ex10-7.htm


    Exhibit 10.7

     

    NEW
CENTURY BANK

    2004
INCENTIVE EQUITY

    AND

    DEFERRED
COMPENSATION PLAN

    
 

    ARTICLE
1

    PURPOSE

     

    1.1   GENERAL.  This
2004 Incentive Equity and Deferred Compensation Plan (the “Plan”) for New
Century Bank supersedes the Bank’s existing Stock Option Plan of New Century
Bank (originally effective as of June 26, 1997), pursuant to which no further
awards or grants will be made after the Effective Date.  The purpose
of the Plan is to promote the success and enhance the value of New Century Bank
by linking the personal interests of directors, employees, officers and
executives of the Bank to those of Bank shareholders and by providing such
individuals with an incentive for outstanding performance in order to generate
superior returns to shareholders of the Bank.  The Plan is further
intended to provide flexibility to the Bank in its ability to motivate, attract,
and retain the services of directors, employees, officers, and executives upon
whose judgment, interest, and special effort the successful conduct of the
Bank’s operation is largely dependent.

     

    ARTICLE
2

    EFFECTIVE
DATE AND TERM

     

    2.1   EFFECTIVE
DATE.  The Plan will be effective as of the date it is approved
by the shareholders of the Bank (the “Effective Date”).  No Awards
which could not have been granted under the prior version of the Plan shall be
made prior to shareholder approval of this Plan.

     

    2.2    
 
TERM.  Unless
sooner terminated by the Board, the Plan shall terminate on the Plan Termination
Date, and no Awards may be granted under the Plan thereafter.  The
termination of the Plan shall not affect any Award that is outstanding on the
termination date, without the consent of the Participant.

     

    ARTICLE
3

    DEFINITIONS
AND CONSTRUCTION

     

    3.1   DEFINITIONS.  When
a word or phrase appears in this Plan with the initial letter capitalized, and
the word or phrase does not commence a sentence, the word or phrase shall
generally be given the meaning ascribed to it in this Section or in Sections 1.1
or 2.1 unless a clearly different meaning is required by the
context.  The following words and phrases shall have the following
meanings:

     

    (a) “Award”
means any Option, Stock Appreciation Right, Restricted Stock Award, Unrestricted
Stock Award, or Performance-Based Award granted to a Participant under the
Plan.

     

     

    
      
         


      

      
         


        
          

        

      

      
         


      

       

    

    (b)   “Award
Agreement” means a writing, in such form as the Committee in its discretion
shall prescribe, evidencing an Award.

     

    (c)   “Bank”
means New Century Bank.

     

    (d)   “Board”
means the Board of Directors of the Bank.

     

    (e)   “Cause”
means actions of or failure to act by a Participant which would authorize the
forfeiture of fringe benefits or other remuneration under his or her written
contract of employment with the Bank or, if there is no written contract of
employment, and with respect to non-employee Directors, (i) willful misconduct
materially injurious to the Bank, (ii) dishonesty, (iii) the commission of a
crime, or (iv) gross negligence of the Participant in the performance of his or
her duties.

     

    (f)   “Change
in Control” means:

     

    (1) the
acquisition by a person or persons acting in concert of the power to vote
twenty-five percent (25%) or more of a class of the Bank’s voting
securities;

     

    (2) the
acquisition by a person of the power to direct the Bank’s or Bank’s management
or policies, if the Board of Directors or the Bank’s primary federal regulator
has made a determination that such acquisition constitutes or will constitute an
acquisition of control of the Bank for the purposes of the Change in Bank
Control Act or other similar law and the regulations thereunder;

     

    (3) during
any period of two (2) consecutive years, individuals who at the beginning of
such period constitute the members of the Board cease, for any reason, to
constitute at least a majority thereof, unless the election of each director who
was not a director at the beginning of such period has been approved in advance
by directors representing at least two-thirds (2/3) of the directors then in
office who were directors in office at the beginning of the period; provided,
however, that for purposes of this clause (3), each director who is first
elected to the Board (or first nominated by the Board for election by the
shareholders) with the approval of at least two-thirds (2/3) of the directors
who were directors at the beginning of the period shall be deemed to be a
director at the beginning of the two-year period;

     

    (4) the Bank
shall have merged into or consolidated with another corporation, or merged
another corporation into the Bank, on a basis whereby less than fifty percent
(50%) of the total voting power of the surviving corporation is represented by
shares held by persons who were shareholders of the Bank immediately before the
merger or consolidation; or

     

    (5) the Bank
shall have sold to another person substantially all of the Bank’s assets. 


     

    The term
“person” refers to an individual, corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship, unincorporated organization
or other entity.

     

    
      
         


      

      
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    (g) “Code”
means the Internal Revenue Code of 1986, as amended, and regulations promulgated
thereunder.

     

    (h) “Committee”
means the committee of the Board described in Article 4.

     

    (i) “Covered
Employee” means an Employee who is a “covered employee” within the meaning of
Section 162(m) of the Code.

     

    (j) “Deferred
Compensation Account” means the bookkeeping account established for each
Participant pursuant to Section 12.2 of this Plan.

     

    (k) “Director”
means a member of the Board.

     

    (l) “Disability”
shall have the meaning set forth in Section 22(e)(3) of the Code.

     

    (m) “Distribution
Event” means an event as a result of which a Participant is entitled to receive
the balance of his or her Deferred Compensation Account pursuant to Section 12.3
of this Plan, namely (i) with respect to a Participant who is an employee of the
Bank and the portion of his or her Deferred Compensation Account attributable to
an Award or other compensation earned as an employee, the date the Participant
terminates his or her employment with the Bank, and (ii) with respect a
Participant who is a Director and the portion of his or her Deferred
Compensation Account attributable to an Award or other compensation earned as a
Director, the earlier of (A) the date the Participant terminates his or her
service as a Director, or (B) the Participant’s attainment of the age specified
(not younger than age 55) in an election form filed by the Participant with the
Committee at such time as he or she first becomes eligible to defer compensation
pursuant to Article 12 of this Plan.

     

    (n) "Employee"
shall mean an individual who is an employee of the Bank under general common law
principles. An individual who is an "Employee," as so defined, may also be a
member of the Board or the Board of Directors of the Bank (but not a
Non-Employee Director).

