RETENTION BONUS AGREEMENT

MADE as of this 28th day of September, 2011, by and between Fulton Financial
Corporation, a Pennsylvania corporation with offices at One Penn Square, P.O.
4887, Lancaster, Pennsylvania 17604 (“Fulton”), and R. Scott Smith, Jr., an
adult individual who resides at [redacted] (the “Executive”).
 
Background

The Executive and Fulton have previously entered into an amended employment
agreement dated November 14, 2008 (“Executive’s Employment Agreement”). As part
of its regular review of Fulton’s executive compensation practices in
consultation with an independent compensation consultant, the HR Committee (the
“Committee”) of Fulton’s Board of Directors determined that it should consider a
supplemental cash retention award for the Executive in order to position the
Executive closer to the median compensation level among Fulton’s peer companies.
Further, going forward, the Committee believes that the Executive will continue
to play a critical role in Fulton’s future success, as it falls principally upon
him and the other members of management to determine and achieve Fulton’s
strategic goals. Specifically, the Executive will be required to guide Fulton
through unprecedented regulatory changes and in its efforts to grow both
organically through branch expansion and externally through strategically
important mergers and other acquisition opportunities.
 
Thus, the Committee has recommended to the Board of Directors, that a
supplemental cash retention award be made to the Executive, with the goals of
such an award including the following:
 
 
•
to ensure the Executive’s continued employment at competitive compensation
levels;

 
•
to provide an incentive to the Executive to arrange a smooth transition for his
successor as he approaches retirement age;

 
•
to continue to motivate the Executive to drive Fulton’s performance; and

 
•
to ensure the Executive does not pursue employment at a competitor.

Therefore, the Board of Directors of Fulton, upon recommendation of the
Committee and the Committee’s independent compensation consultant, has concluded
that, in addition to Executive’s Employment Agreement and other benefits
available to him, an additional financial incentive should be provided to
Executive in the form of a supplemental cash retention award (the “Retention
Bonus”) payable in the event that he remains employed through December 31, 2012,
as more fully described in this Agreement.
 
The purpose of this Agreement is to memorialize the award of the Retention
Bonus, specify the amount of the Retention Bonus and to specify the conditions
under which the Retention Bonus is to be paid.
 
In consideration of Executive's continuing service to Fulton and of the mutual
covenants and undertakings hereinafter set forth, the parties hereto, intending
to be legally bound, hereby agree as follows:
 
Section 1.  Undertaking of Fulton
 
Fulton shall provide to Executive the Retention Bonus payment in the amount
specified in Section 5 below as soon as permissible and administratively
practicable after January 1, 2013 but no later than January 15, 2013: A) if the
Executive remains employed by Fulton through December 31, 2012; or B) upon the
occurrence of a separation from service with Fulton only if the separation from
service occurs before December 31, 2012: (i) on account of a Disability (as
hereafter defined) while actively employed by Fulton, (ii) on account of an
involuntary termination of the Executive’s employment by Fulton without Cause
(as hereafter defined), (iii) on account of the Executive’s termination of his
employment with Fulton for Good Reason (as hereafter defined), or (iv) on
account of the Executive’s death while actively employed by Fulton. Other than
upon the occurrence of a separation from service under one of these four
conditions, the Executive shall have no vested interest in the Retention Bonus
payment in Section 5 until the Retention Bonus payment vests on December 31,
2012.
 
Section 2.  Discharge for Cause
 
As used herein, Cause shall mean the following:
 
(a) Executive shall have committed an act of dishonesty constituting a felony
and resulting or intending to result directly or indirectly in gain or personal
enrichment at the expense of Fulton;
 
(b) Executive's use of alcohol or other drugs which interferes with the
performance by the Executive of Executive's duties;
 
(c) Executive shall have deliberately and intentionally refused or otherwise
failed (for reasons other than incapacity due to accident or physical or mental
illness) to perform Executive's duties to Fulton, with such refusal or failure
continuing for a period of at least 30 consecutive days following the receipt by
Executive of written notice from Fulton setting forth in detail the facts upon
which Fulton relies in concluding that Executive has deliberately and
intentionally refused or failed to perform such duties; or
 
(d) Executive's conduct that brings public discredit on or injures the
reputation of Fulton, in Fulton's reasonable opinion.
 
