are subject to or underlie Awards which expire or for any
reason are cancelled or terminated, are forfeited, fail to vest, or for any
other reason are not paid or delivered under this Plan shall again be available
for subsequent Awards under this Plan.

 

5.4       Reservation of Shares; No Fractional Shares; Minimum Issue. The
Company shall at all times reserve a number of shares of Common Stock sufficient
to cover the Company's obligations and contingent obligations to deliver shares
with respect to Awards then outstanding under this Plan. No fractional shares
shall be delivered under this Plan. The Committee may pay cash in lieu of any
fractional shares in settlements of Awards under this Plan. No fewer than 100
shares may be purchased on exercise of any Stock Option unless the total number
purchased or exercised is the total number at the time available for purchase or
exercise by the Participant.

 

 

5

 

--------------------------------------------------------------------------------

6.   AWARDS.

 

 

6.1

Stock Options.

 

The Committee may, subject to the limitations of this Plan and the availability
of shares of Common Stock reserved but not previously awarded under the Plan,
grant Stock Options to Employees and Outside Directors, subject to terms and
conditions as it may determine, to the extent that such terms and conditions are
consistent with the following provisions:

 

 

(i)

Exercise Price. The Exercise Price of Stock Options shall not be less than one
hundred percent (100%) of the Fair Market Value of the Common Stock on the date
of grant. The Exercise Price of any Options awarded during calendar year 2008 or
2009 shall not be less than $10.00 per share, subject to adjustment in
accordance with Sections 8.1 and 8.3 herein.

 

 

(ii)

Terms of Options. In no event may an individual exercise an Option, in whole or
in part, more than ten (10) years from the date of grant.

 

 

(iii)

Non-Transferability. Unless otherwise determined by the Committee, an individual
may not transfer, assign, hypothecate, or dispose of an Option in any manner,
other than by will or the laws of intestate succession. The Committee may,
however, in its sole discretion, permit the transfer or assignment of a
Non-Statutory Stock Option, if it determines that the transfer or assignment is
for valid estate planning purposes and is permitted under the Code and Rule
16b-3 of the Exchange Act. For purposes of this Section 6.1, a transfer for
valid estate planning purposes includes, but is not limited to, transfers:

 

 

(1)

to a revocable inter vivos trust, as to which an individual is both settlor and
trustee;

 

 

(2)

for no consideration to: (a) any member of the individual's Immediate Family;
(b) a trust solely for the benefit of members of the individual's Immediate
Family; (c) any partnership whose only partners are members of the individual's
Immediate Family; or (d) any limited liability corporation or other corporate
entity whose only members or equity owners are members of the individual's
Immediate Family.

 

For purposes of this Section 6.1, "Immediate Family" includes, but is not
necessarily limited to, a Participant's parents, grandparents, spouse, children,
grandchildren, siblings (including half brothers and sisters), and individuals
who are family members by adoption. Nothing contained in this Section 6.1 shall
be construed to require the Committee to give its approval to any transfer or
assignment of any Non-Statutory Stock Option or portion thereof, and approval to
transfer or assign any Non-Statutory Stock Option or portion thereof does not
mean that such approval will be given with respect to any other Non-Statutory
Stock Option or portion thereof. The transferee or assignee of any Non-

 

 

6

 

--------------------------------------------------------------------------------

Statutory Stock Option shall be subject to all of the terms and conditions
applicable to such Non-Statutory Stock Option immediately prior to the transfer
or assignment and shall be subject to any other conditions prescribed by the
Committee with respect to such Non-Statutory Stock Option.

 

 

(iv)

Special Rules for Incentive Stock Options. Notwithstanding the foregoing
provisions, the following rules shall further apply to grants of Incentive Stock
Options:

 

 

(1)

If an Employee owns or is treated as owning, for purposes of Section 422 of the
Code, Common Stock representing more than ten percent (10%) of the total
combined voting securities of the Company at the time the Committee grants the
Incentive Stock Option (a "10% Owner"), the Exercise Price shall not be less
than one hundred and ten percent (110%) of the Fair Market Value of the Common
Stock on the date of grant.

 

 

(2)

An Incentive Stock Option granted to a 10% Owner shall not be exercisable more
than five (5) years from the date of grant.

 

 

(3)

To the extent the aggregate Fair Market Value of shares of Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
an Employee during any calendar year, under the Plan or any other stock option
plan of the Company, exceeds $100,000, or such higher value as may be permitted
under Section 422 of the Code, Incentive Stock Options in excess of the $100,000
limit shall be treated as Non-Statutory Stock Options. Fair Market Value shall
be determined as of the date of grant for each Incentive Stock Option.

 

 

(4)

Each Award Agreement for an Incentive Stock Option shall require the individual
to notify the Committee within ten (10) days of any disposition of shares of
Common Stock under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions).

 

 

(5)

Incentive Stock Options may only be awarded to an Employee of the Company or its
Affiliates.

