Exhibit 10.1


 





 








 


Sussex
bancorp


 


2013
equity INCENTIVE PLAN 


 







 



  




    	 



    	 



    




 


Table of Contents





	 	 	Page
	1.	PURPOSE	1
	2.	DEFINITIONS	1
	3.	ADMINISTRATION OF THE PLAN	6
	 	3.1 Committee.	6
	 	3.1.1 Powers and Authorities.	6
	 	3.1.2 Composition of Committee.	6
	 	3.1.3 Other Committees.	6
	 	3.1.4 Delegation by Committee.	7
	 	3.2 Board.	7
	 	3.3 Terms of Awards.	7
	 	3.3.1 Committee Authority.	7
	 	3.3.2 Forfeiture; Recoupment.	8
	 	3.4 No Repricing.	8
	 	3.5 Deferral Arrangement.	8
	 	3.6 No Liability.	8
	 	3.7 Registration; Share Certificates.	9
	4.	STOCK SUBJECT TO THE PLAN	9
	 	4.1 Number of Shares of Stock Available for Awards.	9
	 	4.2 Adjustments in Authorized Shares of Stock.	9
	 	4.3 Share Usage.	9
	5.	EFFECTIVE DATE; TERM; AMENDMENT AND TERMINATION	10
	 	5.1 Effective Date.	10
	 	5.2 Term.	10
	 	5.3 Amendment and Termination.	10
	6.	AWARD ELIGIBILITY AND LIMITATIONS	10
	 	6.1 Eligible Grantees.	10
	 	6.2 Stand-Alone, Additional, Tandem and Substitute Awards.	10
	7.	AWARD AGREEMENT	11
	8.	TERMS AND CONDITIONS OF OPTIONS	11
	 	8.1 Option Price.	11
	 	8.2 Vesting.	11
	 	8.3 Term.	11
	 	8.4 Termination of Service.	12
	 	8.4.1 Termination of Service.	12
	 	8.4.2 Disability of Grantee.	12
	 	8.4.3 Death of Grantee.	12
	 	8.4.4 . Termination for Cause.	12
	 	8.5 Limitations on Exercise of Option.	12
	 	8.6 Method of Exercise.	13
	 	8.7 Rights of Holders of Options.	13


 




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	 	8.8 Delivery of Stock.	13
	 	8.9 Transferability of Options.	13
	 	8.10 Family Transfers.	13
	 	8.11 Limitations on Incentive Stock Options.	14
	 	8.12 Notice of Disqualifying Disposition.	14
	9.	TERMS AND CONDITIONS OF RESTRICTED STOCK and Stock Units	14
	 	9.1 Grant of Restricted Stock and Stock Units.	14
	 	9.2 Restrictions.	14
	 	9.3 Registration; Restricted Share Certificates.	14
	 	9.4 Rights of Holders of Restricted Stock.	15
	 	9.5 Rights of Holders of Stock Units.	15
	 	9.5.1 Voting and Dividend Rights.	15
	 	9.5.2 Creditor’s Rights.	15
	 	9.6 Termination of Service.	15
	 	9.7 Purchase of Restricted Stock and Shares of Stock Subject to Stock Units.	15
	 	9.8 Delivery of Shares of Stock.	16
	10.	TERMS AND CONDITIONS OF UNRESTRICTED STOCK	16
	11.	FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK	16
	 	11.1 General Rule.	16
	 	11.2 Surrender of Shares of Stock.	16
	 	11.3 Cashless Exercise.	16
	 	11.4 Other Forms of Payment.	17
	12.	PARACHUTE LIMITATIONS	17
	13.	REQUIREMENTS OF LAW	18
	 	13.1 General.	18
	 	13.2 Rule 16b-3.	18
	14.	EFFECT OF CHANGES IN CAPITALIZATION	18
	 	14.1 Changes in Stock.	18
	 	14.2 Reorganization in Which the Company Is the Surviving Entity That Does not Constitute a Change in Control.	19
	 	14.3 Change in Control.	19
	 	14.4 Adjustments	20
	 	14.5 No Limitations on Company.	20
	15.	GENERAL PROVISIONS	20
	 	15.1 Disclaimer of Rights.	20
	 	15.2 Nonexclusivity of the Plan.	20
	 	15.3 Withholding Taxes.	21
	 	15.4 Captions.	21
	 	15.5 Construction.	21
	 	15.6 Other Provisions.	22
	 	15.7 Number and Gender.	22
	 	15.8 Severability.	22
	 	15.9 Governing Law.	22
	 	15.10 Code Section 409A.	22


  




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Sussex
Bancorp


 


2013
Equity INCENTIVE PLAN 


 


		1.	PURPOSE 



 


The Plan is intended
to (a) provide eligible persons with an incentive to contribute to the success of the Company and to operate and manage the
Company’s business in a manner that will provide for the Company’s long-term growth and profitability to benefit its
shareholders and other important stakeholders, including its employees and customers, and (b) provide a means of obtaining,
rewarding and retaining key personnel. To this end, the Plan provides for the grant of awards of stock options, restricted stock,
stock units and unrestricted stock. Stock options granted under the Plan may be nonqualified stock options or incentive stock options,
as provided in the Plan.


 


		2.	DEFINITIONS 



 


For purposes of interpreting
the Plan documents (including the Plan and Award Agreements), the following definitions will apply:


 


2.1 “Affiliate”
means any company or other entity that controls, is controlled by or is under common control with the Company within the meaning
of Rule 405 of Regulation C under the Securities Act, including any Subsidiary.


 


2.2 “Applicable
Laws” means the legal requirements relating to the Plan and the Awards under (a) applicable provisions of the corporate,
securities, tax and other laws, rules, regulations and government orders of any jurisdiction applicable to Awards granted to residents
therein and (b) the rules of any Stock Exchange on which the Stock is listed.


 


2.3 “Award”
means a grant under the Plan of an Option, Restricted Stock, a Stock Unit or Unrestricted Stock.


 


2.4 “Award
Agreement” means the agreement between the Company and a Grantee that evidences and sets out the terms and conditions
of an Award.


 


2.5 “Award
Stock” will have the meaning set forth in Section 14.3.


 


2.6 “Benefit
Arrangement” will have the meaning set forth in Section 12.


 


2.7 “Board”
means the Board of Directors of the Company.


 


2.8 “Cause”
means, with respect to any Grantee, as determined by the Committee and unless otherwise provided in an applicable agreement
between such Grantee and the Company or an Affiliate, (a) gross negligence or willful misconduct in connection with the performance
of duties; (b) conviction of a criminal offense (other than minor traffic offenses); or (c) material breach of any term
of any employment, consulting or other services, confidentiality, intellectual property or non-competition agreements, if any,
between such Grantee and the Company or an Affiliate. Any determination by the Committee whether an event constituting Cause will
have occurred will be final, binding and conclusive.


 


2.9 “Capital
Stock” means, with respect to any Person, any and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) in equity of such Person, whether outstanding on the Effective Date or issued thereafter,
including all common stock, no par value, of the Company.


 






    	 



    	 



    

 


2.10 “Change
in Control” means the occurrence of any of the following:


 


(a) a
“Person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of
the Voting Stock of the Company, on a Fully Diluted Basis;


 


(b) individuals
who on the Effective Date constitute the Board (together with any new directors whose election by such Board or whose nomination
by such Board for election by the shareholders of the Company was approved by a vote of at least a majority of the members of such
Board then in office who either were members of such Board on the Effective Date or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the members of such Board then in office;


 


(c) the
Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company,
other than any such transaction in which the holders of securities that represented 100% of the Voting Stock of the Company immediately
prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation
transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in
such merger or consolidation transaction immediately after such transaction;


 


(d) there
is consummated any direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation),
in one transaction or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries,
taken as a whole, to any “Person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act); or


 


(e) the
shareholders of the Company adopt a plan or proposal for the liquidation, winding up or dissolution of the Company.


 


2.11 “Code”
means the Internal Revenue Code of 1986, as amended, as now in effect or as hereafter amended, and any successor thereto. References
in the Plan to any Code Section will be deemed to include, as applicable, regulations promulgated under such Code Section.


