EXHIBIT 10.1


 


REPUBLIC BANCORP, INC. AND SUBSIDIARIES


NON-EMPLOYEE DIRECTOR AND KEY EMPLOYEE


DEFERRED COMPENSATION PLAN


 


(as adopted November 18, 2004 and then


amended and restated on March 16, 2005 and


again on March 19, 2008)


 


1.                                       General. 
This Republic Bancorp, Inc. And Subsidiaries Non-Employee Director and Key
Employee Deferred Compensation Plan (the “Plan”) is intended to more closely
align board and executive compensation at Republic Bancorp, Inc. (the “Company”)
and subsidiaries with the interests of the Company’s shareholders, by making
available to eligible participants tax-deferred investments in Company
stock.  It is intended that the Plan be in compliance with Code Section 409A
(“Section 409A”).  It is also intended that the Plan be an unfunded arrangement
maintained for non-employee directors and for a select group of management or
highly compensated employees.  Effective upon the time that a Key Employee
Participant (as defined below) is first named on Exhibit A attached
hereto, the Plan shall be considered a  “top hat plan” for purposes of the
Employee Retirement Income Security Act of 1974, as amended.  Capitalized terms used herein and not defined
where used shall have the meanings set forth in Section 23.


 


2.                                       Eligibility. 
Eligibility in the Plan shall be granted to the members of the Board of
Directors of the Company or of its Subsidiaries who are not also employees of
the Company or of its Subsidiaries and any Director Emeritus, as defined in Section 23
(collectively referred to as the “Director Participants”).  In addition,
eligibility in the Plan may be granted to the employees of the Company or of
its Subsidiaries who have been designated by the Compensation Committee of the
Board of Directors of the Company or the Subsidiary (as the case may be for a
particular Participant) (the “Committee”) as being eligible for the Plan (the “Key
Employee Participants” and, together with Director Participants, the “Participants”). 
The initial Key Employee Participants (if any) are listed in Exhibit A
attached hereto.  The Committee shall have full power and discretion to
name additional employees of the Company as Key Employee Participants and to
remove such employees as Key Employee Participants at such times as it shall
decide in its sole discretion, provided that any such removal shall not affect
a Participant’s Deferral Elections already made until the next period for which
such elections could otherwise be changed or revoked hereunder.


 


3.                                       Election.


 


(a)                                  Director
Participant Elections.  Each Director Participant may elect to defer
under the Plan up to 100% of his annual board and committee meeting fees
(collectively, “Board Fees”).  A Director Participant’s election to defer
a portion of his Board Fees shall be made in writing and shall be effective upon
receipt and acceptance by the Company.  A new written election must be
submitted to the Company in 2005 with respect to any Board Fees to be earned in
2006, and such election shall remain in effect for subsequent years unless a
new written election is submitted in accordance with this Section 3(a). 
Except in the case of a newly eligible Director Participant who may file an
election to defer within 30 days of his being eligible to participate in the
Plan, an election to defer (or to change or revoke an ongoing deferral
election) shall be made no later than 10 days preceding commencement of a
calendar year with respect to any deferral of Board Fees to be earned in such
year, provided, however, that such elections shall be made at an earlier time
if required under Section 409A.  Any election may be changed in
writing, but only as to fees to be earned at and after commencement of the next
succeeding calendar year, and shall become irrevocable 10 days before that
succeeding calendar year.


 


(b)                                 Key
Employee Participant Elections.  Each Key Employee Participant may
elect to defer under the Plan up to 50% of his base salary (“Base Compensation”)
and up to 100% of his annual incentive compensation with respect to services
for that upcoming year (even if the bonus is otherwise payable in a later
calendar year) (“Bonus Compensation”) (collectively, “Annual Compensation”). 
A Key Employee Participant’s election to defer a portion of his Annual
Compensation shall be made in writing and shall be effective upon receipt and
acceptance by the Company.  A new written election must be submitted to
the Company in 2005 with respect to any Annual Compensation to be earned in
2006, and such election shall remain in effect for subsequent years unless a
new written election is submitted in accordance with this Section 3(b). 
Except in the case of a newly eligible Key 