 

 

(v)

Option Awards to Outside Directors. Subject to the limitations of Section
6.4(a), the Committee may award Non-Statutory Stock Options to purchase shares
of Common Stock to each Outside Director of the Company at an Exercise Price
equal to the Fair Market Value of the Common Stock on such date of grant. The
Options will be first exercisable at the rate of 20% on the one year anniversary
of the date of grant of such Award and 20% annually thereafter during periods of
continuing service as a Director or Director Emeritus. Upon the death or
Disability of the Director or Director Emeritus, such Option shall be deemed
immediately 100% exercisable. Such Options shall continue to be exercisable for
a period of ten years following the date of grant without regard to

 

 

7

 

--------------------------------------------------------------------------------

the continued services of such Director as a Director or Director Emeritus. In
the event of the Director's death, such Options may be exercised by the
Beneficiary or the personal representative of his estate or person or persons to
whom his rights under such Option shall have passed by will or by the laws of
descent and distribution. Options may be granted to newly appointed or elected
Outside Directors within the sole discretion of the Committee. The Exercise
Price per share of such Options granted shall be equal to the Fair Market Value
of the Common Stock at the time such Options are granted. All outstanding Awards
shall become immediately exercisable in the event of a Change in Control of the
Bank or the Company. Unless otherwise inapplicable, or inconsistent with the
provisions of this paragraph, the Options to be granted to Outside Directors
hereunder shall be subject to all other provisions of this Plan.

 

6.2       Award Payouts. Awards may be paid out in the form of cash, Common
Stock, or combinations thereof as the Committee shall determine in its sole
discretion, and with such restrictions as it may impose.

 

6.3       Consideration for Stock Options. The Exercise Price for any Stock
Option granted under this Plan may be paid by means of any lawful consideration
as determined by the Committee, including, without limitation, one or a
combination of the following methods:

 

 

(a)

cash, check payable to the order of the Company, or electronic funds transfer;

 

(b)

the delivery of previously owned shares of Common Stock; or

 

(c)

subject to such procedures as the Committee may adopt, pursuant to a "cashless
exercise" with a third party who provides financing for the purposes of (or who
otherwise facilitates) the purchase or exercise of such Stock Option.

 

In no event shall any shares newly-issued by the Company be issued for less than
the minimum lawful consideration for such shares or for consideration other than
consideration permitted by applicable state law. In the event that the Committee
allows a Participant to exercise an Option by delivering shares of Common Stock
previously owned by such Participant, any such shares delivered which were
initially acquired by the Participant from the Company (upon exercise of a stock
option or otherwise) must have been owned by the Participant for at least six
months prior to such date of delivery. Shares of Common Stock used to satisfy
the Exercise Price of an Option shall be valued at their Fair Market Value on
the date of exercise. The Company will not be obligated to deliver any shares
unless and until it receives full payment of the Exercise Price and any related
withholding obligations under Section 9.5 have been satisfied, or until any
other conditions applicable to exercise or purchase have been satisfied. No
Shares of Common Stock shall be issued until full payment has been received by
the Company, and no Participant shall have any of the rights of a stockholder of
the Company until shares of Common Stock are issued upon the exercise of such
Stock Options. Unless expressly provided otherwise in the applicable Award
Agreement, the Committee may at any time within its sole discretion eliminate or
limit a Participant's ability to pay the purchase or Exercise Price of any Award
by any method other than a cash payment to the Company.

 

 

 

8

--------------------------------------------------------------------------------

 

 

 

 

6.4

Limitations on Awards.

 

 

(a)

Stock Option Award Limitations. In no event shall Shares subject to Options
granted to Outside Directors in the aggregate under this Plan exceed more than
35% of the total number of shares authorized for delivery under this Plan with
respect to Stock Options or exceed more than 7% of such shares to any individual
Outside Director pursuant to Section 5.2(a) herein. In no event shall Shares
subject to Options granted to any single Employee exceed more than 25% of the
total number of shares authorized for delivery under the Plan pursuant to
Section 5.2(a) herein.

 

 

(b)

Vesting of Awards. Except as otherwise provided by the terms of the Plan or by
action of the Committee at the time of the grant of an Award, Stock Options will
be first earned and exercisable and Restricted Stock Awards will be earned and
non-forfeitable at the rate of 20% of such Award on the one year anniversary of
the date of grant and 20% annually thereafter during such periods of service as
an Employee, Director or Director Emeritus.

 

 

(c)

Restricted Stock Award Limitations. In no event shall shares subject to
Restricted Stock Awards granted to Outside Directors in the aggregate under this
Plan exceed more than 35% of the total number of shares authorized for delivery
under this Plan with respect to Restricted Stock Awards or exceed more than 7%
to any individual Outside Director pursuant to Section 5.2(b) herein. In no
event shall shares subject to Restricted Stock Awards granted to any single
Employee exceed more than 25% of the total number of shares authorized for
delivery under the Plan pursuant to Section 5.2(b) herein.

 

6.5       Restricted Stock Awards. The Committee may make grants of Restricted
Stock Awards, which shall consist of the grant of some number of shares of
Common Stock to an individual upon such terms and conditions as it may
determine, to the extent such terms and conditions are consistent with the
following provisions:

 

 

(a)

Grants of Stock. Restricted Stock Awards may only be granted in whole shares of
Common Stock.