 


2.12 “Committee”
means a committee of, and designated from time to time by resolution of, the Board, which will be constituted as provided in Section 3.1.2
and Section 3.1.3 (or, if no Committee has been so designated, the Board).


 


2.13 “Company”
means Sussex Bancorp, a New Jersey corporation.


 


2.14 “Determination
Date” means the Grant Date or such other date as of which the Fair Market Value of a share of Stock is required to be
established for purposes of the Plan.


 


2.15 “Disability”
means the inability of a Grantee to perform each of the essential duties of such Grantee’s position by reason of a medically
determinable physical or mental impairment that is potentially permanent in character or that can be expected to last for a continuous
period of not less than 12 months; provided that, with respect to rules regarding expiration of an Incentive Stock Option
following termination of a Grantee’s Service, Disability will mean the inability of such Grantee to engage in any substantial
gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or
that has lasted or can be expected to last for a continuous period of not less than 12 months.


 






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2.16 “Effective
Date” means April 24, 2013, the date on which the Plan was approved by the Company’s shareholders.


 


2.17 “Employee”
means, as of any date of determination, an employee (including an officer) of the Company or an Affiliate.


 


2.18 “Exchange
Act” means the Securities Exchange Act of 1934, as amended, as now in effect or as hereafter amended.


 


2.19“Fair
Market Value” means the fair market value of a share of Stock for purposes of the Plan, which will be determined as of
any Determination Date as follows:


 


(a) If on
such Determination Date the shares of Stock are listed on a Stock Exchange, or are publicly traded on another established securities
market (a “Securities Market”), the Fair Market Value of a share of Stock will be the closing price of the Stock
on such Determination Date as reported on such Stock Exchange or such Securities Market (provided that, if there is more
than one such Stock Exchange or Securities Market, the Committee will designate the appropriate Stock Exchange or Securities Market
for purposes of the Fair Market Value determination). If there is no such reported closing price on such Determination Date, the
Fair Market Value of a share of Stock will be the closing price of the Stock on the next preceding day on which any sale of Stock
will have been reported on such Stock Exchange or such Securities Market.


 


(b) If
on such Determination Date the shares of Stock are not listed on a Stock Exchange or publicly traded on a Securities Market, the
Fair Market Value of a share of Stock will be the value of the Stock on such Determination Date as determined by the Committee
by the reasonable application of a reasonable valuation method, in a manner consistent with Code Section 409A.


 


Notwithstanding this
Section 2.19 or Section 15.3, for purposes of determining taxable income and the amount of the related
tax withholding obligation pursuant to Section 15.3, the Fair Market Value will be determined by the Company using
any reasonable method; provided, however, that for any shares of Stock subject to an Award that are sold by or on behalf
of a Grantee on the same date on which such shares may first be sold pursuant to the terms of the related Award Agreement, the
Fair Market Value of such shares will be the sale price of such shares on such date (or if sales of such shares are effectuated
at more than one sale price, the weighted average sale price of such shares on such date).


 


2.20 “Family
Member” means, with respect to any Grantee as of any date of determination, (a) a person who is a spouse, former
spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of such Grantee, (b) any
person sharing such Grantee’s household (other than a tenant or employee), (c) a trust in which any one or more of the
persons specified in clauses (a) and (b) above (and such Grantee) own more than 50% of the beneficial interest,
(d) a foundation in which any one or more of the persons specified in clauses (a) and (b) above (and such Grantee)
control the management of assets, and (e) any other entity in which one or more of the persons specified in clauses (a) and
(b) above (and such Grantee) own more than 50% of the voting interests.


 






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2.21 “Fully
Diluted Basis” means, as of any date of determination, the sum of (x) the number of shares of Voting Stock outstanding
as of such date of determination plus (y) the number of shares of Voting Stock issuable upon the exercise, conversion or exchange
of all then-outstanding warrants, options, convertible Capital Stock or indebtedness, exchangeable Capital Stock or indebtedness,
or other rights exercisable for or convertible or exchangeable into, directly or indirectly, shares of Voting Stock, whether at
the time of issue or upon the passage of time or upon the occurrence of some future event, and whether or not in the money as of
such date of determination 


 


2.22 “Grant
Date” means, as determined by the Committee, the latest to occur of (a) the date as of which the Committee approves
the Award, (b) the date on which the recipient of an Award first becomes eligible to receive an Award under Section 6
(e.g., in the case of a new hire, the first date on which such new hire performs any Service), or (c) such subsequent date
specified by the Committee in the corporate action approving the Award.


 


2.23 “Grantee”
means a person who receives or holds an Award under the Plan.


 


2.24 “Incentive
Stock Option” means an “incentive stock option” within the meaning of Code Section 422, or the corresponding
provision of any subsequently enacted tax statute, as amended from time to time.


 


2.25 “Nonqualified
Stock Option” means an Option that is not an Incentive Stock Option.


 


2.26 “Option”
means an option to purchase one or more shares of Stock pursuant to the Plan.


 


2.27 “Option
Price” means the exercise price for each share of Stock subject to an Option.


 


2.28 “Other
Agreement” will have the meaning set forth in Section 12.


 


2.29 “Outside
Director” means a member of the Board who is not an Employee.


 


2.30 “Parachute
Payment” will have the meaning set forth in Section 12.


 


2.31 “Person”
means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or instrumentality thereof.


 


2.32 “Plan”
means this Sussex Bancorp 2013 Equity Incentive Plan, as amended from time to time.


 


2.33 “Reporting
Person” means a person who is required to file reports under Section 16(a) of the Exchange Act, or any successor
provision.


 


2.34 “Restricted
Period” will have the meaning set forth in Section 9.2.


 


2.35 “Restricted
Stock” means shares of Stock awarded to a Grantee pursuant to Section 9.


 


2.36 “Securities
Act” means the Securities Act of 1933, as amended, as now in effect or as hereafter amended.


 


2.37 “Service”
means service qualifying a Grantee as a Service Provider to the Company or an Affiliate. Unless otherwise provided in the applicable
Award Agreement, a Grantee’s change in position or duties will not result in interrupted or terminated Service, so long as
such Grantee continues to be a Service Provider to the Company or an Affiliate. Subject to the preceding sentence, any determination
by the Committee whether a termination of Service will have occurred for purposes of the Plan will be final, binding and conclusive.
If a Service Provider’s employment or other service relationship is with an Affiliate and the applicable entity ceases to
be an Affiliate, a termination of Service will be deemed to have occurred when such entity ceases to be an Affiliate unless the
Service Provider transfers his or her employment or other service relationship to the Company or any other Affiliate.


 






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2.38 “Service
Provider” means an Employee, officer, or director of the Company or an Affiliate, or a consultant or adviser (who is
a natural person) to the Company or an Affiliate currently providing services to the Company or an Affiliate.


 


2.39 “Stock”
means the common stock, no par value, of the Company, or any security that shares of Stock may be changed into or for which shares
of Stock may be exchanged as provided in Section 14.1.


 


2.40 “Stock
Exchange” means The NASDAQ Stock Market LLC or another established national or regional stock exchange.


 


2.41 “Stock
Unit” means a bookkeeping entry representing the equivalent of one share of Stock awarded to a Grantee pursuant
to Section 9.


 


2.42 “Subsidiary”
means any corporation (other than the Company) or non-corporate entity with respect to which the Company owns, directly or
indirectly, 50% or more of the total combined voting power of all classes of stock, membership interests or other ownership
interests of any class or kind ordinarily having the power to vote for the directors, managers or other voting members of the governing
body of such corporation or non-corporate entity. In addition, any other entity may be designated by the Committee as a Subsidiary,
provided that (a) such entity could be considered as a subsidiary according to U.S. generally accepted accounting principles,
and (b) in the case of an Award of an Option, such Award would be considered to be granted in respect of “service recipient
stock” under Code Section 409A.


 


2.43 “Substitute
Award” means an Award granted upon assumption of, or in substitution for, outstanding awards previously granted under
a compensatory plan by a business entity acquired or to be acquired by the Company or an Affiliate or with which the Company or
an Affiliate has combined or will combine.