 


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Employee Participant who
may file an election to defer Annual Compensation earned with respect to
services performed after such election within 30 days of his designation by the
Committee as being eligible to participate in the Plan, an election to defer
Annual Compensation (or to change or revoke an ongoing deferral election) shall
be made no later than 10 days preceding commencement of a calendar year with
respect to any deferral of Annual Compensation to be earned in such year. 
Notwithstanding the foregoing, if Bonus Compensation qualifies as “performance-based
compensation” under Section 409A, an election to defer Bonus Compensation
may be made as late as June 30th of the year with respect to
which such Bonus Compensation relates, provided that there is no minimum amount
payable or substantially certain to be paid at the date such election is
actually made.  Any election may be
changed in writing, but only as to compensation that relates to services
rendered after commencement of the next succeeding calendar year, and shall
become irrevocable 10 days before the succeeding calendar year.


 


4.                                       Duration
of Deferral.  Each Participant’s election shall specify the period of
the deferral, which shall be a specified period of years ranging from two to
five years from the beginning of the year of deferral.  A Participant may
later elect to lengthen the period of a deferral; provided, however, that any
delayed payment date election shall not take effect for 12 months following the
election and the election must be made at least 12 months before the
previously-scheduled payment date with respect to the deferral, and, provided further,
that each such change in payment date must provide for an additional deferral
of the payment date for five years later than the previously-scheduled payment
date.


 


5.                                       Deferred
Compensation Account.  The Company
shall maintain a bookkeeping account to which deferred compensation of each
Participant shall be credited at the end of each calendar month after such
compensation is earned (each a “Deferred Compensation Account”).  At the
end of each fiscal quarter, the amounts credited to each Deferred Compensation
Account shall be converted into whole stock units (“Stock Units”) equivalent in
value to shares of Class A common stock of the Company (“Stock”). 
The conversion of deferred compensation into Stock Units will be made on the
basis of the Fair Market Value of the Stock on the last business day of each
fiscal quarter.  Any fractional units shall be credited as cash and
converted to Stock Units only as and when the accumulated cash credited to that
Participant is sufficient to convert to a whole Stock Unit at the end of a
quarter.


 


6.                                       Dividend
Equivalent.  During the term of deferral, the Stock Units standing to
the credit of each Participant’s Deferred Compensation Account shall be
credited with an amount equal to the cash dividends that would have paid on the
number of Stock Units in such Deferred Compensation Account if such Stock Units
were deemed to be outstanding shares of Stock (“Dividend Equivalents”). 
Dividend Equivalents credited to Stock Units shall be converted to additional
whole Stock Units and credited to the Participant’s Deferred Compensation
Account at the end of each fiscal quarter.  The conversion of Dividend
Equivalents into Stock Units shall be made on the basis of the Fair Market
Value of the Stock on the last business day of each fiscal quarter.  Any fractional units shall be credited as
cash and converted to Stock Units only as and when the accumulated cash
credited to that Participant is sufficient to convert to a whole Stock Unit at
the end of a quarter.


 


7.                                       Changes
in Stock.  In the event of a stock dividend, stock split, reverse
stock split or similar change in capitalization affecting the Stock, the
Committee shall make appropriate adjustments in the number of Stock Units
credited to each Participant’s Deferred Compensation Account.  The
adjustment by the Committee shall be final, binding and conclusive.


 


8.                                       Rights
of Participants.  Participation in the Plan, and any actions taken
pursuant to the Plan, shall not create or be deemed to create a trust or
fiduciary relationship of any kind between the Company, its Subsidiaries and
the Participant.  The Company or its Subsidiaries (as the case may be)
may, but shall have no obligation to, establish any separate fund, reserve, or
escrow or to provide security with respect to any amounts deferred under the
Plan.  Any assets of the Company or its Subsidiaries which are set aside
in any separate fund, reserve or escrow shall continue for all purposes to be a
part of the general assets of the Company or its Subsidiaries, with title to
the beneficial ownership of any such assets remaining at all times in the
Company and its Subsidiaries.  No Participant, nor his legal
representatives, nor any of his beneficiaries shall have any right, other than
the right of an unsecured general creditor of the Company or its Subsidiaries,
in respect of the Deferred Compensation Account established hereunder, and such
persons shall have no property interest whatsoever in any specific assets of
the Company or its Subsidiaries.  A Participant shall have no rights as a
stockholder of the Company, and shall not be entitled to vote, with respect to
the Stock Units credited to his Deferred Compensation Account.