 

(b)

Non-Transferability. Except to the extent permitted by the Code, the rules
promulgated under Section 16(b) of the Exchange Act or any successor statutes or
rules:

 

(1)

The recipient of a Restricted Stock Award grant shall not sell, transfer,
assign, pledge, or otherwise encumber shares subject to the grant until full
vesting of such shares has occurred. For purposes of this Section 6.5, the
separation of beneficial ownership and legal title through the use of any "swap"
transaction is deemed to be a prohibited encumbrance.

 

(2)

Unless otherwise determined by the Committee, and except in the event of the
Participant's death or pursuant to a qualified domestic relations order, a
Restricted Stock Award grant is not transferable and may be earned only by the
individual to whom it is granted during his or her lifetime. Upon the death of a
Participant, a Restricted Stock Award shall be transferred to the Beneficiary.
The designation of a Beneficiary shall not constitute a transfer.

 

 

9

 

--------------------------------------------------------------------------------

 

(3)

If the recipient of a Restricted Stock Award is subject to the provisions of
Section 16 of the Exchange Act, shares of Common Stock subject to the grant may
not, without the written consent of the Committee (which consent may be given in
the Award Agreement), be sold or otherwise disposed of within six (6) months
following the date of grant.

 

(c)    Issuance of Certificates. The Committee, in its sole discretion, may
permit the issuance of shares of Common Stock to be issued pursuant to a
Restricted Stock Award prior to the time that such Award shall be deemed earned
and non-forfeitable, with such stock certificate evidencing such shares
registered in the name of the Participant to whom the Restricted Stock Award was
granted; provided, however, that the Company may not cause a stock certificate
to be issued unless it has received a general stock power in favor of the
Company duly endorsed in blank with respect to such shares. Further, each such
stock certificate shall bear the following legend:

 

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED
HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING
FORFEITURE PROVISIONS AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE MSB
FINANCIAL CORP. 2008 STOCK COMPENSATION AND INCENTIVE PLAN, AS AMENDED AND
RESTATED, AND THE RELATED AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED
OWNER OF SUCH SHARES AND MSB FINANCIAL CORP. THE PLAN AND AWARD AGREEMENT IS ON
FILE IN THE OFFICE OF THE CORPORATE SECRETARY OF MSB FINANCIAL CORP.

 

This legend shall not be removed until such Restricted Stock Award shall be
deemed earned and non-forfeitable by the Participant pursuant to the terms of
the Plan and respective Award Agreement. Each certificate issued pursuant to
this Section 6.5 shall be held by the Company or its Affiliates, unless the
Committee determines otherwise.

 

 

(d)

Treatment of Dividends. Participants are entitled to all dividends and other
distributions declared and paid on all shares of Common Stock subject to a
Restricted Stock Award, from and after the date of grant of such Restricted
Stock Award. Such dividends and other distributions shall be distributed to the
holder of such Restricted Stock Award within 30 days of the payment date
applicable to such distributions declared and paid with respect to the Common
Stock; provided that in the event of the forfeiture of such Restricted Stock
Award, all future dividend rights shall cease.

 

 

(e)

Voting Rights Associated with of Restricted Stock Awards. Voting rights
associated with any Restricted Stock Award shall not be exercised by the
Participant until certificates of Common Stock representing such Award have been
issued to such Participant, and such Restricted Stock Award shall be deemed
earned and non-forefeitable. Any shares of Common Stock held by the Trust prior
to issuance to a Participant shall be voted by the Trustee of such Trust as
directed by the Committee. Any shares of Common Stock held by Company prior to
such time that the Awards are earned and non-forfeitable shall be voted by the
Committee in accordance with the general stock power held by the Company
applicable to such shares.

 

 

10

 

--------------------------------------------------------------------------------

 

 

(f)

Restricted Stock Awards to Outside Directors. Notwithstanding anything herein to
the contrary, the Committee may grant a Restricted Stock Award consisting of
shares of Common Stock to each Outside Director of the Company. Such Award shall
be earned and non-forfeitable at the rate of one-fifth as of the one-year
anniversary of such date of grant and an additional one-fifth following each of
the next four successive years during such periods of service as a Director or
Director Emeritus. Such Award shall be immediately 100% earned and
non-forfeitable in the event of the death or Disability of such Director. Such
Award shall be immediately 100% earned and non-forfeitable upon a Change in
Control of the Company or the Bank. Restricted Stock Awards may be granted to
newly elected or appointed Outside Directors within the discretion of the
Committee, provided that total Restricted Stock Awards granted to Outside
Directors shall not exceed the limitations set forth at Section 6.4(c) herein.

 

7.

EFFECT OF TERMINATION OF SERVICE ON AWARDS.