     

    (o) “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the regulations
promulgated thereunder.

     

    (p) “Fair
Market Value” means, as of any given date, the fair market value of Stock on a
particular date determined in accordance with the requirements of Section 422 of
the Code.

     

    (q) “Incentive
Stock Option” means an Option that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto.

     

    (r) “Non-Employee
Director” means a member of the Board who is not an Employee.

     

    (s) “Non-Qualified
Stock Option” means an Option that is not intended to be an Incentive Stock
Option.

     

     

    
      
         


      

      
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    (t)  “Option”
means a right granted to a Participant under Article 7 of the Plan to purchase
Stock at a specified price during specified time periods.  An Option
may be either an Incentive Stock Option or a Non-Qualified Stock
Option.

     

    (u) “Participant”
means a person who, as a Director or an employee, officer, or executive of the
Bank, has been granted an Award under the Plan, or who has been designated as
eligible to make an election to defer compensation under this Plan.

     

    (v) “Performance-Based
Awards” means Stock Awards granted to selected Covered Employees pursuant to
Article 9, but which are subject to the terms and conditions set forth in
Article 10.  All Performance-Based Awards are intended to qualify as
“performance-based compensation” under Section 162(m) of the Code.

     

    (w) “Performance
Criteria” means the criteria that the Committee selects for purposes of
establishing the Performance Goal or Performance Goals for a Participant for a
Performance Period.  The Performance Criteria that will be used to
establish Performance Goals may include, but shall not be limited to, one or
more of the following:  pre- or after-tax net earnings, sales growth,
operating earnings, operating cash flow, working capital, return on net assets,
return on stockholders’ equity, return on assets, return on capital, Stock price
growth, stockholder returns, gross or net profit margin, earnings per share,
price per share of Stock, and market share, any of which may be measured either
in absolute terms or as compared to any incremental increase or as compared to
results of a peer group.  The Committee shall, within the time
prescribed by Section 162(m) of the Code, define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.

     

    (x) “Performance
Goals” means, for a Performance Period, the goals established in writing by the
Committee for the Performance Period based upon the Performance
Criteria.  Depending on the Performance Criteria used to establish
such Performance Goals, the Performance Goals may be expressed in terms of
overall Bank performance or the performance of a division, business unit, or an
individual.  The Committee, in its discretion, may, within the time
prescribed by Section 162(m) of the Code, adjust or modify the calculation of
Performance Goals for such Performance Period in order to prevent the dilution
or enlargement of the rights of Participants (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (ii) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Bank, or the financial
statements of the Bank, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business
conditions.

     

    (y) “Performance
Period” means the one or more periods of time, which may be of varying and
overlapping durations, as the Committee may select, over which the attainment of
one or more Performance Goals will be measured for the purpose of determining a
Participant’s right to, and the payment of, a Performance-Based
Award.

     

    (z) “Plan”
means the New Century Bank 2004 Incentive Equity and Deferred Compensation Plan
as set forth herein.

     

     

    
      
         


      

      
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    (aa) “Plan
Termination Date” means the date that is ten (10) years after the Effective
Date.

     

    (bb) “Restricted
Stock Award” means Stock granted to a Participant under Article 9 that is
subject to certain restrictions and to risk of forfeiture.

     

    (cc) “Stock”
means the common stock of New Century Bank and such other securities of New
Century Bank which may be substituted for Stock pursuant to Article
13.

     

    (dd) “Stock
Appreciation Right” or “SAR” means a right granted to a Participant under
Article 8 to receive a payment equal to the difference between the Fair Market
Value of a share of Stock as of the date of exercise of the SAR over the grant
price of the SAR, all as determined pursuant to Article 8.

     

    (ee) “Stock
Award” means a Restricted Stock Award or an Unrestricted Stock
Award.

     

    (ff) “Unrestricted
Stock Award” means Stock granted to a Participant under Article 9 that is not
subject to restrictions or a risk of forfeiture.

     

    ARTICLE
4

    ADMINISTRATION

     

    4.1   COMMITTEE;
BOARD APPROVAL.  The Plan shall be administered by a Committee
appointed by, and which serves at the discretion of, the
Board.  Notwithstanding any other provision of the Plan, during any
period in which the Bank may be subject to the Exchange Act, either: (i) the
Committee shall consist of at least two individuals and each member of the
Committee shall qualify as a Non-Employee Director; or (ii) (A) at least two
members of the Committee must qualify as Non-Employee Directors, (B) any member
of the Committee who does not qualify as a “Non-Employee Director” may not
participate in any action of the Committee with respect to any Award under the
Plan, and (C) the Plan shall be deemed to be administered by the full Board, the
actions of the Committee under the Plan shall be deemed merely advisory to the
Board, and the Board’s approval shall be required for all actions of the
Committee under the Plan, including without limitation the grant of each
Award.  To the extent necessary or desirable (as may be determined by
the Board from time to time) each member of the Committee shall also qualify as
an “outside director” under Code Section 162(m) and the regulations issued
thereunder.  The members of the Committee shall meet such additional
criteria as may be necessary or desirable to comply with regulatory or stock
exchange rules or exemptions.  The Bank will pay all reasonable
expenses of the Committee. The Board of Directors may designate the Bank’s
Compensation Committee as the “Committee” hereunder provided the Compensation
Committee meets these requirements.

     

    4.2   AUTHORITY
OF COMMITTEE.  Subject to any specific designation in the Plan,
the Committee (or the Board, in cases where the Board administers the Plan
pursuant to Section 4.1) has the exclusive power, authority and discretion
to:

     

    (a) Designate
Participants to receive Awards;

     

     

    
      
         


      

      
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    (b) Determine
the type or types of Awards to be granted to each Participant;

     

    (c) Determine
the number of Awards to be granted and the number of shares of Stock to which an
Award will relate;

     

    (d) Determine
the terms and conditions of any Award granted under the Plan including but not
limited to, the exercise price, grant price, or purchase price, any restrictions
or limitations on the Award, any schedule for lapse of forfeiture restrictions
or restrictions on the exercisability of an Award, and accelerations or waivers
thereof, based in each case on such considerations as the Committee in its sole
discretion determines;

     

    (e) Amend,
modify, or terminate any outstanding Award, with the Participant’s consent
unless the Committee has the authority to amend, modify, or terminate an Award
without the Participant’s consent under any other provision of the
Plan.

