Document:

ex10-1.htm

MSB FINANCIAL CORP.

2008 STOCK COMPENSATION AND INCENTIVE PLAN

AS AMENDED AND RESTATED

1.           PURPOSE OF PLAN.

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

2.           DEFINITIONS.

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

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

“Bank” means Millington Savings Bank, and any successors thereto.

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

“Board of Directors” means the board of directors of the Company.

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

“Change in Control” shall mean: (i) the sale of all, or a material portion, of the assets of the Company or its Affiliates; (ii) the merger or recapitalization of the Company whereby the Company is not the surviving entity; (iii) a change in control of the Company, as otherwise defined or determined by the Board of Governors of the Federal Reserve Board or regulations promulgated by it; or (iv) the acquisition, directly or indirectly, of the beneficial ownership (within the meaning of that term as it is used in Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of twenty-five percent (25%) or more of the outstanding voting securities of the Company by any person, trust, entity or group.  This limitation shall not apply to the purchase of shares by underwriters in connection with a public offering of Company stock, or the purchase of shares of up to 25% of any class of securities of the Company by a tax-qualified employee stock 

 

 

  

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benefit plan.   The term “person” refers to an individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity not specifically listed herein.

“Code” means the Internal Revenue Code of 1986, as amended.

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

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

“Company” means MSB Financial Corp., a Maryland corporation, and any successor entity or any future parent corporation of the Bank.

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

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

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

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

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

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

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

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

 

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

 

 

  

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applicable date; and (c) in the absence of such markets for the Shares, the Fair Market Value shall be determined in good faith by the Committee.

 

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

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

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

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

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

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

“Plan” means this MSB Financial Corp. 2008 Stock Compensation and Incentive Plan, as Amended and Restated.

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

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

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

  

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3.           ADMINISTRATION.

	
  

	
(a)

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

	
  

	
(b)

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

	
  

	
(i)

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

	
  

	
(ii)

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

	
  

	
(iii)

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

	
  

	
(iv)

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

	
  

	
(c)

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

	
  

	
(i)

	
the type of Award granted;

	
  

	 	
(ii)

	
the Exercise Price for any Option;

	 	
(iii)

	
the number of shares or rights subject to the Award;

	
  

	
(iv)

	
the expiration date of the Award;

	
  

	
(v)

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

	
  

	
(vi)

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

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

 

 

  

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(d)

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

4.           ELIGIBILITY.

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

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

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

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

	
  

	
(a)

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

	
  

	
(b)

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

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

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

____________________

[*  Share amounts are subject to adjustment based upon the exchange ratio established  upon the closing of the Company’s stock offering at the time of the conversion of MSB Financial, MHC and MSB Financial Corp., a Maryland corporation for exchanging shares of MSB Financial Corp., a federal corporation into shares of MSB Financial Corp., a Maryland corporation.]

  

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AWARDS.

	
  

	
6.1

	
Stock Options.

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

	
  

	
(i)

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

	
  

	
(ii)

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

	
  

	
(iii)

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

	
  

	
(1)

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

	
  

	
(2)

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

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

 

 

  

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other conditions prescribed by the Committee with respect to such Non-Statutory Stock Option.

	
  

	
(iv)

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

	
  

	
(1)

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

	
  

	
(2)

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

	
  

	
(3)

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

	
  

	
(4)

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

	
  

	
(5)

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

	
  

	
(v)

	
Option Awards to Outside Directors.  Subject to the limitations of Section 6.4(a), the Committee may award Non-Statutory Stock Options to purchase shares of Common Stock to each Outside Director of the Company at an Exercise Price equal to the Fair Market Value of the Common Stock on such date of grant.  The Options will be first exercisable at the rate of 20% on the one year anniversary of the date of grant of such Award and 20% annually thereafter during periods of continuing service as a Director or Director Emeritus.  Upon the death or Disability of the Director or Director Emeritus, such Option shall be deemed immediately 100% exercisable.  Such Options shall continue to be exercisable for a period of ten years following the date of grant without regard to the continued services of such Director as a Director or Director Emeritus.  In the event of the Director’s death, such Options may be exercised by the Beneficiary or the personal representative of his estate or person or persons to whom his rights under such Option shall have passed by will or by the laws of descent and distribution.  Options may be granted to newly appointed or elected Outside Directors within the sole discretion of the Committee.  The Exercise Price per share of such Options granted shall be equal to the Fair Market 

 

 

  

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Value of the Common Stock at the time such Options are granted.  All outstanding Awards shall become immediately exercisable in the event of a Change in Control of the Bank or the Company.  Unless otherwise inapplicable, or inconsistent with the provisions of this paragraph, the Options to be granted to Outside Directors hereunder shall be subject to all other provisions of this Plan.