Section 3.  Disability
 
For purposes hereof, Disability shall mean that the Executive, by reason of a
medically determinable physical or medical impairment that can be expected to
result in death or expected to last for a continuous period of at least twelve
months, (i) is unable to engage in any substantial gainful activity or (ii) has
received income replacement benefits for a period of at least three months under
an accident or health plan of Fulton.
 
Section 4.  Resignation for Good Reason
 
As used herein, the Executive shall have Good Reason to terminate his employment
if one of the following conditions (a) through (c) comes into existence, the
Executive provides notice to Fulton of the existence of the condition within 90
days of its initial existence, and Fulton fails to remedy the condition within
30 days of receiving notice of its existence:
 
(a) There has occurred a material breach of Fulton's material obligations under
this Agreement;
 
(b) Fulton, without Executive's prior written consent, changes or attempts to
change in any material respect the authority, duties, compensation, benefits or
other terms or conditions of Executive's employment in a manner that is adverse
to the Executive; or
 
(c) Fulton requires Executive to be based at a location outside a thirty-five
(35) mile radius of the location where Executive previously was based, except
for reasonably required travel on Fulton's business.
 
Section 5.  Retention Bonus
 
5.1  Retention Bonus Payment.  The Retention Bonus to be provided to Executive
by Fulton under this Agreement shall be an amount equal to one million, three
hundred thousand dollars ($1,300,000.00).  Such payment shall be made in one
lump sum as soon as permissible and administratively practicable after it vests
pursuant to Section 1 above.  It is understood that Fulton shall withhold from
said payment such amounts as may be required under any applicable federal, state
or local income tax law.
 
5.2  No Tax Gross Up Permitted.  Notwithstanding anything in the Executive’s
Employment Agreement to the contrary,  in the event the Retention Bonus payment
is made in connection with a Change in Control and the Executive is thereupon
determined to be subject to the excise tax imposed under the Internal Revenue
Code (“Code”) section 4999, the tax gross up right provided to the Executive
under Section 7.8 of said Executive’s Employment Agreement shall not operate to
provide Executive with a tax gross-up payment for amounts attributable solely to
this Agreement.
 
Section 6.  Undertakings by Executive, Restrictive Covenants, and Clawbacks
 
6.1  Confidentiality.  Executive acknowledges a duty of confidentiality owed to
Fulton and shall not, at any time during or after Executive's employment by
Fulton, retain in writing, use, divulge, furnish, or make accessible to anyone,
without the express authorization of the Board of Directors or senior management
of Fulton, any trade secret, private or confidential information or knowledge of
Fulton or any of their affiliates obtained or acquired by Executive while so
employed.  All computer software, business cards, customer lists, price lists,
contract forms, catalogs, books, records, files and know-how acquired while an
employee of Fulton are acknowledged to be the property of Fulton (or the
applicable affiliate) and shall not be duplicated, removed from Fulton's
possession or made use of other than in pursuit of Fulton's business and, upon
termination of employment for any reason, Executive shall deliver to Fulton,
without further demand, all copies thereof which are then in Executive's
possession or under Executive's control.
 
6.2  Non-Competition and Nonsolicitation.  Executive shall not, for a period of
two (2) years following his separation from service, directly or indirectly:
 
(a) be or become an officer, director or employee or agent of, or a consultant
to or give financial or other assistance to, any person or entity considering
engaging in commercial banking, or so engaged, anywhere within the geographic
market of Fulton;
 
(b) seek, in competition with the business of Fulton, to procure orders from or
do business with any customer of Fulton;
 
(c) solicit or contact any person who is an employee of the Fulton with a view
to the engagement or employment of such person by a third party;
 
(d) seek to contract with or engage (in such a way as to adversely affect or
interfere with the business of Fulton) any person or entity who has been
contracted with or engaged to provide goods or services to Fulton; or
 
(e) engage in or participate in any effort or act to induce any of the
customers, associates, consultants, or employees of Fulton to take any action
which might be disadvantageous to Fulton;
 
provided, however, (i) that nothing herein shall prohibit the Executive and
Executive's affiliates from owning, as passive investors, in the aggregate not
more than 5% of the outstanding publicly traded stock of any corporation so
engaged and (ii) in the event the Executive's employment is terminated by the
Executive for Good Reason or by Fulton other than for Cause, the covenants in
this Section 6.2 shall not apply.
 