     

    (f) Determine
whether, to what extent, and under what circumstances an Award may be settled
in, or the exercise price of an Award may be paid in, cash, Stock, other Awards,
or other property, or an Award may be canceled, forfeited, or
surrendered;

     

    (g) Prescribe
the form of each Award Agreement, which need not be identical for each
Participant;

     

    (h) Decide
all other matters that must be determined in connection with an
Award;

     

    (i) Establish,
adopt, revise, amend or rescind any guidelines, rules and regulations as it may
deem necessary or advisable to administer the Plan; and

     

    (j) Interpret
the terms of, and rule on any matter arising under, the Plan or any Award
Agreement;

     

    (k) Make all
other decisions and determinations that may be required under the Plan or as the
Committee deems necessary or advisable to administer the Plan, including but not
limited to, the determination of whether and to what extent any Performance
Goals have been achieved; and

     

    (l) Retain
counsel, accountants and other consultants to aid in exercising its powers and
carrying out its duties under the Plan.

     

    4.3   DECISIONS
BINDING.  The Committee’s interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan shall (if approved or
ratified by the Board during any period when the Board is deemed to administer
the Plan pursuant to Section 4.1) be final, binding, and conclusive on all
parties and any other persons claiming an interest in any Award or under the
Plan.

     

    
      
         


      

      
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    ARTICLE
5

    SHARES
SUBJECT TO THE PLAN

     

    5.1   NUMBER OF
SHARES.  Subject to adjustment provided in Section 13.1, the
aggregate number of shares of Stock reserved and available for grant under the
Plan, in addition to any shares of Stock that become available by reason of the
lapse of an Award granted prior to the Effective date, shall be 200,000
shares.

     

    5.2   LAPSED
AWARDS.  To the extent that an Award terminates, is cancelled,
expires, lapses or is forfeited for any reason, including, but not limited to,
the failure to achieve any Performance Goals, any shares of Stock subject to the
Award will again be available for the grant of an Award under the Plan; however,
shares subject to an Award granted prior to the Effective Date may not again be
available for the grant of an Award after the Plan Termination
Date.

     

    5.3   STOCK
DISTRIBUTED.  Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.

     

    5.4   LIMITATION
ON NUMBER OF
SHARES SUBJECT TO AWARDS.  Notwithstanding any provision in the
Plan to the contrary, and subject to the adjustment in Section 13.1, but subject
to any restrictions of applicable law and the other terms and conditions of the
Plan, the maximum number of shares of Stock with respect to Options and Stock
Appreciation Rights that may be granted to any one Participant during a fiscal
year of the Bank shall be 25,000 shares.

     

    ARTICLE
6

    ELIGIBILITY
AND PARTICIPATION

     

    6.1           
ELIGIBILITY.  Employees
and Non-Employee Directors shall be potentially eligible to receive Awards under
the Plan.  In making determinations regarding the potential
eligibility of any Employee or Non-Employee Director, the Board may take into
account the nature of the services rendered by such Employee or Non-Employee
Director, their present and potential contributions to the Bank's success and
such other factors as the Committee in its discretion shall deem
relevant.

     

    6.2   ACTUAL
PARTICIPATION.  Subject to the provisions of the Plan, the
Committee may, from time to time, select from among all eligible individuals
those to whom Awards shall be granted and shall determine the nature and amount
of each Award.  No individual shall have any right to be granted an
Award under this Plan.

     

    ARTICLE
7

    STOCK
OPTIONS

     

    7.1   GENERAL.  The
Committee is authorized to grant Options to Participants on the following terms
and conditions:

     

     

    
      
         


      

      
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    (a) EXERCISE
PRICE.  The exercise price per share of Stock under an Option shall be
the Fair Market Value as of the date of grant.

     

    (b) TERM OF
OPTION.  No Option shall be exercisable after the date that is 10
years from the date it is granted.

     

    (c) TIME AND
CONDITIONS OF EXERCISE.  Except as provided herein, the Committee
shall determine the time or times at which an Option may be exercised in whole
or in part.  The Committee shall also determine the performance or
other conditions, if any, that must be satisfied before all or part of an Option
may be exercised.  An Option will lapse immediately if a Participant’s
employment or service as a Director is terminated for Cause.

     

    (d) TRANSFERABILITY.  Each
Option granted under the Plan shall, by its terms, not be transferable otherwise
than by will or the laws of descent and distribution.  Notwithstanding
the foregoing, or any other provision of this Plan, a Participant who holds
Options may transfer such Options (but not Incentive Stock Options) to his or
her spouse, lineal ascendants, lineal descendants, or to a duly established
trust for the benefit of one or more of these individuals.  Options so
transferred may thereafter be transferred only to the Participant who originally
received the grant or to an individual or trust to whom the Participant could
have initially transferred the Options pursuant to this Section
7.1(d).  Options which are transferred pursuant to this Section 7.1(d)
shall be exercisable by the transferee according to the same terms and
conditions as applied to the Participant (for example, such Options shall
terminate automatically, upon the termination of employment or service as a
Director of the Participant for Cause).

     

    (e) PAYMENT.  An
Option shall be exercised by giving a written notice to the Chief Executive
Officer of the Company stating the number of shares of Stock with respect to
which the Option is being exercised and containing such other information as the
Committee may require and by tendering payment therefore with a cashier's check,
certified check, or with existing holdings of Stock held for more than six
months. In addition, if the terms of a Stock Option so provide, the optionee may
pay the exercise price by directing the Company to withhold from those shares of
Common Stock that would otherwise be received upon the exercise of the Stock
Option that number of shares of Common Stock having an aggregate fair market
value as of the date of exercise equal to the Stock Option’s exercise price, or
the applicable portion of the Stock Option’s exercise price if the Stock Option
is not exercised in full.  The shares of Common Stock so withheld
shall not be deemed to have been issued for purposes of the aggregate-share
limitation set forth in Section 4, above.

     

    (f) EVIDENCE
OF GRANT.  All Options shall be evidenced by an Award
Agreement.  The Award Agreement shall include such additional
provisions as may be specified by the Committee.