 


2.44 “Ten
Percent Shareholder” means a natural person who owns more than ten percent of the total combined voting power of all
classes of outstanding voting securities of the Company, the Company’s parent (if any) or any of the Company’s Subsidiaries.
In determining stock ownership, the attribution rules of Code Section 424(d) will be applied.


 


2.45 “Unrestricted
Stock” will have the meaning set forth in Section 10.


 


2.46 “Voting
Stock” means, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote
for the election of directors, managers or other voting members of the governing body of such Person.


 






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		3.	ADMINISTRATION OF THE PLAN 



 


		3.1	Committee. 



 


		3.1.1	Powers and Authorities. 



 


The Committee will
administer the Plan and will have such powers and authorities related to the administration of the Plan as are consistent with
the Company’s certificate of incorporation and bylaws and Applicable Laws. Without limiting the generality of the foregoing,
the Committee will have full power and authority to take all actions and to make all determinations required or provided for under
the Plan, any Award or any Award Agreement, and will have full power and authority to take all such other actions and make all
such other determinations not inconsistent with the specific terms and provisions of the Plan which the Committee deems to be necessary
or appropriate to the administration of the Plan, any Award or any Award Agreement. All such actions and determinations will be
made by (a) the affirmative vote of a majority of the members of the Committee present at a meeting at which a quorum is present,
or (b) the unanimous consent of the members of the Committee executed in writing in accordance with the Company’s certificate
of incorporation and bylaws and Applicable Laws. Unless otherwise expressly determined by the Board, the Committee will have the
authority to interpret and construe all provisions of the Plan, any Award and any Award Agreement, and any such interpretation
or construction, and any other determination contemplated to be made under the Plan or any Award Agreement, by the Committee will
be final, binding and conclusive whether or not expressly provided for in any provision of the Plan, such Award or such Award Agreement.


 


In the event that
the Plan, any Award or any Award Agreement provides for any action to be taken by the Board or any determination to be made by
the Board, such action may be taken or such determination may be made by the Committee constituted in accordance with this Section 3.1
if the Board has delegated the power and authority to do so to such Committee.


 


		3.1.2	Composition of Committee. 



 


The Committee will
be a committee composed of not fewer than two directors of the Company designated by the Board to administer the Plan. Each member
of the Committee will be a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act and, for
so long as the Stock is listed on The NASDAQ Stock Market LLC, an “independent director” within the meaning of NASDAQ
Listing Rule 5605(a)(2) (or, in each case, any successor term or provision); provided that any action taken by the Committee
will be valid and effective whether or not members of the Committee at the time of such action are later determined not to have
satisfied the requirements for membership set forth in this Section 3.1.2 or otherwise provided in any charter of the
Committee. Without limiting the generality of the foregoing, the Committee may be the Compensation Committee of the Board or a
subcommittee thereof if the Compensation Committee of the Board or such subcommittee satisfies the foregoing requirements.


 


		3.1.3	Other Committees. 



 


The Board also may
appoint one or more committees of the Board, each composed of one or more directors of the Company who need not be Outside Directors,
which may administer the Plan with respect to Grantees who are not “officers” as defined in Rule 16a-1(f) under the
Exchange Act or directors of the Company, may grant Awards under the Plan to such Grantees, and may determine all terms of such
Awards, subject to the requirements of Rule 16b-3 under the Exchange Act and, for so long as the Stock is listed on The NASDAQ
Stock Market LLC, the rules of such Stock Exchange.


 






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		3.1.4	Delegation by Committee. 



 


To the extent permitted
by Applicable Laws, the Committee may by resolution delegate some or all of its authority with respect to the Plan and Awards to
the Chief Executive Officer of the Company and/or any other officer of the Company designated by the Committee, provided that
the Committee may not delegate its authority hereunder (a) to make Awards to directors of the Company, (b) to make Awards to Employees
who are (i) “officers” as defined in Rule 16a-1(f) under the Exchange Act or (ii) officers of the Company who are delegated
authority by the Committee pursuant to this Section 3.1.4, or (c) to interpret the Plan or any Award. Any delegation hereunder
will be subject to the restrictions and limits that the Committee specifies at the time of such delegation or thereafter. Nothing
in the Plan will be construed as obligating the Committee to delegate authority to any officer of the Company, and the Committee
may at any time rescind the authority delegated to an officer of the Company appointed hereunder and delegate authority to one
or more other officers of the Company. At all times, an officer of the Company delegated authority pursuant to this Section
3.1.4 will serve in such capacity at the pleasure of the Committee. Any action undertaken by any such officer of the Company
in accordance with the Committee’s delegation of authority will have the same force and effect as if undertaken directly
by the Committee, and any reference in the Plan to the “Committee” will, to the extent consistent with the terms and
limitations of such delegation, be deemed to include a reference to each such officer.


 


		3.2	Board. 



 


The Board from time
to time may exercise any or all of the powers and authorities related to the administration and implementation of the Plan, as
set forth in Section 3.1 and other applicable provisions of the Plan, as the Board will determine, consistent with
the Company’s certificate of incorporation and bylaws and Applicable Laws.


 


		3.3	Terms of Awards. 



 


		3.3.1	Committee Authority. 



 


Subject to the other
terms and conditions of the Plan, the Committee will have full and final authority to:


 


(a) designate Grantees;


 


(b) determine the
type or types of Awards to be made to a Grantee;


 


(c) determine the
number of shares of Stock to be subject to an Award;


 


(d) establish the
terms and conditions of each Award (including the Option Price of any Option or the purchase price for Restricted Stock), the nature
and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture
of an Award or the shares of Stock subject thereto, the treatment of an Award in the event of a Change in Control (subject to applicable
agreements), and any terms or conditions that may be necessary to qualify Options as Incentive Stock Options;


 


(e) prescribe the
form of each Award Agreement evidencing an Award; and


 


(f) subject to the
limitation on repricing in Section 3.4, amend, modify or supplement the terms of any outstanding Award, which authority
will include the authority, in order to effectuate the purposes of the Plan but without amending the Plan, to make Awards or to
modify outstanding Awards made to eligible natural persons who are foreign nationals or are natural persons who are employed outside
the United States to reflect differences in local law, tax policy, or custom, provided that, notwithstanding the foregoing,
no amendment, modification or supplement of the terms of any outstanding Award will, without the consent of the Grantee thereof,
impair such Grantee’s rights under such Award.


 






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		3.3.2	Forfeiture; Recoupment. 



 


The Committee may
reserve the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee with respect to an Award thereunder
on account of actions taken by, or failed to be taken by, such Grantee in violation or breach of or in conflict with any (a) employment
agreement, (b) non-competition agreement, (c) agreement prohibiting solicitation of Employees or clients of the Company
or an Affiliate, (d) confidentiality obligation with respect to the Company or an Affiliate, (e) Company policy or procedure,
(f) other agreement, or (g) any other obligation of such Grantee to the Company or an Affiliate, as and to the extent specified
in such Award Agreement. The Committee may annul an outstanding Award if the Grantee thereof is an Employee of the Company or an
Affiliate and is terminated for Cause as defined in the Plan or the applicable Award Agreement or for “cause” as defined
in any other agreement between the Company or such Affiliate and such Grantee, as applicable.


 


Any Award granted
pursuant to the Plan will be subject to mandatory repayment by the Grantee to the Company to the extent the Grantee is, or in the
future becomes, subject to (a) any Company “clawback” or recoupment policy that is adopted to comply with the
requirements of any Applicable Law, rule or regulation, or otherwise, or (b) any law, rule or regulation which imposes mandatory
recoupment, under circumstances set forth in such law, rule or regulation.


 


		3.4	No Repricing. 



 


Except in connection
with a corporate transaction involving the Company (including any stock dividend, distribution (whether in the form of cash, shares
of Stock, other securities or other property), stock split, extraordinary cash dividend, recapitalization, change in control, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of Stock or other securities or similar
transaction), the Company may not, without obtaining shareholder approval: (a) amend the terms of outstanding Options to reduce
the exercise price of such outstanding Options; (b) cancel outstanding Options in exchange for or substitution of Options
with an exercise price that is less than the exercise price of the original Options; (c) cancel outstanding Options with an
exercise price above the current stock price in exchange for cash or other securities; or (d) take any other action that is treated
as a repricing under U.S. generally accepted accounting principles.