 


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9.                                       Distributions.


 


(a)                                  Normal
Distributions.


 


(i)                                     Director
Participants.  Each Director Participant (or his beneficiary in the
event of his death) shall be entitled to receive the value of all Stock Units
standing to the credit of his Deferred Compensation Account upon the earliest
to occur of: (A) the payment date last selected pursuant to Section 4;
and (B) the Director Participant’s death or Disability.


 


(ii)                                  Key
Employee Participants.  Each Key Employee Participant (or his
beneficiary in the event of his death) shall be entitled to receive the value
of all Stock Units standing to the credit of his Deferred Compensation Account
upon the earliest to occur of: (A) the payment date last selected pursuant
to Section 4; and (B) the Key Employee Participant’s death or
Disability.


 


(b)                                 Early
Distributions.  A Participant will only be permitted to receive a
distribution of his Deferred Compensation Account prior to the times specified
in Section 9(a) above in the event of: (i) a Change in Control
of the Company or Subsidiary for which that Participant works or performs
Director services; or (ii) upon approval by the Committee, a de minimis
payout of a Participant’s entire Deferred Compensation Account upon his
Separation from Service if the payment is not greater than $10,000 and the
payout is made on or before the later of December 31 of the year of his
Separation from Service or 21⁄2 months after his Separation from Service


 


(c)                                  Form of
Distribution.  All distributions
shall be paid in a single lump of whole shares of Stock equal to the number of
Stock Units in the Deferred Compensation Account, with any amount in excess of
whole shares then credited to the account paid in cash. All distributions under
the Plan shall be the obligation of the Company or Subsidiary for which the
Participant provides services.


 


(d)                                 Delay
in Distribution to Specified Participants. Notwithstanding anything to the
contrary in this Section 9, in the case of a distribution to a Participant
who is a “specified participant” where the timing of such distribution is based
on such Participant’s Separation from Service other than on account of death,
the date of distribution to such Participant shall be at least six (6) months
after the date of such Participant’s Separation from Service (or, if earlier,
the date of the Participants death or Disability).  A “specified
participant” shall mean a “key employee” (which can include Directors) within
the meaning of Code Section 416(i) (but without regard to Code Section 416(i)(5)),
as of the last identification date thereof and determined in the manner provided
in Treasury Regulation §1.409-1(i), if, when the Participant’s Separation From
Service occurs, stock of the Company is publicly traded on an established
securities market or otherwise.


 


10.                                 Tax
Withholding.


 


(a)                                  Payment
by Participant.  Each Participant shall, no later than the date as of
which his Stock Units or payments received thereunder first become includible
in the gross income of the Participant for Federal income or employment tax
purposes, pay to the Company, or make arrangements satisfactory to the
Committee regarding payment of, any Federal, state, or local taxes of any kind
required by law to be withheld with respect to such income.  With respect
to Key Employee Participants, the Company will withhold any such taxes then due
to be withheld from the amount that would otherwise be deferred and credited
hereunder, and credit the net after such tax withholding to the Participant’s
Deferred Compensation Account.  The
Company shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant. 
The Company’s obligation to make any payments to any Participant is subject to
and conditioned on tax obligations being satisfied by the Participant. 
The Company shall report amounts deferred hereunder to the Internal Revenue
Service in accordance with the requirements of Section 409A.


 


(b)                                 Payment
in Stock.  Subject to approval by the Committee, a Participant may
elect to have the minimum required Federal, state, other income and statutory
withholding obligation due when payments are made under the Plan satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares
of Stock to be issued pursuant to the Plan a number of shares with an aggregate
fair market value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company
shares of Stock owned by the Participant, and that have been held by the
Participant for at least six months (12 months in the case of Stock acquired
upon exercise of an incentive stock option), with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.  Notwithstanding
the preceding sentence, any 


 


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such right to pay
withholding amounts due by delivery of already-owned stock shall be ineffective
and void from its inception if such right is deemed to be a feature allowing
deferral of compensation within the meaning of Section 409A.