     

    7.2 INCENTIVE
STOCK OPTIONS.  Incentive Stock Options shall be granted only
to employees of the Bank or “subsidiary corporations” with respect to the Bank,
within the meaning of Section 424 of the Code, and the terms of any Incentive
Stock Options granted under the Plan must comply with the following additional
rules, which in case of conflict shall control over other provisions of this
Plan that might otherwise be applicable:

     

     

    
      
         


      

      
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    (a) EXERCISE.  In
no event may any Incentive Stock Option be exercisable for more than ten years
from the date of its grant.

     

    (b) INDIVIDUAL
DOLLAR LIMITATION.  The aggregate Fair Market Value (determined as of
the time an Award is made) of all shares of Stock with respect to which
Incentive Stock Options are first exercisable by a Participant in any calendar
year may not exceed $100,000.00 or such other limitation as imposed by Section
422(d) of the Code, or any successor provision.  To the extent that
Incentive Stock Options are first exercisable by a Participant in excess of such
limitation, the excess shall be considered Non-Qualified Stock
Options.

     

    (c) TEN
PERCENT OWNERS.  An Incentive Stock Option shall be granted to any
individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the Bank
only if such Option is granted at a price that is not less than 110% of Fair
Market Value on the date of grant and the Option is exercisable for no more than
five years from the date of grant.

     

    (d) RIGHT TO
EXERCISE.  During a Participant’s lifetime, an Incentive Stock Option
may be exercised only by the Participant.

     

    ARTICLE
8

    STOCK
APPRECIATION RIGHTS

     

    8.1   GRANT OF
SARS.  The Committee is authorized to grant SARs to
Participants on the following terms and conditions:

     

    (a) RIGHT TO
PAYMENT.  Upon the exercise of a Stock Appreciation Right, the
Participant to whom it is granted has the right to receive the excess, if any,
of:

     

    (1) The Fair
Market Value of a share of Stock on the date of exercise; over

     

    (2) The grant
price of the Stock Appreciation Right as determined by the Committee, which
shall not be less than the Fair Market Value of a share of Stock on the date of
grant.

     

    (b) OTHER
TERMS.  All such Awards shall be evidenced by an Award
Agreement.  The terms, methods of exercise, methods of settlement,
form of consideration payable in settlement, and any other terms and conditions
of any Stock Appreciation Right shall be determined by the Committee at the time
of the grant of the Award and shall be reflected in the Award Agreement, except
that in all events a Stock Appreciation Right granted in tandem with an
Incentive Stock Option shall be exercisable only when the underlying Incentive
Stock Option may be exercised.  For purposes of the Plan, a Stock
Appreciation Right shall be considered to be granted in tandem with an Incentive
Stock Option if the exercise of one results in an automatic forfeiture of the
other, or if the exercise of one results in the automatic exercise of the
other.

     

     

    
      
         


      

      
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    ARTICLE
9

    STOCK
AWARDS

     

    9.1   GRANT OF
STOCK.  The Committee is authorized to grant Unrestricted Stock
Awards and Restricted Stock Awards to Participants in such amounts and subject
to such terms and conditions as determined by the Committee.  All such
Awards shall be evidenced by an Award Agreement.

     

    9.2   ISSUANCE
AND RESTRICTIONS.  An Unrestricted Stock Award may provide for
a transfer of shares of Stock to a Participant at the time the Award is granted,
or it may provide for a deferred transfer of shares of Stock subject to
conditions prescribed by the Committee.  Restricted Stock Awards shall
be subject to such restrictions on transferability and risks of forfeiture as
the Committee may impose.  These restrictions and risks may lapse
separately or in combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee determines at the time of the grant
of the Award or thereafter.

     

    9.3   FORFEITURE.  Except
as otherwise determined by the Committee at the time of the grant of the Award
or thereafter, upon termination of employment or service as a Director during
the applicable restriction period, Stock subject to a Restricted Stock Award
that is at that time subject to restrictions shall be forfeited, provided,
however, that the Committee may provide in any Restricted Stock Award that
restrictions or forfeiture conditions relating to the Stock will be waived in
whole or in part in the event of terminations resulting from specified causes,
and the Committee may in other cases waive in whole or in part restrictions or
forfeiture conditions relating to the Stock.

     

    9.4   CERTIFICATES
FOR RESTRICTED STOCK.  Restricted Stock Awards granted under
the Plan may be evidenced in such manner as the Committee shall
determine.  If certificates representing shares of Stock subject to
Restricted Stock Awards are registered in the name of the Participant,
certificates must bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such shares, and the Bank may, at its discretion,
retain physical possession of the certificate until such time as all applicable
restrictions lapse.

     

    ARTICLE
10

    PERFORMANCE-BASED
AWARDS

     

    10.1   PURPOSE.  The
purpose of this Article 10 is to provide the Committee the ability to qualify
the Awards under Article 9 as “performance-based compensation” under Section
162(m) of the Code.  If the Committee, in its discretion, decides to
grant a Performance-Based Award to a Covered Employee, the provisions of this
Article 10 shall control over any contrary provision contained in Article
9.

     

    10.2   APPLICABILITY.  This
Article 10 shall apply only to those Covered Employees selected by the Committee
to receive Performance-Based Awards.  The Committee may, in its
discretion, grant Awards other than Performance-Based Awards to
Covered Employees that do not satisfy the requirements of this Article
10.  The designation of a Covered Employee as a Participant for a
Performance Period shall not in any manner entitle the Participant to receive an
Award for the period.  Moreover, designation of a Covered Employee as
a Participant for a particular Performance Period shall not require designation
of such Covered Employee as a Participant in any subsequent Performance Period
and designation of one Covered Employee as a Participant shall not require
designation of any other Covered Employees as a Participant in such period or in
any other period.

     

     

    
      
         


      

      
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    10.3   DISCRETION
OF COMMITTEE WITH RESPECT TO PERFORMANCE AWARDS.  With regard
to a particular Performance Period, the Committee shall have full discretion to
select the length of such Performance Period, the type of Performance-Based
Awards to be issued, the kind and/or level of the Performance Goal, and whether
the Performance Goal is to apply to the Bank or any division or business unit
thereof or to particular Participants or other individuals.