 


		3.5	Deferral Arrangement. 



 


The Committee may
permit or require the deferral of any payment pursuant to any Award into a deferred compensation arrangement, subject to such rules
and procedures as it may establish, which may include provisions for the payment or crediting of interest and, in connection therewith,
provisions for converting such credits into Stock Units and for restricting deferrals to comply with hardship distribution rules
affecting tax-qualified retirement plans subject to Code Section 401(k)(2)(B)(IV). Any such deferrals will be made in a manner
that complies with Code Section 409A, including, if applicable, with respect to when a “separation from service”
(as defined for purposes of Code Section 409A) occurs.


 


		3.6	No Liability. 



 


No member of the Board
or the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Award or Award
Agreement.


 






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		3.7	Registration; Share Certificates. 



 


Notwithstanding any
provision of the Plan to the contrary, the ownership of the shares of Stock issued under the Plan may be evidenced in such a manner
as the Committee, in its sole discretion, deems appropriate, including by book-entry or direct registration (including transaction
advices) or the issuance of one or more share certificates.


 


		4.	STOCK SUBJECT TO THE PLAN 



 


		4.1	Number of Shares of Stock Available for Awards. 



 


Subject to such additional
shares of Stock as will be available for issuance under the Plan pursuant to Section 4.2, and subject to adjustment pursuant
to Section 14, the maximum number of shares of Stock available for issuance under the Plan will be equal to three hundred
thousand (300,000) shares of Stock. Such shares of Stock may be authorized and unissued shares of Stock or treasury shares
of Stock or any combination of the foregoing, as may be determined from time to time by the Board or by the Committee. Any of the
shares of Stock available for issuance under the Plan may be used for any type of Award under the Plan, and any or all of the shares
of Stock available for issuance under the Plan will be available for issuance pursuant to Incentive Stock Options.


 


		4.2	Adjustments in Authorized Shares of Stock. 



 


In connection with
mergers, reorganizations, separations, or other transactions to which Code Section 424(a) applies, the Committee will have
the right to cause the Company to assume awards previously granted under a compensatory plan by another business entity that is
a party to such transaction and to substitute Awards under the Plan for such awards. The number of shares of Stock available for
issuance under the Plan pursuant to Section 4.1 will be increased by the number of shares of Stock subject to any such
assumed awards and substitute Awards. Shares available for issuance under a shareholder-approved plan of a business entity that
is a party to such transaction (as appropriately adjusted, if necessary, to reflect such transaction) may be used for Awards under
the Plan and will not reduce the number of shares of Stock otherwise available for issuance under the Plan, subject to applicable
rules of any Stock Exchange on which the Stock is listed.


 


		4.3	Share Usage. 



 


(a) Shares of Stock
subject to an Award will be counted as used as of the Grant Date.


 


(b) Any shares of
Stock that are subject to Awards, including shares of Stock acquired through dividend reinvestment pursuant to Section 9.4,
will be counted against the share issuance limit set forth in Section 4.1 as one share of Stock for every one share
of Stock subject to such Award.


 


(c) Notwithstanding
anything to the contrary in Section 4.1, any shares of Stock related to Awards under the Plan that thereafter terminate
by expiration, forfeiture, cancellation, or otherwise without the issuance of such shares will be available again for issuance
under the Plan in the same amount as such shares were counted against the limit set forth in Section 4.1. Shares of Stock
tendered or withheld or subject to an Award other than an Option surrendered in connection with the purchase of shares of Stock
or deducted or delivered from payment of an Award other than Option in connection with the Company’s tax withholding obligations
as provided in Section 15.3 will be available again for issuance under the Plan in the same amount as such shares were
counted against the limit set forth in Section 4.1.


 






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(d) The number of
shares of Stock available for issuance under the Plan will not be increased by the number of shares of Stock (i) tendered
or withheld or subject to an Award surrendered in connection with the purchase of shares of Stock upon exercise of an Option as
provided in Section 11.2, (ii) deducted or delivered from payment of an Award of an Option in connection with
the Company’s tax withholding obligations as provided in Section 15.3 or (iii) purchased by the Company
with proceeds from Option exercises.


 


		5.	EFFECTIVE DATE; TERM; AMENDMENT AND TERMINATION 



 


		5.1	Effective Date. 



 


The Plan will be effective
as of the Effective Date.


 


		5.2	Term. 



 


The Plan will terminate
automatically ten years after the Effective Date and may be terminated on any earlier date as provided in Section 5.3.


 


		5.3	Amendment and Termination. 



 


The Board may, at
any time and from time to time, amend, suspend or terminate the Plan as to any shares of Stock as to which Awards have not been
made. The effectiveness of any amendment to the Plan will be contingent on approval of such amendment by the Company’s shareholders
to the extent provided by the Board or required by Applicable Laws (including the rules of any Stock Exchange on which the Stock
is then listed), provided that no amendment will be made to the no-repricing provisions of Section 3.4 or the
Option pricing provisions of Section 8.1 without the approval of the Company’s shareholders. No amendment, suspension
or termination of the Plan will impair rights or obligations under any Award theretofore made under the Plan without the consent
of the Grantee thereof.


 


		6.	AWARD ELIGIBILITY AND LIMITATIONS 



 


		6.1	Eligible Grantees. 



 


Subject to this Section 6,
Awards may be made under the Plan to (i) any Service Provider, as the Committee will determine and designate from time to time
and (ii) any other individual whose participation in the Plan is determined to be in the best interests of the Company by the Committee.


 


		6.2	Stand-Alone, Additional, Tandem and Substitute Awards. 



 


Subject to Section 3.4,
Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with,
or in substitution or exchange for, (a) any other Award, (b) any award granted under another plan of the Company, an
Affiliate, or any business entity that has been a party to a transaction with the Company or an Affiliate, or (c) any other
right of a Grantee to receive payment from the Company or an Affiliate. Such additional, tandem and substitute or exchange Awards
may be granted at any time. If an Award is granted in substitution or exchange for another Award, or for an award granted under
another plan of the Company, an Affiliate, or any business entity that has been a party to a transaction with the Company or an
Affiliate, the Committee will require the surrender of such other Award or award under such other plan in consideration for the
grant of such substitute or exchange Award. In addition, Awards may be granted in lieu of cash compensation, including in lieu
of cash payments under other plans of the Company or an Affiliate. Notwithstanding Section 8.1, but subject to Section 3.4,
the Option Price of an Option that is a Substitute Award may be less than 100% of the Fair Market Value of a share of Stock
on the original Grant Date; provided that such Option Price is determined in accordance with the principles of Code Section 424
for any Incentive Stock Option and consistent with Code Section 409A for any other Option.


 






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		7.	AWARD AGREEMENT 



 


Each Award granted
pursuant to the Plan will be evidenced by an Award Agreement, which will be in such form or forms as the Committee will from time
to time determine. Award Agreements employed under the Plan from time to time or at the same time need not contain similar provisions,
but will be consistent with the terms of the Plan. Each Award Agreement evidencing an Award of an Option will specify whether the
Option is intended to be a Nonqualified Stock Option or an Incentive Stock Option, and, in the absence of such specification, the
Option will be deemed to constitute Nonqualified Stock Options.


 


		8.	TERMS AND CONDITIONS OF OPTIONS 



 


		8.1	Option Price. 



 


The Option Price of
each Option will be fixed by the Committee and stated in the Award Agreement evidencing such Option. Except in the case of Substitute
Awards, the Option Price of each Option will be at least the Fair Market Value of one share of Stock on the Grant Date; provided
that in the event that a Grantee is a Ten Percent Shareholder, the Option Price of an Option granted to such Grantee that is
intended to be an Incentive Stock Option will be not less than 110% of the Fair Market Value of one share of Stock on the
Grant Date.


 


		8.2	Vesting. 



 


Subject to Sections
8.3, 8.4.2, 8.4.3 and 14.3, each Option granted under the Plan will become exercisable at such times and under such
conditions as will be determined by the Committee and stated in the Award Agreement, in another agreement with the Grantee or otherwise
in writing, provided that no Option will be granted to persons who are entitled to overtime under applicable state or federal laws,
that will vest or be exercisable within a six-month period starting on the Grant Date.