 


11.                                 Beneficiary. 
If a Participant dies before he has received full payment of the amount
credited to his Deferred Compensation Account, such unpaid portion shall be
paid to the Participant’s primary or contingent beneficiary as designated by
the Participant in writing.  If no beneficiary has been designated or if a
designated beneficiary has predeceased the Participant, such unpaid portion
shall be paid first to the Participant’s spouse, or, if there is no spouse, to
the Participant’s children per stirpes, or, if there are no spouse or children,
to the Participant’s estate.


 


12.                                 No
Assignment.  The deferred compensation payable under this Plan shall
not be subject to alienation, assignment, garnishment, execution, or levy of
any kind, and any attempt to cause any compensation to be so subjected shall
not be recognized.


 


13.                                 Expenses. 
All expenses incurred in the establishment and maintenance of or attributable
to a Participant’s Deferred Compensation Account shall be borne by the Company
and shall not reduce the amount credited to such Deferred Compensation Account.


 


14.                                 Amendment
and Termination.  This Plan may be amended in any way or may be
terminated, in whole or in part, at any time, and from time to time, by the
Board of Directors of the Company.  The foregoing provisions of this
paragraph notwithstanding, no amendment or termination of the Plan shall
adversely reduce the number of Stock Units credited to the Deferred
Compensation Accounts prior to the effective date of such amendment or termination
or, except to the extent permitted under Section 409A following a Change
in Control, accelerate the timing of payment from the Deferred Compensation
Accounts.  Notwithstanding the foregoing, the Board of Directors of the
Company specifically reserves the right to amend the Plan as necessary to
comply with Section 409A.


 


15.                                 Plan
Administration.  The Board of Directors of the Company shall have the
exclusive discretionary authority to determine the amounts of benefits under
the Plan, make factual determinations, construe and interpret terms of the
Plan, supply omissions and determine any questions which may arise in
connection with its operation and administration.  Its decisions or
actions in respect thereof, including any determination of any amount credited
or charged to the Participants’ Deferred Compensation Accounts or the amount or
recipient of any payment to be made therefrom, shall be conclusive and binding
for all purposes upon the Company and upon any and all Participants, their
beneficiaries, and their respective heirs, distributees, executors,
administrators and assignees.  In the case of the administration of the
Plan with respect to Key Employee Participants only, the authority of the Board
of Directors of the Company described herein may be exercised by the Committee.


 


16.                                 Binding
Effect.  The terms of this Plan shall be binding upon and shall inure
to the benefit of the Company and its successors or assigns and each
Participant and his Beneficiaries, heirs, executors, and administrators.


 


17.                                 Limitation
of Liability.  Subject to its obligation to pay the amount credited to
the Participant’s Deferred Compensation Account at the time distribution is
called, neither the Company, any person acting on behalf of the Company, the
Board of Directors, nor the Committee shall be liable for any act performed or
the failure to perform any act with respect to the terms of the Plan, except in
the event that there has been a judicial determination of willful misconduct on
the part of the Company, such person, the Board of Directors or the Committee.


 


18.                                 Governing
Law.  This Plan, and all actions taken hereunder, shall be governed by
and construed in accordance with the laws of the Commonwealth of Kentucky,
except as such laws may be superseded by any applicable Federal laws.


 


19.                                 Reporting. 
The Company shall provide statements to Participants showing the amounts
standing to the credit of their Deferred Compensation Accounts no less
frequently than once a year.


 


20.                                 Claims
Procedure.


 


(a)                                  All
claims for benefits under this Plan shall be filed in writing with the Board of
Directors of the Company in accordance with such procedures as the Board shall
reasonably establish.