For the purpose of this Section 6, Fulton shall be deemed to refer to Fulton and
all of its present or future affiliates.
 
6.3  Injunctive and Other Relief.
 
Executive acknowledges and agrees that the covenants contained herein are fair
and reasonable in light of the consideration paid hereunder, and that damages
alone shall not be an adequate remedy for any breach by Executive of Executive's
covenants which then apply and accordingly expressly agrees that, in addition to
any other remedies which Fulton may have, Fulton shall be entitled to injunctive
relief in any court of competent jurisdiction for any breach or threatened
breach of any such covenants by Executive.  Nothing contained herein shall
prevent or delay Fulton from seeking, in any court of competent jurisdiction,
specific performance or other equitable remedies in the event of any breach or
intended breach by Executive of any of its obligations hereunder.
 
In the event Executive breaches Executive's obligations under Section 6.2, the
period specified therein shall be tolled during the period of any such breach
and any litigation seeking remedies for such breach and shall resume upon the
conclusion or termination of any such breach and any such litigation.  The
remedies set forth in this Section are cumulative and in addition to any and all
other remedies available to Fulton at law or in equity.
 
6.4  Clawback of Retention Bonus Received.
 
Executive acknowledges that the Retention Bonus is subject to any Clawback
Policy that may be adopted by Fulton’s Board of Directors. Absent any formal
Clawback Policy, the Executive agrees that he shall be required to forfeit and
pay back to Fulton the Retention Bonus  paid to the Executive if: (a) a court
makes a final determination that the Executive directly or indirectly engaged in
fraud or misconduct that caused or partially caused the need for a material
financial restatement by Fulton; or (b) the independent members of Fulton’s
Board of Directors determine that the Executive has committed a material
violation of Fulton’s Code of Conduct.
 
6.5  Continuing Assistance by Executive.
 
Executive acknowledges that for a period of two (2) years following his
separation from service, he will make reasonable efforts to cooperate with and
assist in the transition for the incoming Chief Executive Officer and Fulton’s
ongoing performance.
 
Section 7. Miscellaneous.
 
7.1  Invalidity.  If any provision hereof is determined to be invalid or
unenforceable by a court of competent jurisdiction, Executive shall negotiate in
good faith to provide Fulton with protection as nearly equivalent to that found
to be invalid or unenforceable and if any such provision shall be so determined
to be invalid or unenforceable by reason of the duration or geographical scope
of the covenants contained therein, such duration or geographical scope, or
both, shall be considered to be reduced to a duration or geographical scope to
the extent necessary to cure such invalidity.
 
7.2  Assignment.  This Agreement shall not be assignable by Executive, and shall
be assignable by Fulton only to any affiliate or to any person or entity which
may become a successor in interest (by purchase of assets or stock, or by
merger, or otherwise) to Fulton in the business or a portion of the business
presently operated by it. Subject to the foregoing, this Agreement and the
rights and obligations set forth herein shall inure to the benefit of, and be
binding upon, the parties hereto and each of their respective permitted
successors, assigns, heirs, executors and administrators, including the
restrictive covenants of this Agreement.
 
7.3  Notices.  All notices hereunder shall be in writing and shall be
sufficiently given if hand-delivered, sent by documented overnight delivery
service or registered or certified mail, postage prepaid, return receipt
requested or by telegram, fax or telecopy (confirmed by U. S. mail), receipt
acknowledged, addressed as set forth below or to such other person and/or at
such other address as may be furnished in writing by any party hereto to the
other.  Any such notice shall be deemed to have been given as of the date
received, in the case of personal delivery, or on the date shown on the receipt
or confirmation therefor, in all other cases.  Any and all service of process
and any other notice in any such action, suit or proceeding shall be effective
against any party if given as provided in this Agreement; provided that nothing
herein shall be deemed to affect the right of any party to serve process in any
other manner permitted by law.
 