 

	
  

	
6.2

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

 

	
  

	
6.3

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

 

	
  

	
(a) 

	

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

 

	
  

	
(b) 

	
the delivery of previously owned share of Common Stock; or

 

	
  

	
(c) 

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

 

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

 

	
  

	
6.4

	
Limitations on Awards.

 

	
  

	
(a)   

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

 

	
  

	
(b) 

	
Vesting of Awards. Except as otherwise provided by the terms of the Plan or by action of the Committee at the time of the grant of an Award, Stock Options will be first earned and

 

  

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exercisable and Restricted Stock Awards will be earned and non-forfeitable at the rate of 20% of such Award on the one year anniversary of the date of grant and 20% annually thereafter during such periods of service as an Employee, Director or Director Emeritus.

 

	
  

	
(c) 

	

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

 

	
  

	
6.5

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

 

	
  

	
(a) 

	

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

 

	
  

	
(b) 

	

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

 

	 	
  

	
(1)

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

 

	 	
  

	
(2)

	

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

	 	
  

	
(3)

	

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

 

	
  

	
(c) 

	

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

 

 

  

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in blank with respect to such shares. Further, each such stock certificate shall bear the following legend:

 

	
  

	
 

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

 

	
  

	
 

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

 

	
  

	
(d)

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

 

	
  

	
(e)

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

	
  

	
(f)

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

 

 

  

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7.           EFFECT OF TERMINATION OF SERVICE ON AWARDS.

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

	
  

	
(a)

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

 

	
  

	
(b)

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

	
  

	
(c)

	
Death.  In the event of the death of a Participant, any Incentive Stock Options previously granted to such Participant may be exercised by the Participant's Beneficiary or the person or persons to whom the Participant’s rights under any such Incentive Stock Options pass by will or by the laws of descent and distribution (including the Participant’s estate during the period of administration) at any time prior to the earlier of (i) the respective expiration dates of any such Incentive Stock Options or (ii) the date which is two (2) years after the date of death of such Participant, but only if, and to the extent that, the Participant was entitled to exercise any such Incentive Stock Options at the date of death.  For purposes of this Section 7.1(c), any Incentive Stock Option held by a Participant shall be considered exercisable at the date of his death if the only unsatisfied condition precedent to the exercisability of such Incentive Stock Option at the date of death is the passage of a specified period of time.  At the discretion of the Committee, upon exercise of such Options, the Beneficiary may receive Shares or cash or 

 

 

  

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(c)

	
a combination thereof.  If cash shall be paid in lieu of shares of Common Stock, such cash shall be equal to the difference between the Fair Market Value of such Shares and the exercise price of such Options on the exercise date. Notwithstanding anything herein to the contrary, except as otherwise detailed by the Committee at the time of grant of an Award, upon the death of a Participant, all previously granted Awards shall become immediately earned and non-forfeitable, and all Stock Options shall remain exercisable for a period of two years following such date of death or the expiration date of such Award, if earlier.

 

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

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

	
8.

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

8.1           Adjustments in Capital Structure.  Upon any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split (“stock split”); any merger, combination, consolidation, or other reorganization; any spin-off, split-up, or similar extraordinary dividend distribution with respect to the Common Stock (whether in the form of securities or property); any exchange of Common Stock or other securities of the Company, or any similar, unusual or extraordinary corporate transaction affecting the Common Stock; or a sale of all or substantially all the business or assets of the Company in its entirety; then the Committee shall proportionately adjust the Plan and the Awards thereunder in such manner,  to such extent and at such times, as is necessary to preserve the benefits or potential benefits of such Awards, including:

	
  

	
(a)

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

	
  

	
(b)

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

8.2           The Committee may adopt such valuation methodologies for outstanding Awards as it deems reasonable in the event of a cash or property settlement and, in the case of Options, may base such settlement 

 

  

12

  

 

solely upon the excess, if any, of the per share amount payable upon or in respect of such event over the Exercise Price or base price of the Award. With respect to any Award of an Incentive Stock Option, the Committee may make an adjustment that causes the Option to cease to qualify as an Incentive Stock Option without the consent of the affected Participant.