 


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(b)                                 The
Board of Directors of the Company shall, within 90 days (45 days for payment
based on Disability) after a submission of a claim, provide adequate notice in
writing to any claimant whose claim for benefits under the Plan has been
denied.  Such notice shall contain the specific reason or reasons for the
denial and references to specific Plan provisions on which the denial is
based.  The Board shall also provide the claimant with a description of
any material or information which is necessary in order for the claimant to
perfect his claim and an explanation of why such information is
necessary.  If special circumstances require an extension of time for
processing the claim, the Board shall furnish the claimant a written notice of
such extension prior to the expiration of the 90-day period (30 days for a
Disability claim, and an additional 30 day extension is available).  The
extension notice shall indicate the reasons for the extension and the expected
date for a final decision, which date shall not be more than 180 days (105 days
for Disability) from the initial claim.


 


(c)                                  The
Board of Directors of the Company shall, upon written request by a claimant
within 60 (180 for a disability claim) days of receipt of the notice that his
claim has been denied, afford a reasonable opportunity to such claimant for a
full and fair review by the Board of the decision denying the claim.  The
Board will afford the claimant an opportunity to review pertinent documents and
submit issues and comments in writing.  The claimant shall have the right
to be represented.


 


(d)                                 The
Board of Directors of the Company shall, within 60 days (45 days for a
disability claim) of receipt of a request for a review, render a written
decision on its review.  If special circumstances require extra time for
the Board to review its decision, the Board will attempt to make its decision
as soon as practicable, and in no event will the Board take more than 120 days
(105 days for Disability claims) to send the claimant a written notice of its
decision.


 


21.                                 Source
of Shares.  Shares of Stock reserved under the Company’s 2005 Stock
Incentive Plan shall be used to satisfy any obligations to distribute Stock
under this Plan, but the Stock when issued under this Plan shall not bear the
restrictions on transfer set forth in Section 10.10 of the Stock Incentive
Plan.


 


22.                                 Effective
Date.  This Plan shall be effective as of January 1, 2005.


 


23.                                 Definitions.


 


(a)                                  “Change
in Control “ shall have the meaning provided in regulations or guidance under
Code Section 409A from time to time, which currently provide that it shall
mean the occurrence of a “Change in Ownership,” “Change in Effective Control”
or “Change in Asset Control” as each is defined below, subject to the
requirements in subsection (i) below.


 


(i)                                   General Requirements.


 


(A)                              The
Change in Control must relate to (A) a corporation for whom the
Participant is performing services at the time of the Change in Control, (B) a
corporation that is liable for the payment of the deferred compensation (or all
corporations liable for the payment if more than one corporation is liable), or
(C) a corporation that is a majority shareholder of a corporation
identified in (A) or (B), or any corporation in a chain of corporations in
which each corporation is a majority shareholder of another corporation in the
chain, ending in a corporation identified in (A) or (B).


 


(B)                                A
majority shareholder is a shareholder owning more than 50% of the total fair
market value and total voting power of such corporation.


 


(C)                                For
purposes of this definition, Code Section 318(a) applies to determine
stock ownership.  Stock underlying a
vested option is considered owned by the individual who holds the vested option
(and the stock underlying an unvested option is not considered owned by the individual
who holds the unvested option).  For
purposes of the preceding sentence, however, if a vested option is exercisable
for stock that is not substantially vested (as defined by Treas. Reg.  Sections 1.83-3(b) and (j)), the stock
underlying the option is not treated as owned by the individual who holds the
option.


 


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(D)                               For
purposes of this definition, Persons will not be considered to be acting as a
group solely because they purchase assets or purchase or own stock of the same
corporation at the same time, or as a result of the same public offering.  However, persons will be considered to be
acting as a group if they are owners of a corporation that enters into a
merger, consolidation, purchase or acquisition of stock or assets, or similar
business transaction with the corporation. 
If a Person owns stock in both corporations that enter into a merger,
consolidation, purchase or acquisition of stock, or similar transaction, such
shareholder is considered to be acting as a group with other shareholders in a
corporation only to the extent of the ownership in that corporation prior to
the transaction giving rise to the change and not with respect to the ownership
interest in the other corporation.