 

   (a) If to Fulton:      
 Fulton Financial Corporation
One Penn Square
Lancaster, PA  17604
Attention: General Counsel
       (b) If to Executive:      
 R. Scott Smith, Jr.
[redacted]
   

 
          
7.4  Entire Agreement and Modification.  This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters contemplated
herein and supersedes all prior agreements and understandings with respect
thereto.  Any amendment, modification, or waiver of this Agreement shall not be
effective unless in writing and agreed and executed by Fulton and the
Executive.  Neither the failure nor any delay on the part of any party to
exercise any right, remedy, power or privilege shall preclude any other or
further exercise of the same or of any other right, remedy, power, or privilege
with respect to any occurrence and such failure or delay to exercise any right
shall not be construed as a waiver of any right, remedy, power, or privilege
with respect to any other occurrence.
 
7.5  Governing Law.  This Agreement is made pursuant to, and shall be construed
and enforced in accordance with, the laws of the Commonwealth of Pennsylvania
(and United States federal law, to the extent applicable), without giving effect
to otherwise applicable principles of conflicts of law.
 
7.6  Headings; Counterparts.  The headings of sections and subsections in this
Agreement are for convenience only and shall not affect its
interpretation.  This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original and all of which, when taken
together, shall be deemed to constitute but one and the same Agreement.
 
7.7  Further Assurances.  Each of the parties hereto shall execute such further
instruments and take such other actions as any other party shall reasonably
request in order to effectuate the purposes of this Agreement.
 
7.8  Attorneys' Fees and Related Expenses.  All attorneys' fees and related
expenses incurred by Executive in connection with or relating to enforcement by
Executive of Executive's rights under this Agreement shall be paid in full by
Fulton, provided Executive prevails in connection with enforcing Executive's
rights under this Agreement.
 
7.9  Mitigation.  Executive shall not be required to mitigate the amount of any
payment or benefit provided for in Section 5 hereto by seeking employment or
otherwise and Fulton shall not be entitled to setoff against the amount of any
payments made pursuant to Section 5 hereto with respect to any compensation
earned by Executive arising from other employment.
 
7.10  409A Safe Harbor.  Notwithstanding anything in this Agreement to the
contrary, in no event shall Fulton be obligated to commence payment or
distribution to the Executive of any amount that constitutes nonqualified
deferred compensation within the meaning Code section 409A (“Code section 409A”)
earlier than the earliest permissible date under Code section 409A that such
amount could be paid without additional taxes or interest being imposed under
Code section 409A.  Fulton and the Executive agree that they will execute any
and all amendments to this Agreement as they mutually agree in good faith may be
necessary to ensure compliance with the distribution provisions of Code section
409A and to cause any and all amounts due under this Agreement, the payment or
distribution of which is delayed pursuant to Code section 409A, to be paid or
distributed in a single sum payment at the earliest permissible date under Code
section 409A.  Without limiting the generality of the foregoing, in the event
the Executive is to receive a payment of compensation hereunder that is on
account of a separation from service, such payment is subject to the provisions
of Code section 409A, and the Executive is a key employee of Fulton, then
payment shall not be made before the date that is six months after the date of
separation from service (or, if earlier than the end of the six month period,
the date of the Executive’s death).  Amounts otherwise payable during such six
month period shall be accumulated and paid in a lump sum on the first day of the
seventh month.  For purposes hereof, Executive is a key employee of Fulton if on
his date of separation from service Fulton is publicly traded and he met the
definition key employee found in Code section 416(i)(1)(A)(i), (ii) or (iii)
(disregarding section 416(i)(5)) as of the last day of the calendar year
preceding the date of separation.
 
IN WITNESS WHEREOF, this Agreement is executed the day and year first above
written.
 

FULTON FINANCIAL CORPORATION

By:           /s/ Craig H. Hill               
Craig H. Hill                                                      
Senior Executive Vice President

EXECUTIVE
 
    /s/ R. Scott Smith,
Jr.                                                      
R. Scott Smith, Jr.