     

    10.4   PAYMENT
OF PERFORMANCE-BASED AWARDS.  Unless otherwise provided in the
relevant Award Agreement, a Participant must be employed by the Bank on the last
day of the Performance Period to be eligible for a Performance-Based Award for
such Performance Period.  In determining the actual size of an
individual Performance-Based Award, the Committee may reduce or eliminate the
amount of the Performance-Based Award earned for the Performance Period, if in
its sole and absolute discretion, such reduction or elimination is
appropriate.

     

    10.5   SHAREHOLDER
APPROVAL.  The Board shall disclose to the shareholders of the
Bank the material terms of any Performance-Based Award, and shall seek approval
of the shareholders of the Performance-Based Award before any Stock is
transferred to a Participant, or before any restrictions with respect to same
lapse, pursuant to the Award.  The Committee shall certify that the
Performance Goals with respect to any Performance - Based Award have been
achieved before any Stock is transferred to a Participant, or before any
restrictions with respect to same lapse.  Such disclosure, approval
and certification shall be effected in accordance with the requirements of
Section 162(m)(4)(C) of the Code.

     

    ARTICLE
11

    PROVISIONS
APPLICABLE TO AWARDS

     

    11.1   STAND-ALONE
AND TANDEM AWARDS.  Awards granted under the Plan may, in the
discretion of the Committee, be granted either alone, in addition to, or in
tandem with, any other Award granted under the Plan. Awards granted in addition
to or in tandem with other Awards may be granted either at the same time as or
at a different time from the grant of such other Awards.

     

    11.2   EXCHANGE
PROVISIONS.  The Committee may at any time offer to exchange or
buy out any previously granted Award for a payment in cash, Stock, or another
Award, based on the terms and conditions the Committee determines and
communicates to the Participant at the time the offer is made.

     

    11.3   TERM OF
AWARD.  The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with an
Incentive Stock Option exceed a period of ten years from the date of its
grant.

     

     

    
      
         


      

      
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    11.4   LIMITS ON
TRANSFER.  No right or interest of a Participant in any Award
may be pledged, encumbered, or hypothecated to or in favor of any party other
than the Bank, or shall be subject to any lien, obligation, or liability of such
Participant to any other party other than the Bank; provided, however, that the
foregoing shall not be deemed to imply any obligation of the Bank to lend
against or accept a lien or pledge of any Award for any reason.  No
Award shall be assignable or transferable by a Participant other than by will or
the laws of descent and distribution, except that the Committee, in its
discretion, may permit a Participant to make a gratuitous transfer of an Award
that is not an Incentive Stock Option or a Stock Appreciation Right granted in
tandem with an Incentive Stock Option to his or her spouse, lineal descendants,
lineal ascendants, or a duly established trust for the benefit of one or more of
these individuals.

     

    11.5   BENEFICIARIES.  Notwithstanding
Section 11.4, a Participant may, if and to the extent, and in such manner as may
be determined by the Committee from time to time, designate a beneficiary to
exercise the rights of the Participant and to receive any distribution with
respect to any Award upon the Participant’s death.  A beneficiary,
legal guardian, legal representative, or other person claiming any rights under
the Plan is subject to all terms and conditions of the Plan and any Award
applicable to the Participant, except to the extent the Plan and Award otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee.  If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant’s
estate.  Subject to the foregoing, if a Participant is entitled to
designate a beneficiary, a beneficiary designation may be changed or revoked by
a Participant at any time in accordance with any procedures or conditions
established by the Committee from time to time, provided the change or
revocation is filed with the Committee.

     

    11.6   STOCK
CERTIFICATES.  Notwithstanding anything herein to the contrary,
the Bank shall not be required to issue or deliver any certificates evidencing
shares of Stock pursuant to the exercise of any Awards, unless and until the
Board has determined, with advice of counsel, that the issuance and delivery of
such certificates is in compliance with all applicable laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange on
which the shares of Stock are listed or traded as well as the terms of this Plan
and any other terms, conditions or restrictions that may be
applicable.  All Stock certificates delivered under the Plan are
subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with Federal, state, or foreign
jurisdiction, securities or other laws, rules and regulations and the rules of
any national securities exchange or automated quotation system on which the
Stock is listed, quoted, or traded.  The Committee may place legends
on any Stock certificate to reference restrictions applicable to the
Stock.  In addition to the terms and conditions provided herein, the
Board may require that a Participant make such reasonable covenants, agreements,
and representations as the Board, in its discretion, deems advisable in order to
comply with any such laws, regulations, or requirements.

     

    


     

    
      
         


      

      
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    ARTICLE
12

    DEFERRAL OF
COMPENSATION

    


    12.1           RIGHT TO
DEFER COMPENSATION.

    


    (a)           TYPES
OF DEFERRALS.  Any Participant designated by the Board or by the Committee
may elect to defer (i) all or any portion of the Participant's salary, (ii) any
percentage of a fiscal year bonus determined by the Board or other duly
constituted authority or delegate to be payable to such Participant, or (iii)
all or any portion of the Participant’s director’s fees.  Such
election shall remain in force for all future years, to the extent applicable,
until modified or revoked.  In addition, the Committee, in its
discretion, may permit a Participant to elect to defer his or her receipt of the
payment of cash or the delivery of shares of Stock that would otherwise be due
to such Participant pursuant to an Award.  Any election under this
Section 12.1 shall be made by written notice delivered to the Board or
Committee, specifying the amount (or percentage) of salary and/or bonus and/or
directors’ fees and/or the Award to be deferred.

    


    (b)           TIMING
OF ELECTIONS.  A Participant may, at any time within 30 days of first
becoming eligible to participate in this Plan, make an election to defer salary
or director’s fees earned after such election.  Any increase or
decrease in future deferrals of salary or director’s fees earned during a
calendar year must be made prior to such calendar year.  A Participant
may make an initial election to defer a bonus for a fiscal year, or may elect to
increase or decrease the amount of a fiscal year bonus to be deferred, if such
election is made prior to such fiscal year.  A Participant may make an
election to defer the receipt of cash or shares of Stock otherwise payable or
transferable to the Participant pursuant to an Award in accordance with the
terms of such Award.