 


		8.3	Term. 



 


Each Option granted
under the Plan will terminate, and all rights to purchase shares of Stock thereunder will cease, upon the expiration of ten years
from the Grant Date of such Option, or under such circumstances and on such date prior thereto as is set forth in the Plan or as
may be fixed by the Committee and stated in the Award Agreement relating to such Option; provided that in the event that
the Grantee is a Ten Percent Shareholder, an Option granted to such Grantee that is intended to be an Incentive Stock Option will
not be exercisable after the expiration of five years from its Grant Date; and provided further, that, to the extent deemed
necessary or appropriate by the Committee to reflect differences in local law, tax policy, or custom with respect to any Option
granted to a Grantee who is a foreign national or is a natural person who is employed outside the United States, such Option may
terminate, and all rights to purchase shares of Stock thereunder may cease, upon the expiration of such period longer than ten
years from the Grant Date of such Option as the Committee will determine.


 






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		8.4	Termination of Service. 



 


		8.4.1	Termination of Service.



 


Unless the Committee
otherwise provides in an Award Agreement, if a Grantee’s Service terminates (other than for Cause and other than upon the
Grantee’s death or Disability), the Option may be exercised (to the extent that the Grantee was entitled to exercise the
Option as of the date of termination of Service) within the period of time ending on the earlier of (i) the date 30 days following
the termination of the Grantee’s Service (or such longer or shorter period of time specified in the applicable Award Agreement),
and (ii) the expiration of the term of the Option as set forth in the Award Agreement. If, after termination of Service, the Grantee
does not exercise the Option within the applicable time frame, the Option will terminate.


 


		8.4.2	Disability of Grantee. 



 


Unless the Committee
otherwise provides in an Award Agreement, if a Grantee’s Service terminates as a result of the Grantee’s Disability,
(a) 100% of the shares of Stock underlying the Option will immediately vest, effective on the date of termination of Service; and
(b) the Option may be exercised (to the extent that the Grantee was entitled to exercise the Option as of the date of termination
of Service) within the period of time ending on the earlier of (i) the date six months following the termination of the Grantee’s
Service (or such longer or shorter period of time specified in the applicable Award Agreement), and (ii) the expiration of the
term of the Option as set forth in the Award Agreement. If, after termination of Service, the Grantee does not exercise the Option
within the applicable time frame, the Option will terminate.


 


		8.4.3	Death of Grantee. 



 


Unless the Committee
otherwise provides in an Award Agreement, if a Grantee’s Service terminates as a result of the Grantee’s death, (a)
100% of the shares of Stock underlying the Option will immediately vest, effective on the date of termination of Service; and (b)
the Option may be exercised (to the extent that the Grantee was entitled to exercise the Option as of the date of termination of
Service) within the period of time ending on the earlier of (i) the date 12 months following the termination of the Grantee’s
Service (or such longer or shorter period of time specified in the applicable Award Agreement), and (ii) the expiration of the
term of the Option as set forth in the Award Agreement. If, after termination of Service, the Grantee does not exercise the Option
within the applicable time frame, the Option will terminate.


 


		8.4.4.	Termination for Cause.



 


Unless the Committee
otherwise provides in an Award Agreement or unless otherwise provided in another individual written agreement between the Company
or any Affiliate and the Grantee, if a Grantee’s Service is terminated for Cause, the Option will terminate immediately upon
the Grantee’s termination of Service and the Grantee will be prohibited from exercising the Option from and after the time
of such termination of Service.


 


		8.5	Limitations on Exercise of Option. 



 


Notwithstanding any
other provision of the Plan, in no event may any Option be exercised, in whole or in part, after the occurrence of an event referred
to in Section 14, which results in the termination of such Option.


 






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		8.6	Method of Exercise. 



 


Subject to the terms
of Section 11 and Section 15.3, an Option that is exercisable may be exercised by the Grantee’s delivery
to the Company or its designee or agent a notice of exercise on any business day, at the Company’s principal office or the
office of such designee or agent, on the form specified by the Company and in accordance with any additional procedures specified
by the Committee. The notice of exercise will specify the number of shares of Stock with respect to which such Option is being
exercised and will be accompanied by payment in full of the Option Price of the shares of Stock for which such Option is being
exercised plus the amount (if any) of federal and/or other taxes which the Company may, in its judgment, be required to withhold
with respect to the exercise of such Option.


 


		8.7	Rights of Holders of Options. 



 


Unless otherwise stated
in the applicable Award Agreement, a Grantee or other person holding or exercising an Option will have none of the rights of a
shareholder of the Company (for example, the right to receive cash or dividend payments or distributions attributable to the shares
of Stock subject to such Option, to direct the voting of the shares of Stock subject to such Option, or to receive notice of any
meeting of the Company’s shareholders) until the shares of Stock subject thereto are fully paid and issued to such Grantee
or other person. Except as provided in Section 14, no adjustment will be made for dividends, distributions or other
rights with respect to any shares of Stock subject to an Option for which the record date is prior to the date of issuance of such
shares of Stock.


 


		8.8	Delivery of Stock. 



 


Promptly after the
exercise of an Option by a Grantee and the payment in full of the Option Price with respect thereto, such Grantee will be entitled
to receive such evidence of such Grantee’s ownership of the shares of Stock subject to such Option as will be consistent
with Section 3.7.


 


		8.9	Transferability of Options. 



 


Except as provided
in Section 8.10, during the lifetime of a Grantee of an Option, only such Grantee (or, in the event of such Grantee’s
legal incapacity or incompetency, such Grantee’s guardian or legal representative) may exercise such Option. Except as provided
in Section 8.10, no Option will be assignable or transferable by the Grantee to whom it is granted, other than by will
or the laws of descent and distribution.


 


		8.10	Family Transfers. 



 


If authorized in the
applicable Award Agreement and by the Committee, in its sole discretion, a Grantee may transfer, not for value, all or part of
an Option which is not an Incentive Stock Option to any Family Member. For the purpose of this Section 8.10, a transfer
“not for value” is a transfer which is (a) a gift, (b) a transfer under a domestic relations order in settlement
of marital property rights or (c) unless Applicable Laws do not permit such transfer, a transfer to an entity in which more
than 50% of the voting interests are owned by Family Members (and/or the Grantee) in exchange for an interest in such entity.
Following a transfer under this Section 8.10, any such Option will continue to be subject to the same terms and conditions
as were applicable immediately prior to such transfer, and the shares of Stock acquired pursuant to such Option will be subject
to the same restrictions with respect to transfers of such shares of Stock as would have applied to the Grantee thereof. Subsequent
transfers of transferred Options will be prohibited except to Family Members of the original Grantee in accordance with this Section 8.10
or by will or the laws of descent and distribution. The provisions of Section 8.4 relating to termination of Service
will continue to be applied with respect to the original Grantee of the Option, following which such Option will be exercisable
by the transferee only to the extent, and for the periods specified, in Section 8.4.


 






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		8.11	Limitations on Incentive Stock Options. 



 


An Option will constitute
an Incentive Stock Option only (a) if the Grantee of such Option is an Employee of the Company or any corporate Subsidiary,
(b) to the extent specifically provided in the related Award Agreement and (c) to the extent that the aggregate Fair
Market Value (determined at the time such Option is granted) of the shares of Stock with respect to which all Incentive Stock Options
held by such Grantee become exercisable for the first time during any calendar year (under the Plan and all other plans of the
Company and its Affiliates) does not exceed $100,000. Except to the extent provided in the regulations under Code Section 422,
this limitation will be applied by taking Options into account in the order in which they were granted.


 


		8.12	Notice of Disqualifying Disposition. 



 


If any Grantee makes
any disposition of shares of Stock issued pursuant to the exercise of an Incentive Stock Option under the circumstances provided
in Code Section 421(b) (relating to certain disqualifying dispositions), such Grantee will notify the Company of such disposition
within ten days thereof.