 

7.1       General. The Committee shall establish the effect of a termination of
employment or service on the continuation of rights and benefits available under
an Award, and, in so doing, may make distinctions based upon, inter alia, the
recipient of such Award, the cause of termination and the type of the Award.
Notwithstanding the foregoing, the terms of Awards shall be consistent with the
following, as applicable:

 

 

(a)

Termination of Employment. In the event that any Participant's employment with
the Company shall terminate for any reason, other than Disability or death, all
of any such Participant's Incentive Stock Options, and all of any such
Participant's rights to purchase or receive shares of Common Stock pursuant
thereto, shall automatically terminate on (A) the earlier of (i) or (ii):
(i) the respective expiration dates of any such Incentive Stock Options, or
(ii) the expiration of not more than three (3) months after the date of such
termination of employment; or (B) at such later date as is determined by the
Committee at the time of the grant of such Award based upon the Participant(s
continuing status as a Director or Director Emeritus of the Bank or the Company,
but only if, and to the extent that, the Participant was entitled to exercise
any such Incentive Stock Options at the date of such termination of employment,
and further that such Award shall thereafter be deemed a Non-Statutory Stock
Option. Notwithstanding anything herein to the contrary, except as otherwise
detailed by the Committee at the time of grant of an Award, upon the termination
of employment of a Participant who shall continue service thereafter as a
Director or Director Emeritus, all previously granted Awards shall continue to
be earned and non-forfeitable annually in accordance with the schedule detailed
at the time of such Award, and all Stock Options shall remain exercisable during
such period of service as a Director or Director Emeritus or the expiration date
of such Award, if earlier.

 

 

(b)

Disability. In the event that any Participant(s employment with the Company
shall terminate as the result of the Disability of such Participant, such
Participant may exercise any Incentive Stock Options previously granted to the
Participant pursuant to the Plan at any time prior to the earlier of (i) the
respective expiration dates of any such Incentive Stock Options or (ii) the date
which is one (1) year after the date of such termination of employment, but only
if, and to the extent that, the Participant was entitled to exercise any such
Incentive Stock Options at the date of such termination of employment.
Notwithstanding anything herein to the contrary, except as otherwise detailed by
the Committee at the time of grant of an Award, upon the Disability of a
Participant, all previously granted Awards shall become immediately earned and
non-forfeitable, and all

 

 

11

 

--------------------------------------------------------------------------------

Stock Options shall remain exercisable for a period of one year following such
date of Disability or the expiration date of such Award, if earlier.

 

 

(c)

Death. In the event of the death of a Participant, any Incentive Stock Options
previously granted to such Participant may be exercised by the Participant’s
Beneficiary or the person or persons to whom the Participant's rights under any
such Incentive Stock Options pass by will or by the laws of descent and
distribution (including the Participant(s estate during the period of
administration) at any time prior to the earlier of (i) the respective
expiration dates of any such Incentive Stock Options or (ii) the date which is
two (2) years after the date of death of such Participant, but only if, and to
the extent that, the Participant was entitled to exercise any such Incentive
Stock Options at the date of death. For purposes of this Section 7.1(c), any
Incentive Stock Option held by an Participant shall be considered exercisable at
the date of his death if the only unsatisfied condition precedent to the
exercisability of such Incentive Stock Option at the date of death is the
passage of a specified period of time. At the discretion of the Committee, upon
exercise of such Options, the Beneficiary may receive Shares or cash or a
combination thereof. If cash shall be paid in lieu of shares of Common Stock,
such cash shall be equal to the difference between the Fair Market Value of such
Shares and the exercise price of such Options on the exercise date.
Notwithstanding anything herein to the contrary, except as otherwise detailed by
the Committee at the time of grant of an Award, upon the death of a Participant,
all previously granted Awards shall become immediately earned and
non-forfeitable, and all Stock Options shall remain exercisable for a period of
two years following such date of death or the expiration date of such Award, if
earlier.

 

7.2       Events Not Deemed Terminations of Employment or Service. Unless
Company policy or the Committee provides otherwise, the employment relationship
shall not be considered terminated in the case of (a) sick leave, (b) military
leave, or (c) any other leave of absence authorized by the Company or the
Committee; provided that, unless reemployment upon the expiration of such leave
is guaranteed by contract or law, such leave is for a period of not more than 90
days. In the case of any Employee on an approved leave of absence, continued
vesting of the Award while on leave may be suspended until the Employee returns
to service, unless the Committee otherwise provides or applicable law otherwise
requires. In no event shall an Award be exercised after the expiration of the
term set forth in the Award Agreement.

 

7.3       Effect of Change of Affiliate Status. For purposes of this Plan and
any Award, if an entity ceases to be an Affiliate of the Company, a termination
of employment or service shall be deemed to have occurred with respect to each
individual who does not continue as an Employee or Outside Director with another
entity within the Company after giving effect to the Affiliate's change in
status.

 

8.

ADJUSTMENTS IN CAPITAL STRUCTURE; ACCELERATION UPON A CHANGE IN CONTROL.