    


    12.2           DEFERRED
COMPENSATION ACCOUNTS.

    


    (a) ESTABLISHMENT
OF ACCOUNTS.  A Deferred Compensation Account in the name of each
Participant who has elected to defer compensation under the Plan shall be
established and maintained as a special ledger account on the books of the
Bank.  On the last day of each calendar month in which salary or
director’s fees deferred under this Plan would have become payable to a
Participant (in the absence of an election to defer payment thereof), the amount
of such deferred salary or director’s fees shall be credited to the
Participant's Deferred Compensation Account.  On the last day of the
month in which the bonuses deferred under this Plan would have become payable to
a Participant in the absence of an election to defer payment thereof, the amount
of such deferred bonus shall be credited to the Participant's Deferred
Compensation Account.  On the last day of the month in which an Award
would have otherwise become payable or transferable to a Participant in the
absence of an election to defer receipt thereof, the amount of such deferred
Award shall be credited to the Participant’s Deferred Compensation
Account.

     

    (b) DEEMED
INVESTMENT OF ACCOUNT BALANCE.

     

    (1)           Except
as otherwise provided by the terms of an Award, the Participant shall, at the
time of making a deferred compensation election under this Plan, make an
election directing the Bank to credit to the Deferred Compensation Account in
that calendar year based upon the options made available by the Board or
designated Committee which options may include either cash, Stock, or a
combination of cash and Stock equal in value to the amount of the current year's
salary or bonus deferred under the Plan.  In addition to cash or
Stock, the Board or the Committee may offer to the Participant such deemed
investment options as it shall decide are appropriate.  Such
investment options may include deemed investments in individual stocks or bonds,
mutual funds, and such other investment options as the Board or Committee may
choose.  The Board or Committee shall not be required to offer the
same deemed investment options to each Participant but may restrict certain
investment options to designated Participants.  In the absence of a
contrary election by a Participant, the amount credited to a Deferred
Compensation Account shall be credited as cash.

     

     

    
      
         


      

      
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    (2)           If
the Participant directs that any amount credited to the Deferred Compensation
account be credited in the form of Stock, the Board shall credit to the Deferred
Compensation Account sufficient shares of Stock equal in value to the Deferred
Compensation Account balance, or such lesser amount as the Participant shall
direct.  The value of such Stock shall be determined in accordance
with a valuation methodology approved by the Board or by the
Committee.  Except as provided in Section 12.6, such Stock credited to
the Deferred Compensation Account shall merely constitute a bookkeeping entry of
the Bank, and (except as provided herein) the Participant shall have no voting,
dividend, or other legal or economic rights with respect to such
Stock.  At the end of each fiscal quarter, an amount equivalent to all
dividends which would otherwise have been payable with respect to such Stock
shall be credited to the Deferred Compensation Account as additional
Stock.  The amount of the Participant's Deferred Compensation Account
that is credited as cash shall accrue interest at a rate no less than the money
market deposit account rate charged by the Bank to its depositors (as such rate
may change from time to time) and shall not exceed the highest rate paid on
Individual Retirement Accounts (“IRAs”) by the Bank plus two percent
(2%).  Such interest with respect to a Deferred Compensation Account
shall be credited to such account quarterly, based on the weighted average daily
prime rate or the IRA rate for the three (3) month period ending on the last day
of the quarter.

     

    (4)           The
Participant shall elect the portion of their deferral to be allocated to Stock
or cash or such other option as made available by the Board at the time of
making such election to defer compensation.  Such allocation may not
be amended with respect to such deferral without the approval of the
Committee.  Any allocation to Stock shall be paid in the form of
Stock.  No Participant will be granted the right to take payment of
the Stock in cash rather than in shares.

     

    (4)           If,
at any time, the deferral of a Participant is allocated to Stock, and such
Participant would otherwise be deemed to have violated the short-swing profit
rules of Section 16(b) of the Exchange Act through such allocation, the
allocation to Stock shall be void and such allocation shall default to
cash.

     

    12.3           PAYMENT
OF DEFERRED COMPENSATION.

    


    (a)         IN
GENERAL.  Amounts credited to a Participant’s Deferred Compensation Account
shall be payable upon the Participant’s Distribution Event.  The
Participant shall determine the method of distributing the amounts in the
Deferred Compensation Account at the time the first election to participate in
the Plan is made, which shall be either a single distribution or a series of up
to ten (10) consecutive, substantially equal annual installments paid to such
Participant or his or her beneficiary, as the case may be, on or before January
15 of each year, commencing in the year following the Distribution
Event.  If no such election is made, the method of distribution shall
be determined solely by the Board.  If
the Participant has elected to receive installment distributions, and less than
the full value of the Participant’s Deferred Compensation Account balance has
been distributed as of the date of his or her death, the balance shall be paid
to the Participant’s beneficiary in accordance with the same method in effect at
the Participant’s death, except that the beneficiary may elect, with the consent
of the Committee, to receive the balance of the Deferred Compensation Account in
a single lump sum.  For purposes of this Article 12, a Participant’s
“beneficiary” shall mean the person or persons designated by the Participant
pursuant to Section 11.5 of this Plan, or, in the absence of such designation or
if no such person survives the Participant, the Participant’s
estate.  If any portion of the Participant's Deferred Compensation
Account is credited with Stock, then distributions from that portion of the
Deferred Compensation Account shall be made directly in the form of
Stock.  Undistributed amounts shall continue to earn interest or
accrue dividends, as the case may be, as provided in accordance with this
Plan.

     

     

    
      
         


      

      
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    (b)  MODIFICATION
OF PAYMENT TERMS.  A Participant may change a Distribution Election at
any time at least sixty (90) days prior to a Distribution Event.

    


    (c) CHANGE IN
CONTROL.  In the event of a Change in Control, a Participant shall be
permitted to elect to receive a distribution of all or a portion of his or her
Deferred Compensation Account, provided that any such election hereunder must be
made within the period commencing thirty days prior to such Change in Control
and ending on the date of such Change in Control.  Any distribution
pursuant to this Section 12.3(c) shall be made (i) in the form of cash and/or
Stock as his or her Deferred Compensation Account is allocated and (ii) within
seven (7) days subsequent to the Change in Control.