 


		9.	TERMS AND CONDITIONS OF RESTRICTED STOCK and Stock Units



 


		9.1	Grant of Restricted Stock and Stock Units. 



 


Awards of Restricted
Stock and Stock Units may be made for consideration or for no consideration, or, if so provided in the related Award Agreement
or a separate agreement, the promise by the Grantee to perform future Service to the Company or an Affiliate.


 


		9.2	Restrictions. 



 


At the time a grant
of Restricted Stock or Stock Units is made, the Committee may, in its sole discretion, (a) establish a period of time (a “Restricted
Period”) applicable to such Restricted Stock or Stock Units and (b) prescribe restrictions in addition to or other
than the expiration of the Restricted Period, which may be applicable to all or any portion of such Restricted Stock or Stock Units.
Awards of Restricted Stock and Stock Units may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed
of during the Restricted Period or prior to the satisfaction of any other restrictions prescribed by the Committee with respect
to such Awards.


 


		9.3	Registration; Restricted Share Certificates. 



 


Pursuant to Section 3.7,
to the extent that ownership of Restricted Stock is evidenced by a book-entry registration or direct registration (including transaction
advices), such registration will be notated to evidence the restrictions imposed on such Award of Restricted Stock under the Plan
and the applicable Award Agreement. Subject to Section 3.7 and the immediately following sentence, the Company may
issue, in the name of each Grantee to whom Restricted Stock has been granted, share certificates representing the total number
of shares of Restricted Stock granted to the Grantee, as soon as reasonably practicable after the Grant Date of such Restricted
Stock. The Committee may provide in an Award Agreement with respect to an Award of Restricted Stock that either (a) the Secretary
of the Company will hold such share certificates for such Grantee’s benefit until such time as such shares of Restricted
Stock are forfeited to the Company or the restrictions applicable thereto lapse and such Grantee will deliver a stock power to
the Company with respect to each share certificate, or (b) such share certificates will be delivered to such Grantee, provided
that such share certificates will bear legends that comply with applicable securities laws and regulations and make appropriate
reference to the restrictions imposed on such Award of Restricted Stock under the Plan and such Award Agreement.


 






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		9.4	Rights of Holders of Restricted Stock. 



 


Unless the Committee
otherwise provides in an Award Agreement, holders of Restricted Stock will have the right to vote such shares of Restricted Stock
and the right to receive any dividends declared or paid with respect to such shares of Restricted Stock. The Committee may provide
that any dividends paid on Restricted Stock must be reinvested in shares of Stock, which may or may not be subject to the same
vesting conditions and restrictions as the vesting conditions and restrictions applicable to such Restricted Stock. All stock distributions,
if any, received by a Grantee with respect to Restricted Stock as a result of any stock split, stock dividend, combination of stock,
or other similar transaction will be subject to the vesting conditions and restrictions applicable to such Restricted Stock.


 


		9.5	Rights of Holders of Stock Units. 



 


		9.5.1	Voting and Dividend Rights. 



 


Holders of Stock Units
will have no rights as shareholders of the Company (for example, the right to receive cash or dividend payments or distributions
attributable to the shares of Stock subject to such Stock Units, to direct the voting of the shares of Stock subject to such Stock
Units, or to receive notice of any meeting of the Company’s shareholders). The Committee may provide in an Award Agreement
evidencing a grant of Stock Units that the holder of such Stock Units will be entitled to receive, upon the Company’s payment
of a cash dividend on its outstanding shares of Stock, a cash payment for each such Stock Unit that is equal to the per-share dividend
paid on such shares of Stock. Such Award Agreement also may provide that such cash payment will be deemed reinvested in additional
Stock Units at a price per unit equal to the Fair Market Value of a share of Stock on the date on which such cash dividend is paid.


 


		9.5.2	Creditor’s Rights. 



 


A holder of Stock
Units will have no rights other than those of a general unsecured creditor of the Company. Stock Units represent unfunded and unsecured
obligations of the Company, subject to the terms and conditions of the applicable Award Agreement.


 


		9.6	Termination of Service. 



 


Unless the Committee
otherwise provides in an Award Agreement, in another agreement with the Grantee or otherwise in writing after such Award Agreement
is entered into, but prior to termination of Grantee’s Service, upon the termination of such Grantee’s Service, any
Restricted Stock or Stock Units held by such Grantee that have not vested, or with respect to which all applicable restrictions
and conditions have not lapsed, will immediately be deemed forfeited. Upon forfeiture of such Restricted Stock or Stock Units,
the Grantee thereof will have no further rights with respect thereto, including any right to vote such Restricted Stock or any
right to receive dividends with respect to such Restricted Stock or Stock Units.


 


		9.7	Purchase of Restricted Stock and Shares of Stock Subject to Stock Units. 



 


The Grantee of an
Award of Restricted Stock or vested Stock Units will be required, to the extent required by Applicable Laws, to purchase such Restricted
Stock or the shares of Stock subject to such vested Stock Units from the Company at a purchase price equal to the purchase price,
if any, specified in the Award Agreement relating to such Restricted Stock or such vested Stock Units. Such purchase price will
be payable in a form provided in Section 11 or, in the sole discretion of the Committee, in consideration for Service
rendered or to be rendered to the Company or an Affiliate.


 






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		9.8	Delivery of Shares of Stock. 



 


Upon the expiration
or termination of any Restricted Period and the satisfaction of any other conditions prescribed by the Committee, including any
delayed delivery period, the restrictions applicable to Restricted Stock or Stock Units settled in shares of Stock will lapse,
and, unless otherwise provided in the applicable Award Agreement, a book-entry or direct registration (including transaction advices)
or a share certificate evidencing ownership of such shares of Stock will, consistent with Section 3.7, be issued, free
of all such restrictions, to the Grantee thereof or such Grantee’s beneficiary or estate, as the case may be. Neither the
Grantee, nor the Grantee’s beneficiary or estate, will have any further rights with regard to a Stock Unit once the shares
of Stock represented by such Stock Unit have been delivered in accordance with this Section 9.8.


 


		10.	TERMS AND CONDITIONS OF UNRESTRICTED STOCK 



 


The Committee may,
in its sole discretion, grant (or sell at a purchase price as will be determined by the Committee) an Award to any Grantee pursuant
to which such Grantee may receive shares of Stock free of any restrictions (“Unrestricted Stock”) under the
Plan. Unrestricted Stock may be granted or sold to any Grantee as provided in the immediately preceding sentence in respect of
past Service or, if so provided in the related Award Agreement or a separate agreement, the promise by the Grantee to perform future
Service, to the Company or an Affiliate or other valid consideration, or in lieu of, or in addition to, any cash compensation due
to such Grantee.


 


		11.	FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK 



 


		11.1	General Rule. 



 


Payment of the Option
Price for the shares of Stock purchased pursuant to the exercise of an Option or the purchase price, if any, for Restricted Stock
will be made in cash or in cash equivalents acceptable to the Company.


 


		11.2	Surrender of Shares of Stock. 



 


To the extent that
the applicable Award Agreement so provides, payment of the Option Price for shares of Stock purchased pursuant to the exercise
of an Option or the purchase price, if any, for Restricted Stock may be made all or in part through the tender or attestation to
the Company of shares of Stock, which will be valued, for purposes of determining the extent to which such Option Price or purchase
price has been paid thereby, at their Fair Market Value on the date of such tender or attestation.


 


		11.3	Cashless Exercise. 



 


To the extent permitted
by Applicable Laws and to the extent the Award Agreement so provides, payment of the Option Price for shares of Stock purchased
pursuant to the exercise of an Option may be made all or in part by delivery (on a form acceptable to the Committee) of an irrevocable
direction to a licensed securities broker acceptable to the Company to sell shares of Stock and to deliver all or part of the proceeds
of such sale to the Company in payment of such Option Price and any withholding taxes described in Section 15.3, or,
with the consent of the Company, by issuing the number of shares of Stock equal in value to the difference between such Option
Price and the Fair Market Value of the shares of Stock subject to the portion of such Option being exercised.


 






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		11.4	Other Forms of Payment. 