 


(ii)                                Change in Ownership. 
A Change in Ownership occurs on the date that any one Person, or more
than one person acting as a group (as defined above in subsection (a)(i)(D)),
acquires ownership of stock of the corporation that, together with stock held
by such Person or group, constitutes more than 50 percent of the total fair
market value or total voting power of the stock of the corporation.  However, if any one Person or more than one
Person acting as a group, is considered to own more than 50 percent of the
total fair market value or total voting power of the stock of the corporation,
the acquisition of additional stock by the same Person or Persons is not
considered to cause a Change in Ownership of the corporation (or to cause a
Change in the Effective Control of the corporation.  An increase in the percentage of stock owned
by any one Person, or Persons acting as a group, as a result of a transaction
in which the corporation acquires its stock in exchange for property will be
treated as an acquisition of stock for purposes of this Section.  A Change in Ownership occurs only when there
is a transfer of stock of the corporation (or issuance of stock of the
corporation) and stock in the corporation remains outstanding after the
transaction.


 


(iii)                             Change in
Effective Control. 
Notwithstanding that the corporation has not undergone a Change in
Ownership, a Change in Effective Control of the corporation occurs on the date
that either:


 


(A)                              Any
one Person, or more than one Person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such Person or Persons) ownership of stock of the corporation
possessing 35 percent or more of the total voting power of the stock of the
corporation; or


 


(B)                                A
majority of members of the Board of Directors of the corporation is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board prior to the date of the
appointment or election, provided that for purposes of this paragraph (B) the
term corporation refers solely to the relevant corporation identified above in
subsection (a)(i)(A) for which no other corporation is a majority
shareholder for purposes of that paragraph.


 


A
Change in Effective Control also may occur in any transaction in which either
of the two corporations involved in the transaction has a Change in Control
under subsections (a)(ii) or (a)(iv) of this definition.


 


If any
one Person, or more than one Person acting as a group, is considered to
effectively control a corporation (within the meaning of this subsection
(a)(iii)), the acquisition of additional control of the corporation by the same
Person or Persons is not considered to cause a Change in Effective Control of
the corporation (or to cause a Change in Ownership of the corporation within
the meaning of subsection (a)(ii)).


 


(iv)                            Change in Asset Control. 
A Change in Asset Control of the corporation occurs on the date that any
one Person, or more than one Person acting as a group), acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such Person or Persons) assets from the corporation that have a
total gross fair market value equal to or more than 40 percent of the total
gross fair market value of all of the assets of the corporation immediately
prior to such acquisition or acquisitions. For this purpose, gross fair market
value means the value of the assets of the corporation, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets.


 


(A)                              There
is no Change in Control under this subsection (iv) when there is a
transfer to an entity that is controlled by the shareholders of the corporation
immediately after the transfer, 


 


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as
provided in this subsection (iv).  A
transfer of assets by the corporation is not treated as a Change in Assets
Control if the assets are transferred to:


 


(1)                                  A
shareholder of the corporation (immediately before the asset transfer) in
exchange for or with respect to its stock;


 


(2)                                  An
entity, 50 percent or more of the total value or voting power of which is
owned, directly or indirectly, by the corporation;


 


(3)                                  A
Person, or more than one Person acting as a group, that owns, directly or
indirectly, 50 percent or more of the total value or voting power of all the
outstanding stock of the corporation; or


 


(4)                                  A
Person, at least 50 percent of the total value or voting power of which is
owned, directly or indirectly, by a Person described subsection (iv)(A)(3).


 


(B)                                For
purposes of this subsection (iv) and except as otherwise provided, a
Person’s status is determined immediately after the transfer of the assets.


 


(b)                                 “Code”
shall mean the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.


 


(c)                                  “Director
Emeritus” shall mean a former member of the Board of Directors of the Company
who is not also an employee of the Company and who has been classified as a “Director
Emeritus” by the Board of Directors of the Company and serves as such on the
board of directors of a Subsidiary of the Company.


 


(d)                                 “Disability”
shall mean when a Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or is, by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, if the Participant is receiving income replacement benefits for a
period of not less than 3 months under an accident and health plan maintained
by the Company or a Subsidiary.