 

8.1       Adjustments in Capital Structure. Upon any reclassification,
recapitalization, stock split (including a stock split in the form of a stock
dividend) or reverse stock split ("stock split"); any merger, combination,
consolidation, or other reorganization; any spin-off, split-up, or similar
extraordinary dividend distribution with respect to the Common Stock (whether in
the form of securities or property); any exchange of Common Stock or other
securities of the Company, or any similar, unusual

 

 

12

 

--------------------------------------------------------------------------------

or extraordinary corporate transaction affecting the Common Stock; or a sale of
all or substantially all the business or assets of the Company in its entirety;
then the Committee shall proportionately adjust the Plan and the Awards
thereunder in such manner, to such extent and at such times, as is necessary to
preserve the benefits or potential benefits of such Awards, including:

 

 

(a)

proportionately adjust any or all of: (1) the number and type of shares of
Common Stock (or other securities) that thereafter may be made the subject of
Awards (including the specific Share Limits, maximums and numbers of shares set
forth elsewhere in this Plan); (2) the number, amount and type of shares of
Common Stock (or other securities or property) subject to any or all outstanding
Awards; (3) the grant, purchase, or Exercise Price of any or all outstanding
Awards; (4) the securities, cash or other property deliverable upon exercise or
payment of any outstanding Awards; or (5) the performance standards applicable
to any outstanding Awards; or

 

 

(b)

make provision for a cash payment or for the assumption, substitution or
exchange of any or all outstanding Awards, based upon the distribution or
consideration payable to holders of the Common Stock.

 

8.2       The Committee may adopt such valuation methodologies for outstanding
Awards as it deems reasonable in the event of a cash or property settlement and,
in the case of Options, may base such settlement solely upon the excess, if any,
of the per share amount payable upon or in respect of such event over the
Exercise Price or base price of the Award. With respect to any Award of an
Incentive Stock Option, the Committee may make an adjustment that causes the
Option to cease to qualify as an Incentive Stock Option without the consent of
the affected Participant.

 

8.3       Upon any of the events set forth in Section 8.1, the Committee may
take such action prior to such event to the extent that the Committee deems the
action necessary to permit the Participant to realize the benefits intended to
be conveyed with respect to the Awards in the same manner as is or will be
available to stockholders of the Company generally. In the case of any stock
dividend, stock split or reverse stock split, if no action is taken by the
Committee, the proportionate adjustments contemplated by Section 8.1(a) above
shall nevertheless be made.

 

8.4       Automatic Acceleration of Awards. Unless otherwise determined by the
Committee, upon a Change in Control of the Company or the Bank, each Stock
Option then outstanding shall become fully earned and exercisable and remain
exercisable for its remaining term, and all Restricted Stock Awards then
outstanding shall be fully vested, be deemed earned and non-forfeitable and be
free of restrictions.

 

8.5       Acceleration of Vesting. The Committee shall at all times have the
power to accelerate the exercise date of Options and the date that Restricted
Stock Awards shall be earned and non-forfeitable with respect to previously
granted Awards; provided that such action is not contrary to regulations of the
Office of Thrift Supervision or other appropriate banking regulatory agency then
in effect.

 

9.

MISCELLANEOUS PROVISIONS.

 

9.1       Compliance with Laws. This Plan, the granting and vesting of Awards
under this Plan, the offer, issuance and delivery of shares of Common Stock, the
acceptance of payment of money under this Plan or under Awards are subject to
compliance with all applicable federal and state laws, rules and regulations
(including, but not limited to, state and federal securities laws) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. The person acquiring any securities under this Plan will,

 

 

13

 

--------------------------------------------------------------------------------

if requested by the Company, provide such assurances and representations to the
Company as may be deemed necessary or desirable to assure compliance with all
applicable legal and accounting requirements.

 

9.2       Claims. No person shall have any claim or rights to an Award (or
additional Awards, as the case may be) under this Plan, subject to any express
contractual rights to the contrary (set forth in a document other than this
Plan).

 

9.3       No Employment/Service Contract. Nothing contained in this Plan (or in
any other documents under this Plan or in any Award Agreement) shall confer upon
any Participant any right to continue in the employ or other service of the
Company, constitute any contract or agreement of employment or other service or
affect an Employee's status as an employee-at-will, nor interfere in any way
with the right of the Company to change a Participant's compensation or other
benefits, or terminate his or her employment or other service, with or without
cause. Nothing in this Section 9.3, however, is intended to adversely affect any
express independent right of such Participant under a separate employment or
service contract other than an Award Agreement.

 

9.4       Plan Not Funded. Awards payable under this Plan shall be payable in
shares of Common Stock or from the general assets of the Company. No
Participant, beneficiary or other person shall have any right, title or interest
in any fund or in any specific asset (including shares of Common Stock, except
as expressly provided otherwise) of the Company by reason of any Award
hereunder. Neither the provisions of this Plan (or of any related documents),
nor the creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any Participant,
Beneficiary or other person. To the extent that a Participant, Beneficiary or
other person acquires a right to receive payment pursuant to any Award
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company. . Notwithstanding the foregoing, the Company
may establish a Trust in accordance with Section 10 with respect to Awards made
in accordance with Section 6.5 herein.

 

 

9.5

Tax Matters; Tax Withholding.