 


To the extent the
Award Agreement so provides and/or unless otherwise specified in an Award Agreement, payment of the Option Price for shares of
Stock purchased pursuant to exercise of an Option or the purchase price, if any, for Restricted Stock may be made in any other
form that is consistent with Applicable Laws, including (a) Service by the Grantee thereof to the Company or an Affiliate
and (b) by withholding shares of Stock that would otherwise vest or be issuable in an amount equal to the Option Price or
purchase price and the required tax withholding amount.


 


		12.	PARACHUTE LIMITATIONS 



 


If any Grantee is
a “disqualified individual,” as defined in Code Section 280G(c), then, notwithstanding any other provision of
the Plan or of any other agreement, contract, or understanding heretofore or hereafter entered into by such Grantee with the Company
or an Affiliate, except an agreement, contract, or understanding that expressly addresses Code Section 280G or Code Section 4999
(an “Other Agreement”), and notwithstanding any formal or informal plan or other arrangement for the direct
or indirect provision of compensation to the Grantee (including groups or classes of Grantees or beneficiaries of which the Grantee
is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Grantee (a
“Benefit Arrangement”), any right of the Grantee to any exercise, vesting, payment, or benefit under the Plan
will be reduced or eliminated:


 


(a) to the extent
that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for
the Grantee under the Plan, all Other Agreements, and all Benefit Arrangements, would cause any exercise, vesting, payment, or
benefit to the Grantee under the Plan to be considered a “parachute payment” within the meaning of Code Section 280G(b)(2)
as then in effect (a “Parachute Payment”); and


 


(b) if, as a result
of receiving such Parachute Payment, the aggregate after-tax amounts received by the Grantee from the Company under the Plan, all
Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received by the Grantee
without causing any such payment or benefit to be considered a Parachute Payment.


 


The Company will accomplish
such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced
first), then by reducing or eliminating any accelerated vesting of Options, then by reducing or eliminating any accelerated vesting
of Restricted Stock or Stock Units, then by reducing or eliminating any other remaining Parachute Payments.


 






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		13.	REQUIREMENTS OF LAW 



 


		13.1	General. 



 


The Company will not
be required to offer, sell or issue any shares of Stock under any Award, whether pursuant to the exercise of an Option or otherwise,
if the offer, sale or issuance of such shares of Stock would constitute a violation by the Grantee, the Company or an Affiliate,
or any other person, of any provision of Applicable Laws, including any federal or state securities laws or regulations. If at
any time the Company will determine, in its discretion, that the listing, registration or qualification of any shares of Stock
subject to an Award upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition
of, or in connection with, the offering, issuance, sale or purchase of shares of Stock in connection with any Award, no shares
of Stock may be offered, issued or sold to the Grantee or any other person under such Award, whether pursuant to the exercise of
an Option or otherwise, unless such listing, registration or qualification will have been effected or obtained free of any conditions
not acceptable to the Company, and any delay caused thereby will in no way affect the date of termination of such Award. Without
limiting the generality of the foregoing, upon the exercise of any Option that may be settled in shares of Stock or the delivery
of any shares of Stock underlying an Award, unless a registration statement under the Securities Act is in effect with respect
to the shares of Stock subject to such Award, the Company will not be required to offer, sell or issue such shares of Stock unless
the Committee will have received evidence satisfactory to it that the Grantee or any other person exercising such Option or accepting
delivery of such shares may acquire such shares of Stock pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Committee will be final, binding, and conclusive. The Company may register, but will in
no event be obligated to register, any shares of Stock or other securities issuable pursuant to the Plan pursuant to the Securities
Act. The Company will not be obligated to take any affirmative action in order to cause the exercise of an Option or the issuance
of shares of Stock or other securities issuable pursuant to the Plan or any Award to comply with any Applicable Laws. As to any
jurisdiction that expressly imposes the requirement that an Option that may be settled in shares of Stock will not be exercisable
until the shares of Stock subject to such Option are registered under the securities laws thereof or are exempt from such registration,
the exercise of such Option under circumstances in which the laws of such jurisdiction apply will be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.


 


		13.2	Rule 16b-3. 



 


During any time when
the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intention of the Company
that Awards pursuant to the Plan and the exercise of Options granted hereunder that would otherwise be subject to Section 16(b)
of the Exchange Act will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any provision
of the Plan or action by the Committee does not comply with the requirements of such Rule 16b-3, such provision or action will
be deemed inoperative with respect to such Awards to the extent permitted by Applicable Laws and deemed advisable by the Committee,
and will not affect the validity of the Plan. In the event that such Rule 16b-3 is revised or replaced, the Board may exercise
its discretion to modify the Plan in any respect necessary or advisable in its judgment to satisfy the requirements of, or to permit
the Company to avail itself of the benefits of, the revised exemption or its replacement.


 


		14.	EFFECT OF CHANGES IN CAPITALIZATION 



 


		14.1	Changes in Stock. 



 


If the number of outstanding
shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number of shares
or kind of capital stock or other securities of the Company on account of any recapitalization, reclassification, stock split,
reverse stock split, spin-off, combination of stock, exchange of stock, stock dividend or other distribution payable in capital
stock, or other increase or decrease in shares of Stock effected without receipt of consideration by the Company occurring after
the Effective Date, the number and kinds of shares of stock for which grants of Options and other Awards may be made under the
Plan, will be adjusted proportionately and accordingly by the Committee. In addition, the number and kind of shares of stock for
which Awards are outstanding will be adjusted proportionately and accordingly by the Committee so that the proportionate interest
of the Grantee therein immediately following such event will, to the extent practicable, be the same as immediately before such
event. Any such adjustment in outstanding Options will not change the aggregate Option Price payable with respect to shares that
are subject to the unexercised portion of such outstanding Options, but will include a corresponding proportionate adjustment in
the per share Option Price. The conversion of any convertible securities of the Company will not be treated as an increase in shares
effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Company’s
shareholders of securities of any other entity or other assets (including an extraordinary dividend, but excluding a non-extraordinary
dividend, declared and paid by the Company) without receipt of consideration by the Company, the Board or the Committee constituted
pursuant to Section 3.1.2 will, in such manner as the Board or the Committee deems appropriate, adjust (a) the
number and kind of shares of stock subject to outstanding Awards and/or (b) the aggregate and per share Option Price of outstanding
Options as required to reflect such distribution.


 






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		14.2	Reorganization in Which the Company Is the Surviving Entity That Does not Constitute a Change
in Control. 



 


Subject to Section 14.3,
if the Company will be the surviving entity in any reorganization, merger or consolidation of the Company with one or more other
entities which does not constitute a Change in Control, any Option theretofore granted pursuant to the Plan will pertain to and
apply to the securities to which a holder of the number of shares of Stock subject to such Option would have been entitled immediately
following such reorganization, merger or consolidation, with a corresponding proportionate adjustment of the per share Option Price
so that the aggregate Option Price thereafter will be the same as the aggregate Option Price of the shares of Stock remaining subject
to the Option as in effect immediately prior to such reorganization, merger, or consolidation. Subject to any contrary language
in an Award Agreement or in another agreement with the Grantee, or otherwise set forth in writing, any restrictions applicable
to such Award will apply as well to any replacement shares received by the Grantee as a result of such reorganization, merger or
consolidation.


 


		14.3	Change in Control. 



 


Except as otherwise
provided in the applicable Award Agreement or in another agreement with the Grantee, or as otherwise set forth in writing, upon
the occurrence of a Change in Control, all outstanding Restricted Stock will be deemed to have vested, all Stock Units will be
deemed to have vested and the shares of Stock subject thereto will be delivered immediately prior to the occurrence of such Change
in Control, and either of the following two actions will be taken:


 


(a) 15 days prior
to the scheduled consummation of such Change in Control, all Options outstanding hereunder will become immediately exercisable
and will remain exercisable for a period of 15 days, which exercise will be effective upon such consummation; or


 


(b) the Committee
may elect, in its sole discretion, to cancel any outstanding Awards of Options, Restricted Stock and/or Stock Units and pay or
deliver, or cause to be paid or delivered, to the holder thereof an amount in cash or securities having a value (as determined
by the Committee acting in good faith), in the case of Restricted Stock and Stock Units (for shares of Stock subject thereto),
equal to the formula or fixed price per share paid to holders of shares of Stock pursuant to such Change in Control and, in the
case of Options, equal to the product of the number of shares of Stock subject to such Options (the “Award Stock”)
multiplied by the amount, if any, by which (i) the formula or fixed price per share paid to holders of shares of Stock pursuant
to such transaction exceeds (ii) the Option Price applicable to such Award Stock.