     

    (d) HARDSHIP
DISTRIBUTION IN THE CASE OF FINANCIAL EMERGENCY.  Prior to the time a
Deferred Compensation Account of a Participant would otherwise become payable,
the Committee, in its sole discretion, may elect to distribute all or a portion
of the Deferred Compensation Account in the event such Participant requests a
distribution by reason of severe financial hardship.  For purposes of
this Plan, severe financial hardship shall be deemed to exist in the event the
Committee determines that a Participant needs a distribution to meet immediate
and heavy financial needs resulting from a sudden or unexpected illness or
accident of the Participant, or a member of his or her family, loss of the
Participant's property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant.  A distribution based on financial hardship shall not
exceed the amount required to meet the immediate financial need created by the
hardship. In the event the Participant is a member of the Committee making such
determination, the Participant shall not participate in the decision by the
Committee.

     

    


    
      
         


      

      
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    12.4           TRUST
PROVISIONS.

    


    (a) ESTABLISHMENT
OF TRUST.  The Bank may in its sole discretion establish one or more
trusts to provide a source of payment for its obligations under the Plan and
such trust shall be permitted to hold cash, Stock, or other assets to the extent
of the Bank's obligations hereunder.  The Bank may, but is not
required to, utilize a single trust with respect to its obligations to
Participants who are members of the Board and Participants who are not members
of the Board.  The accounts of multiple Participants may be held under
a single trust but in such event each account shall be separately maintained and
segregated from each other account.

     

    (b) CLAIMS OF
THE COMPANY’S CREDITORS.  All assets held by any account or trust
created hereunder and all distributions to be made by the Bank or any
trustee pursuant to this Plan and any trust agreement shall be subject to the
claims of general creditors of the Bank, including judgment creditors and
bankruptcy creditors.  The rights of a Participant or his or her
beneficiaries in or to any assets of the trust shall be no greater than the
rights of an unsecured creditor of the Bank.

     

    12.5 NON-ASSIGNMENT.  No
right or interest of any Participant or any person claiming through or under
such Participant in the Participant’s Deferred Compensation Account shall be
assignable or transferable in any manner or be subject to alienation,
anticipation, sale, pledge, encumbrance or other legal process (including
execution, levy, garnishment, attachment, bankruptcy, or otherwise) or in any
manner be subject to the debts or liabilities of such Participant.  If
any Participant or any such person shall attempt to or shall transfer, assign,
alienate, anticipate, sell, pledge or otherwise encumber his or her benefits
hereunder or any part thereof, or if by reason of his or her bankruptcy or other
event happening at any time such benefits would devolve upon anyone else or
would not be enjoyed by him or her, then the Committee, in its discretion, may
terminate his or her interest in any such benefit to the extent the Committee
considers necessary or advisable to prevent or limit the effects of such
occurrence.  Termination shall be effected by filing a written
declaration of termination with the Committee’s records and making reasonable
efforts to deliver a copy to such Participant or any such other person or his or
her legal representative.  As long as any Participant is alive, any
amounts affected by the termination shall be retained by the Bank or the trustee
of any trust established pursuant to Section 12.4 of this Plan and, in the
Committee's sole and absolute discretion, may be paid to or expended for the
benefit of such Participant, his or her spouse, his or her children, or any
other person or persons in fact dependent upon him or her in such a manner as
the Committee shall deem proper.

    


    ARTICLE
13

    CHANGES
IN CAPITAL STRUCTURE

     

       13.1  GENERAL.

     

    (a) SHARES
AVAILABLE FOR GRANT.  In the event of any change in the number of
shares of Stock outstanding by reason of any stock dividend or split,
recapitalization, merger, consolidation, combination or exchange of shares or
similar corporate change, the maximum aggregate number of shares of Stock with
respect to which the Committee may grant Awards shall be appropriately
adjusted.  In the event of any change in the number of shares of Stock
outstanding by reason of any other event or transaction, the Committee may, but
need not, make such adjustments in the number and class of shares of Stock with
respect to which Awards may be granted as the Committee may deem
appropriate.

     

     

    
      
         


      

      
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    (b) OUTSTANDING
AWARDS – INCREASE OR DECREASE IN ISSUED SHARES WITHOUT
CONSIDERATION.  Subject to any required action by the shareholders of
the Bank, in the event of any increase or decrease in the number of issued
shares of Stock resulting from a subdivision or consolidation of shares of Stock
or the payment of a stock dividend (but only on the shares of Stock), or any
other increase or decrease in the number of such shares effected without receipt
or payment of consideration by the Bank, the Committee shall proportionally
adjust the number of shares of Stock subject to each outstanding Award and the
exercise price per share of Stock of each such Award.

     

    (c) OUTSTANDING
AWARDS – CERTAIN MERGERS.  Subject to any required action by the
shareholders of the Bank, in the event that the Bank shall be the surviving
corporation in any merger or consolidation (except a merger or consolidation as
a result of which the holders of shares of Stock receive securities of another
corporation), each Award outstanding on the date of such merger or consolidation
shall pertain to and apply to the securities which a holder of the number of
shares of Stock subject to such Award would have received in such merger or
consolidation.

     

    (d) OUTSTANDING
AWARDS – CERTAIN OTHER TRANSACTIONS.  In the event of (i) a
dissolution or liquidation of the Bank, (ii) a sale of all or substantially all
of the Bank's assets, (iii) a merger or consolidation involving the Bank in
which the Bank is not the surviving corporation or (iv) a merger or
consolidation involving the Bank, or any other reorganization transaction
(including without limitation the formation of a holding company for the Bank)
in which the Bank is the surviving corporation but the holders of shares of
Stock receive securities of another corporation and/or other property, including
cash, the Committee shall, in its absolute discretion, have the power
to:

     

    (1) cancel,
effective immediately prior to the occurrence of such event, each Award
outstanding immediately prior to such event (whether or not then exercisable),
and, in full consideration of such cancellation, pay to the Participant to whom
such Award was granted an amount in cash, for each share of Stock subject to
such Award, respectively, equal to the excess of (A) the value, as determined by
the Committee in its absolute discretion, of the property (including cash)
received by the holder of a share of Stock as a result of such event over (B)
the exercise of such Award; or

     

    (2) provide
for the exchange of each Award outstanding immediately prior to such event
(whether or not then exercisable) for an option, a stock appreciation right,
restricted stock award, performance share award or performance-based award with
respect to, as appropriate, some or all of the property for which such Award is
exchanged and, incident thereto, make an equitable adjustment as determined by
the Committee in its absolute discretion in the exercise price or value of the
option, stock appreciate right, restricted stock award, performance share award
or performance-based award or the number of shares or amount of property subject
to the option, stock appreciation right, restricted stock award, performance
share award or performance-based award or, if appropriate, provide for a cash
payment to the Participant to whom such Award was granted in partial
consideration for the exchange of the Award, or any combination
thereof.