 

 

(a)

Tax Withholding. Upon any exercise, vesting, or payment of any Award, the
Company shall have the right, within its sole discretion, to:

 

 

(i)

require the Participant (or the Participant's personal representative or
Beneficiary, as the case may be) to pay or provide for payment of at least the
minimum amount of any taxes which the Company may be required to withhold with
respect to such Award or payment; or

 

 

(ii)

deduct from any amount otherwise payable in cash to the Participant (or the
Participant's personal representative or Beneficiary, as the case may be) the
minimum amount of any taxes which the Company may be required to withhold with
respect to such cash payment, or

 

 

(iii)

in any case where tax withholding is required in connection with the delivery of
shares of Common Stock under this Plan, the Committee may, in its sole
discretion, pursuant to such rules and subject to such conditions as the
Committee may establish, reduce the number of shares to be delivered to the

 

 

14

 

--------------------------------------------------------------------------------

Participant by the appropriate number of shares, valued in a consistent manner
at their Fair Market Value as necessary to satisfy the minimum applicable
withholding obligation. In no event shall the shares withheld exceed the minimum
whole number of shares required for tax withholding under applicable law.

 

 

(b)

Required Notification of Section 83(b) Election. In the event a Participant
makes an election under Section 83(b) of the Code in connection with an Award,
the Participant shall notify the Company of such election within ten days of
filing notice of the election with the Internal Revenue Service or other
governmental authority, in addition to any filing and notification required
pursuant to regulations issued under Section 83(b) of the Code or other
applicable provision.

 

 

(c)

Requirement of Notification Upon Disqualifying Disposition Under Section 421(b)
of the Code. If any Participant shall make any disposition of shares of Stock
delivered pursuant to the exercise of Incentive Stock Options under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), such Participant shall notify the Company of such
disposition within ten days thereof.

 

 

(d)

Section 409A Matters. To the extent that any Award is determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the
Code (a “409A Award”), the Award shall be subject to such additional rules and
requirements as specified by the Committee from time to time in order to comply
with Section 409A of the Code. In this regard, if any amount under a 409A Award
is payable upon a “separation from service” (within the meaning of Section 409A
of the Code) to a Participant who is then considered a “specified employee”
(within the meaning of Section 409A of the Code), then no such payment shall be
made prior to the date that is the earlier of (i) six months and one day after
the Participant’s separation from service, or (ii) the Participant’s death, but
only to the extent such delay is necessary to prevent such payment from being
subject to interest, penalties and/or additional tax imposed pursuant to Section
409A of the Code. Further, the settlement of any such Award may not be
accelerated except to the extent permitted by Section 409A of the Code. To the
extent that an Award is deemed to constitute a 409A Award, and the settlement
of, or distribution of benefits thereunder of, such Award is to be triggered
solely by a Change in Control, then with respect to such Award, a Change in
Control shall be defined as required in conformity with the limitations under
Section 409A of the Code, as in effect at the time of such Change in Control
transaction.

 

 

9.6

Effective Date, Termination and Suspension, Amendments.

 

 

(a)

Effective Date and Termination. This Plan is effective upon the later of
approval of the Plan by the Board of Directors of the Company or the vote of
approval by the stockholders of the Company ("Approval Date"). Unless earlier
terminated by the Board, this Plan shall terminate at the close of business on
the day before the tenth anniversary of the Approval Date. After the termination
of this Plan either upon such stated expiration date or its earlier termination
by the Board, no additional Awards may be granted under this Plan, but
previously granted Awards (and the authority of the Committee with respect
thereto, including the authority to amend such Awards) shall remain outstanding
in accordance with their applicable terms and conditions and the terms and
conditions of this Plan.

 

 

15

 

--------------------------------------------------------------------------------

 

(b)

Board Authorization. Subject to applicable laws and regulations, the Board of
Directors may, at any time, terminate or, from time to time, amend, modify or
suspend this Plan, in whole or in part; provided, however, that no such
amendment may have the effect of repricing the Exercise Price of Options. No
Awards may be granted during any period that the Board of Directors suspends
this Plan.

 

 

(c)

Stockholder Approval. The Plan must be approved by a majority of votes cast by
stockholders of the Company (including votes cast by MSB Financial, MHC under
Nasdaq rules), by a majority of the total votes of the Company eligible to be
cast (including votes eligible to be cast by MSB Financial, MHC) and by a
majority of votes cast by stockholders of the Company (excluding shares voted by
MSB Financial, MHC) or such other approval vote as may be required by the Office
of Thrift Supervision.

 

 

(d)

Limitations on Amendments to Plan and Awards. No amendment, suspension or
termination of this Plan or change affecting any outstanding Award shall,
without the written consent of the Participant, affect in any manner materially
adverse to the Participant any rights or benefits of the Participant or
obligations of the Company under any Award granted under this Plan prior to the
effective date of such change. Changes, settlements and other actions
contemplated by Section 8 shall not be deemed to constitute changes or
amendments for purposes of this Section 9.6.

 

 

9.7

Governing Law; Compliance with Regulations; Construction; Severability.