 






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With respect to the
Company’s establishment of an exercise window, (A) any exercise of an Option during the 15-day period referred to above
will be conditioned upon the consummation of the applicable Change in Control and will be effective only immediately before the
consummation thereof, and (B) upon consummation of any Change in Control, the Plan and all outstanding but unexercised Options
will terminate. The Committee will send notice of an event that will result in such a termination to all natural persons and entities
who hold Options not later than the time at which the Company gives notice thereof to its shareholders.


 


		14.4	Adjustments 



 


Adjustments under
this Section 14 related to shares of Stock or other securities of the Company will be made by the Committee, whose
determination in that respect will be final, binding and conclusive. No fractional shares or other securities will be issued pursuant
to any such adjustment, and any fractions resulting from any such adjustment will be eliminated in each case by rounding downward
to the nearest whole share. The Committee may provide in the applicable Award Agreement at the time of grant, in another agreement
with the Grantee, or otherwise in writing at any time thereafter with the consent of the Grantee, for different provisions to apply
to an Award in place of those provided in Sections 14.1, 14.2 and 14.3. This Section 14 will not limit
the Committee’s ability to provide for alternative treatment of Awards outstanding under the Plan in the event of a change
in control event involving the Company that is not a Change in Control.


 


		14.5	No Limitations on Company. 



 


The making of Awards
pursuant to the Plan will not affect or limit in any way the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets (including all or any part of the business or assets of any Subsidiary or other
Affiliate) or engage in any other transaction or activity.


 


		15.	GENERAL PROVISIONS 



 


		15.1	Disclaimer of Rights. 



 


No provision in the
Plan or in any Award or Award Agreement will be construed to confer upon any individual the right to remain in the employ or Service
of the Company or an Affiliate, or to interfere in any way with any contractual or other right or authority of the Company or an
Affiliate either to increase or decrease the compensation or other payments to any natural person or entity at any time, or to
terminate any employment or other relationship between any natural person or entity and the Company or an Affiliate. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the applicable Award Agreement, in another
agreement with the Grantee, or otherwise in writing, no Award granted under the Plan will be affected by any change of duties or
position of the Grantee thereof, so long as such Grantee continues to provide Service. The obligation of the Company to pay any
benefits pursuant to the Plan will be interpreted as a contractual obligation to pay only those amounts provided herein, in the
manner and under the conditions prescribed herein. The Plan and Awards will in no way be interpreted to require the Company to
transfer any amounts to a third-party trustee or otherwise hold any amounts in trust or escrow for payment to any Grantee or beneficiary
under the terms of the Plan.


 


		15.2	Nonexclusivity of the Plan. 



 


Neither the adoption
of the Plan nor the submission of the Plan to the shareholders of the Company for approval will be construed as creating any limitations
upon the right and authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a particular individual or particular individuals) as
the Board in its discretion determines desirable.


 






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		15.3	Withholding Taxes. 



 


The Company or an
Affiliate, as the case may be, will have the right to deduct from payments of any kind otherwise due to a Grantee any federal,
state, or local taxes of any kind required by law to be withheld with respect to the vesting of or other lapse of restrictions
applicable to an Award or upon the issuance of any shares of Stock upon the exercise of an Option or pursuant to any other Award.
At the time of such vesting, lapse, or exercise, the Grantee will pay in cash to the Company or an Affiliate, as the case may be,
any amount that the Company or such Affiliate may reasonably determine to be necessary to satisfy such withholding obligation;
provided that if there is a same-day sale of shares of Stock subject to an Award, the Grantee will pay such withholding
obligation on the day on which such same-day sale is completed. Subject to the prior approval of the Company or an Affiliate, which
may be withheld by the Company or such Affiliate, as the case may be, in its sole discretion, the Grantee may elect to satisfy
such withholding obligation, in whole or in part, (a) by causing the Company or such Affiliate to withhold shares of Stock
otherwise issuable to the Grantee or (b) by delivering to the Company or such Affiliate shares of Stock already owned by the
Grantee. The shares of Stock so withheld or delivered will have an aggregate Fair Market Value equal to such withholding obligation.
The Fair Market Value of the shares of Stock used to satisfy such withholding obligation will be determined by the Company or such
Affiliate as of the date on which the amount of tax to be withheld is to be determined. A Grantee who has made an election pursuant
to this Section 15.3 may satisfy such Grantee’s withholding obligation only with shares of Stock that are not
subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements. The maximum number of shares of Stock
that may be withheld from any Award to satisfy any federal, state or local tax withholding requirements upon the exercise, vesting,
or lapse of restrictions applicable to any Award or payment of shares of Stock pursuant to such Award, as applicable, may not exceed
such number of shares of Stock having a Fair Market Value equal to the minimum statutory amount required by the Company or the
applicable Affiliate to be withheld and paid to any such federal, state or local taxing authority with respect to such exercise,
vesting, lapse of restrictions, or payment of shares of Stock. Notwithstanding Section 2.19 or this Section 15.3,
for purposes of determining taxable income and the amount of the related tax withholding obligation pursuant to this Section 15.3,
for any shares of Stock subject to an Award that are sold by or on behalf of a Grantee on the same date on which such shares may
first be sold pursuant to the terms of the related Award Agreement, the Fair Market Value of such shares will be the sale price
of such shares on such date (or if sales of such shares are effectuated at more than one sale price, the weighted average sale
price of such shares on such date), so long as such Grantee has provided the Company, or its designee or agent, with advance written
notice of such sale. In such case, the percentage of shares of Stock withheld will equal the applicable minimum withholding rate.


 


		15.4	Captions. 



 


The use of captions
in the Plan or any Award Agreement is for convenience of reference only and will not affect the meaning of any provision of the
Plan or such Award Agreement.


 


		15.5	Construction.



 


Unless the context otherwise
requires, all references in the Plan to “including” will mean “including without limitation.”


 






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		15.6	Other Provisions. 



 


Each Award granted
under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee,
in its sole discretion.


 


		15.7	Number and Gender. 



 


With respect to words
used in the Plan, the singular form will include the plural form and the masculine gender will include the feminine gender, as
the context requires.


 


		15.8	Severability. 



 


If any provision of
the Plan or any Award Agreement will be determined to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof will be severable and enforceable in accordance with their terms, and all provisions will
remain enforceable in any other jurisdiction.


 


		15.9	Governing Law. 



 


The validity and construction
of the Plan and the instruments evidencing the Awards hereunder will be governed by, and construed and interpreted in accordance
with, the laws of the State of New Jersey, other than any conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of the Plan and the instruments evidencing the Awards granted hereunder to the substantive laws
of any other jurisdiction.


 


		15.10	Code Section 409A. 



 


The Plan is intended
to comply with Code Section 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan will
be interpreted and administered to be in compliance with Code Section 409A. Any payments described in the Plan that are due within
the “short-term deferral period” as defined in Code Section 409A will not be treated as deferred compensation unless
Applicable Laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated
taxation and tax penalties under Code Section 409A, amounts that would otherwise be payable and benefits that would otherwise be
provided pursuant to the Plan during the six-month period immediately following the Grantee’s termination of “separation
from service” (as defined for purposes of Code Section 409A will instead be paid on the first payroll date after the six-month
anniversary of the Grantee’s separation from service (or the Grantee’s death, if earlier). Notwithstanding the foregoing,
neither the Company nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or
penalty on any Grantee under Code Section 409A and neither the Company nor the Committee will have any liability to any Grantee
for such tax or penalty.


 




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* * *


 


To record adoption
of the Plan by the Board as of March 14, 2013, and approval of the Plan by the shareholders on April 24, 2013, the Company has
caused its authorized officer to execute the Plan.


 


	 	Sussex Bancorp
	 	 
	 	By: /s/ Edward
    J. Leppert
	 	 
	 	Title:  Chairman


  



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