     

     

    
      
         


      

      
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    (e) OUTSTANDING
AWARDS – OTHER CHANGES.  In the event of any other change in the
capitalization of the Bank or corporate change other than those specifically
referred to in this Article, the Committee may, in its absolute discretion, make
such adjustments in the number and class of shares subject to Awards outstanding
on the date on which such change occurs and in the per share exercise price of
each Award as the Committee may consider appropriate to prevent dilution or
enlargement of rights.

     

    (f) NO
ADDITIONAL SHAREHOLDER APPROVAL REQUIRED IN CERTAIN CASES.  Except to
the extent required by applicable law, no adjustment in the number of shares
subject to outstanding Awards, and no adjustment in the number of shares
available for grant under this Plan, shall require additional shareholder
approval, and all such future adjustments shall be deemed approved by the
approval of this Plan, to the extent that such adjustment, whether automatic or
discretionary, is proportional to and accompanies an equivalent adjustment in
the number of shares held by the Bank’s shareholders.

     

    (g) NO OTHER
RIGHTS.  Except as expressly provided in the Plan, no Participant
shall have any rights by reason of any subdivision or consolidation of shares of
stock of any class, the payment of any dividend, any increase or decrease in the
number of shares of stock of any class or any dissolution, liquidation, merger,
or consolidation of the Bank or any other corporation.  Except as
expressly provided in the Plan, no issuance by the Bank of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Stock subject to an Award or the exercise price of any
Award.

     

    ARTICLE
14

    AMENDMENT,
MODIFICATION, AND TERMINATION

     

    14.1   AMENDMENT,
MODIFICATION, AND TERMINATION.  At any time and from time to
time, the Board may terminate, amend or modify the Plan; provided, however, that
the Board shall not, without the affirmative vote of the holder of a majority of
the shares of each class of voting stock of the Bank, make any amendment which
would (i) abolish the Committee without designating such other committee, change
the qualifications of its members, or withdraw the administration of the Plan
from its supervision, (ii) except strictly as and to the extent provided in this
Plan and permitted by applicable law, increase the maximum number of shares of
Stock for which Awards may be granted under the Plan, (iii) amend the formula
for determination of the exercise price of Options, (iv) extend the term of the
Plan, and (v) amend the requirements as to the employees eligible to receive
Awards; and further provided that no other amendment shall be made without
shareholder approval to the extent shareholder approval is necessary to comply
with any applicable law, regulations or stock exchange rule.

     

    14.2   AWARDS
PREVIOUSLY GRANTED.  Except as otherwise provided in the Plan,
including without limitation, the provisions of Article 13, no termination,
amendment, or modification of the Plan shall adversely affect in any material
way any Award previously granted under the Plan, without the written consent of
the Participant.

     

     

    
      
         


      

      
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    ARTICLE
15

    GENERAL
PROVISIONS

     

    15.1   NO RIGHTS
TO AWARDS.  No Participant, employee, or other person shall
have any claim to be granted any Award under the Plan, and neither the Bank nor
the Committee is obligated to treat Participants, employees, and other persons
uniformly.

     

    15.2   NO
STOCKHOLDERS RIGHTS.  No Award gives the Participant any of the
rights of a stockholder of the Bank unless and until shares of Stock are in fact
issued to such person in connection with such Award.

     

    15.3   WITHHOLDING.  The
Bank shall have the authority and the right to deduct or withhold, or require a
Participant to remit to the Bank, an amount sufficient to satisfy Federal,
state, and local taxes (including the Participant’s FICA obligation) required by
law to be withheld with respect to any taxable event arising as a result of this
Plan.  A Participant may elect to have the Bank withhold from those
shares of Stock that would otherwise be received upon the exercise of any
Option, a number of shares having a Fair Market Value equal to the minimum
statutory amount necessary to satisfy the Bank’s applicable federal, state,
local and foreign income and employment tax withholding
obligations.

     

    15.4   NO RIGHT
TO EMPLOYMENT OR SERVICES.  Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Bank or any
of its affiliates or subsidiaries to terminate any Participant’s employment or
services at any time, nor confer upon any Participant any right to continue in
the employ of the Bank.

     

    15.5   INDEMNIFICATION.  To
the extent allowable under applicable law, each member of the Committee or of
the Board shall be indemnified and held harmless by the Bank and
any of its applicable subsidiaries from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by such member in connection
with or resulting from any claim, action, suit, or proceeding to which he or she
may be a party or in which he or she may be involved by reason of any action or
failure to act under the Plan and against and from any and all amounts paid by
him or her in satisfaction of judgment in such action, suit, or proceeding
against him or her provided he or she gives the Bank an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf.  The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Bank’s or any of its applicable
subsidiaries’ Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Bank or any of its applicable subsidiaries may
have to indemnify them or hold them harmless.

     

    15.6   FRACTIONAL
SHARES.  No fractional shares of stock shall be issued and the
Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up or down as appropriate.

     

     

    
      
         


      

      
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    15.7   GOVERNMENT
AND OTHER REGULATIONS.  The obligation of the Bank to make
payment of awards in Stock or otherwise shall be subject to all applicable laws,
rules, and regulations, and to such approvals by government agencies as may be
required.  The Bank shall be under no obligation to register, under
the Securities Act of 1933, as amended, or any other federal or state securities
laws, any of the shares of Stock paid under the Plan.  If the shares
paid under the Plan may in certain circumstances be exempt from registration
under the Securities Act of 1933, as amended, or applicable state laws, the Bank
may restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.

     

    15.8   GOVERNING
LAW.  The Plan and the terms of all Awards shall be construed
in accordance with and governed by the laws of the Commonwealth of Pennsylvania
without regard to rules of choice of law or conflict of laws, except to the
extent such laws may be pre-empted by the federal laws of the United States of
America.

     

     

     

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