 

 

(a)

Construction. This Plan, the Awards, all documents evidencing Awards and all
other related documents shall be governed by, and construed in accordance with,
the laws of the United States and the laws of the State of New Jersey to the
extent not preempted by Federal law.

 

 

(b)

Compliance with Regulations. This Plan will comply with the requirements set
forth in 12 C.F.R. Section 563b.500. Notwithstanding any other provision in this
Plan, no shares of Common Stock shall be issued with respect to any Award to the
extent that such issuance would cause the MHC to fail to qualify as a mutual
holding company of the Bank under applicable federal laws or regulations.

 

 

(c)

Severability. If a court of competent jurisdiction holds any provision invalid
and unenforceable, the remaining provisions of this Plan shall continue in
effect.

 

 

(d)

Section 16 of Exchange Act. It is the intent of the Company that the Awards and
transactions permitted by Awards be interpreted in a manner that, in the case of
Participants who are or may be subject to Section 16 of the Exchange Act,
qualify, to the maximum extent compatible with the express terms of the Award,
for exemption from matching liability under Rule 16b-3 promulgated under the
Exchange Act. Notwithstanding the foregoing, the Company shall have no liability
to any Participant for Section 16 consequences of Awards or events affecting
Awards if an Award or event does not so qualify.

 

 

(e)

Compliance with Law. Shares of Common Stock shall not be issued with respect to
any Award granted under the Plan unless the issuance and delivery of such shares
shall comply with all relevant provisions of applicable law, including, without
limitation, the Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder,

 

 

16

 

--------------------------------------------------------------------------------

any applicable state securities laws and the requirements of any stock exchange
upon which the shares may then be listed.

 

 

(f)

Necessary Approvals. The inability of the Company to obtain any necessary
authorizations, approvals or letters of non-objection from any regulatory body
or authority deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any shares of Common Stock issuable hereunder shall relieve
the Company of any liability with respect to the non-issuance or sale of such
shares.

 

 

(g)

Representations and Warranties of Participants. As a condition to the exercise
of any Option or the delivery of shares in accordance with an Award, the Company
may require the person exercising the Option or receiving delivery of the shares
to make such representations and warranties as may be necessary to assure the
availability of an exemption from the registration requirements of federal or
state securities law.

 

 

(h)

Termination for Cause. Notwithstanding anything herein to the contrary, upon the
termination of employment or service of a Participant by the Company or an
Affiliate for "cause" as defined at 12 C.F.R. Section 563.39(b)(1) as determined
by the Board of Directors or the Committee, all Awards held by such Participant
which have not yet been delivered and deemed earned and non-forfeitable shall be
forfeited by such Participant as of the date of such termination of employment
or service.

 

 

(i)

Cash Payment in Lieu of Delivery of Shares. Upon the exercise of an Option, the
Committee, in its sole and absolute discretion, may make a cash payment to the
Participant, in whole or in part, in lieu of the delivery of shares of Common
Stock. Such cash payment to be paid in lieu of delivery of Common Stock shall be
equal to the difference between the Fair Market Value of the Common Stock on the
date of the Option exercise and the exercise price per share of the Option. Such
cash payment shall be in exchange for the cancellation of such Option. Such cash
payment shall not be made in the event that such transaction would result in
liability to the Participant or the Company under Section 16(b) of the Exchange
Act and regulations promulgated thereunder, or subject the Participant to
additional tax liabilities related to such cash payments pursuant to Section
409A of the Code.

 

 

(j)

Certain Regulatory Matters. In the event that the Bank shall be deemed
critically undercapitalized (as defined at 12 C.F.R. Section 565.4), is subject
to enforcement action by the Office of Thrift Supervision, or receives a capital
directive under 12 C.F.R. Section 565.7, then all Options then exercisable and
held by executive officers or Directors of the Company or its Affiliates must be
exercised within such deadlines provided for under such action or directive or
such Options will be forfeited.

 

 

(k)

Forfeiture of Awards in Certain Circumstances. In addition to any forfeiture or
reimbursement conditions the Committee may impose upon an Award, a Participant
may be required to forfeit an Award, or reimburse the Company for the value of a
prior Award, by virtue of the requirement of Section 304 of the Sarbanes-Oxley
Act of 2002 (or by virtue of any other applicable statutory or regulatory
requirement), but only to the extent that such forfeiture or reimbursement is
required by such statutory or regulatory provision. Unless otherwise determined
by the Committee, in the event of a forfeiture of an Award with respect to which
a Participant paid cash consideration, the Participant shall be repaid the
amount of such cash consideration.

 

 

17

 

--------------------------------------------------------------------------------

9.8       Captions. Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of this Plan or any provision thereof.

 

9.9       Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed
to limit the authority of the Board of Directors or the Committee to grant
Awards or authorize any other compensation, with or without reference to the
Common Stock, under any other plan or authority.

 

9.10     Limitation on Liability. No Director, member of the Committee or the
Trustee shall be liable for any determination made in good faith with respect to
the Plan, the Trust or any Awards granted. If a Director, member of the
Committee or the Trustee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by any reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Company
shall indemnify such person against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or her in connection with such action, suit or proceeding if he or she
acted in good faith and in a manner he or she reasonably believed to be in the
best interests of the Company and its Affiliates and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.