 


(e)                                  “Fair
Market Value” shall mean, as of any date, the value of a share of Stock
determined as follows:


 


(i)                                     If
the Stock is listed on any established stock exchange or a national market
system, including, without limitation, the National Market of the National
Association of Securities Dealers, Inc. Automated Quotation (“Nasdaq”)
System, its Fair Market Value shall be the closing market price of the Stock as
reported on the date of determination, or, if no trades were reported on that
date, the closing price on the most recent trading day immediately preceding
the date of the determination, as quoted on such system or exchange, or the
exchange with the greatest volume of trading in Stock for the last market
trading day prior to the time of determination, as reported in The Wall Street
Journal or such other source as the Committee deems reliable;


 


(ii)                                  If
the Stock is quoted on the Nasdaq System (but not on the National Market
thereof) or regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the
high bid and low asked prices for the Stock for the last market trading day
prior to the time of  determination, as
reported in The Wall Street Journal or such other source as the Committee deems
reliable; or


 


(ii)                                  In
the absence of such markets for the Stock, the Fair Market Value shall be
determined in good faith by the Committee, considering any and all information
they determine relevant, including, without limitation, the valuation methods
permitted in Treas. Reg. Section 20.2031-2 (estate tax regulations) or a
third-party appraisal.


 


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(f)                                    “Person”
shall mean an individual, a partnership, a corporation, a limited liability
company, a limited liability partnership, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization, or any other
business entity.


 


(g)                                 “Subsidiary”
or “Subsidiaries” shall mean any corporation which at the time qualifies as a
subsidiary of the Company under the definition of “subsidiary corporation”
in  Code Section 424(f).


 


(h)                                 “Separation
from Service” means,


 


(i)                                     with
respect to a Key Employee Participant, the date the Company and the Key
Employee Participant reasonably anticipate that (i) the Key Employee
Participant will not perform any further services for the Company or any other
entity considered a single employer with the Company under Section 414(b) or
(c) of the Code, or (ii) the level of bona fide services performed
after that date (as an employee or independent contractor), will permanently
decrease to less than 50% of the average level of bona fide services performed
over the previous 36 months (or if shorter over the duration of service).  The Key Employee Participant will not be
treated as having a Separation from Service while on military leave, sick leave
or other bona fide leave of absence if the leave does not exceed six months or,
if longer, the period during which the Employee has a reemployment right with
the Company by statute or contract.  If a
bona fide leave of absence extends beyond six months, a Separation from Service
will be deemed to occur on the first day after the end of such six month
period, or on the day after the Employee’s statutory or contractual reemployment
right lapses, if later. The Company will determine whether a Separation from
Service  has occurred based on all
relevant facts and circumstances, in accordance with Treasury Regulation
§1.409A-1(h).


 


(ii) with respect to a Director Participant, the
date the Director’s term as a Director expires, the Director resigns, or the
Director is removed, provided that the Company and Director in good faith
believe at that time that the Director’s status will not be renewed and that no
other service relationship (as an employee or independent contractor) will
continue or be begun. If the parties anticipate that some service relationship
will continue after a Director’s term expires and is not renewed, in all events
the “Separation from Service” is deemed to occur 12 months after the date on
which a Director Participant ceases to serve as a member of the Board of
Directors of the Company or a Subsidiary, as long as the Director Participant
does not actually perform services for the Company or a Subsidiary (as a director,
employee or independent contractor) during such 12 month period, as provided
under Treasury Regulation §1.409A-1(h)(2)(ii).


 


Notwithstanding the
above, no Separation from Service shall be deemed to occur if the Participant
serves as both a Key Employee and a Director and severs the relationship in one
capacity but not the other, unless benefits under this Agreement are aggregated
with benefits under any other Employer Group plan or agreement in which the
Participant also participates in the other capacity, as more specifically
provided in Treas. Reg 1.409A-1(h)(5).


 


 


	
  Board Approval:

  	
   

  	
  March 19,
  2008

  	
  /s/ MAR

  	
  [secretary to
  initial]

  



 


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EXHIBIT A


 


KEY EMPLOYEE PARTICIPANTS


 


None as of March 19,
2008.


 


9