 

10.

TRUST ARRANGEMENT.

 

10.1     Activities of Trustee. The Trustee shall receive, hold, administer,
invest and make distributions and disbursements from the Trust in accordance
with the provisions of the Plan and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
the Plan.

 

10.2     Management of Trust. It is the intention of this Plan that the Trustee
shall have complete authority and discretion with respect to the management,
control and investment of the Trust, and that the Trustee shall invest all
assets of the Trust, except those attributable to cash dividends paid with
respect to unearned and unawarded Restricted Stock Awards, in Common Stock to
the fullest extent practicable, except to the extent that the Trustee determines
that the holding of monies in cash or cash equivalents is necessary to meet the
obligations of the Trust. In performing their duties, the Trustee shall have the
power to do all things and execute such instruments as may be deemed necessary
or proper, including the following powers:

 

 

(a)

To invest up to one hundred percent (100%) of all Trust assets in the Common
Stock without regard to any law now or hereafter in force limiting investments
for Trustee or other fiduciaries. The investment authorized herein may
constitute the only investment of the Trust, and in making such investment, the
Trustee is authorized to purchase Common Stock from the Parent or from any other
source, and such Common Stock so purchased may be outstanding, newly issued, or
treasury shares.

 

 

(b)

To invest any Trust assets not otherwise invested in accordance with (a) above
in such deposit accounts, and certificates of deposit (including those issued by
the Bank), obligations of the United States government or its agencies or such
other investments as shall be considered the equivalent of cash.

 

 

(c)

To sell, exchange or otherwise dispose of any property at any time held or
acquired by the Trust.

 

 

18

 

--------------------------------------------------------------------------------

 

(d)

To cause stocks, bonds or other securities to be registered in the name of a
nominee, without the addition of words indicating that such security is an asset
of the Trust (but accurate records shall be maintained showing that such
security is an asset of the Trust).

 

 

(e)

To hold cash without interest in such amounts as may be in the opinion of the
Trustee reasonable for the proper operation of the Plan and Trust.

 

 

(f)

To employ brokers, agents, custodians, consultants and accountants.

 

 

(g)

To hire counsel to render advice with respect to their rights, duties and
obligations hereunder, and such other legal services or representation as they
may deem desirable.

 

 

(h)

To hold funds and securities representing the amounts to be distributed to a
Participant or his Beneficiary as a consequence of a dispute as to the
disposition thereof, whether in a segregated account or held in common with
other assets.

 

 

(i)

As may be directed by the Committee or the Board from time to time, the Trustee
shall pay to the Company any earnings of the Trust attributable to unawarded or
forfeited Restricted Stock Awards.

 

Notwithstanding anything herein contained to the contrary, the Trustee shall not
be required to make any inventory, appraisal or settlement or report to any
court, or to secure any order of a court for the exercise of any power herein
contained, or to maintain bond.

 

10.3     Records and Accounts. The Trustee shall maintain accurate and detailed
records and accounts of all transactions of the Trust, which shall be available
at all reasonable times for inspection by any legally entitled person or entity
to the extent required by applicable law, or any other person determined by the
Committee.

 

10.4     Earnings. All earnings, gains and losses with respect to Trust assets
shall be allocated in accordance with a reasonable procedure adopted by the
Committee, to bookkeeping accounts for Participants or to the general account of
the Trust, depending on the nature and allocation of the assets generating such
earnings, gains and losses. In particular, any earnings on cash dividends
received with respect to Restricted Stock Awards shall be allocated to accounts
for Participants, except to the extent that such cash dividends are distributed
to Participants, if such shares are the subject of outstanding Restricted Stock
Awards, or, otherwise held by the Trust or returned to the Company.

 

10.5     Expenses. All costs and expenses incurred in the operation and
administration of this Plan, including those incurred by the Trustee, shall be
paid by the Company or, if not so paid, then paid from the cash assets of the
Trust.

 

10.6     Indemnification. Subject to the requirements and limitations of
applicable laws and regulations, the Company shall indemnify, defend and hold
the Trustee harmless against all claims, expenses and liabilities arising out of
or related to the exercise of the Trustee(s powers and the discharge of their
duties hereunder, unless the same shall be due to their gross negligence or
willful misconduct.

 

10.7     Term of Trust. The Trust, if established, shall remain in effect until
the earlier of (i) termination by the Committee, (ii) the distribution of all
assets of the Trust, or (iii) 21 years from the Effective Date. Termination of
the Trust shall not effect any Restricted Stock Award previously granted, and
such Restricted Stock Award shall remain valid and in effect until they have
been earned and paid, or by their terms expire or are forfeited.

 

 

19

 

--------------------------------------------------------------------------------

10.8     Tax Status of Trust. It is intended that the Trust established hereby
shall be treated as a grantor trust of the Company under the provisions of
Section 671 et seq. of the Code.

 

 

 

 

20