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

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

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

9.           MISCELLANEOUS PROVISIONS.

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

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

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

9.4           Plan Not Funded.  Awards payable under this Plan shall be payable in shares of Common Stock or from the general assets of the Company. No Participant, beneficiary or other person shall have any right, title or interest in any fund or in any specific asset (including shares of Common Stock, except as expressly provided otherwise) of the Company by reason of any Award hereunder. Neither the provisions of 

 

  

13

  

 

this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan shall create, or be construed to create, a trust of any kind or a fiduciary relationship between the Company and any Participant, Beneficiary or other person. To the extent that a Participant, Beneficiary or other person acquires a right to receive payment pursuant to any Award hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company.  Notwithstanding the foregoing, the Company may establish a Trust in accordance with Section 10 with respect to Awards made in accordance with Section 6.5 herein.

9.5           Tax Matters; Tax Withholding.

	
  

	
(a)

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

	
  

	
(i)

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

	
  

	
(ii)

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

	
  

	
(iii)

	
in any case where tax withholding is required in connection with the delivery of shares of Common Stock under this Plan, the Committee may, in its sole discretion, pursuant to such rules and subject to such conditions as the Committee may establish, reduce the number of shares to be delivered to the Participant by the appropriate number of shares, valued in a consistent manner at their Fair Market Value as necessary to satisfy the minimum applicable withholding obligation.  In no event shall the shares withheld exceed the minimum whole number of shares required for tax withholding under applicable law.

 

	
  

	
(b)

	

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

 

	
  

	
(c)

	

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

 

	
  

	
(d)

	
Section 409A Matters. To the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code (a “409A Award”), the Award shall be subject to such additional rules and requirements as specified by the Committee from time to time in order to comply with Section 409A of the Code. In this regard, if any amount under a 409A Award is payable upon a “separation from

 

  

14

  

 

	
  

	
(d)

	

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

 

	
  

	
9.6

	
Effective Date, Termination and Suspension, Amendments.

	
  

	
(a)

	
Effective Date and Termination.  This Plan was  effective as of March 10, 2008.   (“Approval Date”).  Unless earlier terminated by the Board, this Plan shall terminate at the close of business on the day before the tenth anniversary of the Approval Date. After the termination of this Plan either upon such stated expiration date or its earlier termination by the Board, no additional Awards may be granted under this Plan, but previously granted Awards (and the authority of the Committee with respect thereto, including the authority to amend such Awards) shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of this Plan.

	
  

	
(b)

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

	
  

	
(c)

	
Stockholder Approval. The Plan must be approved by a majority of votes cast by  stockholders of the Company or the requisite vote of the stockholders of MSB Financial Corp. a Federal corporation, prior to its merger with the Company.  Thereafter, material amendments to the Plan shall be approved by a majority of votes cast by stockholders of the Company. .

	
  

	
(d)

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

	
  

	
9.7

	
Governing Law; Compliance with Regulations; Construction; Severability.

	
  

	
(a)

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

 

 

  

15

  

	
  

	
(b)

	
Compliance with Regulations.  This Plan will comply with the requirements set forth in 12 C.F.R. Section 239.63(a).

 

	
  

	
(c)

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

	
  

	
(d)

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

	
  

	
(e)

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

	
  

	
(f)

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

	
  

	
(g)

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

	
  

	
(h)

	
Termination for Cause.  Notwithstanding anything herein to the contrary, upon the termination of employment or service of a Participant by the Company or an Affiliate for “cause” as defined at 12 C.F.R. Section 239.41 as determined by the Board of Directors or the Committee, all Awards held by such Participant which have not yet been delivered and deemed earned and non-forfeitable shall be forfeited by such Participant as of the date of such termination of employment or service.

	
  

	
(i)

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

 

 

  

16

  

 

	
  

	
(j)

	
Certain Regulatory Matters.  In the event that the Bank shall be deemed critically undercapitalized (as defined at 12 C.F.R. Section 325.103), is subject to enforcement action by the FDIC or other applicable bank regulatory agency, or receives a capital directive under Section 8 of the Federal Deposit Insurance Act, 12 U.S.C. Section 1818, then all Options then exercisable and held by executive officers or Directors of the Company or its Affiliates must be exercised within such deadlines provided for under such action or directive or such Options will be forfeited.

	
  

	
(k)

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

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

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

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

10.           TRUST ARRANGEMENT.

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

10.2           Management of Trust.  It is the intention of this Plan that the Trustee shall have complete authority and discretion with respect to the management, control and investment of the Trust, and that the Trustee shall invest all assets of the Trust, except those attributable to cash dividends paid with respect to unearned and unawarded Restricted Stock Awards, in Common Stock to the fullest extent practicable, except to the extent that the Trustee determines that the holding of monies in cash or cash equivalents is necessary to 

 

 

  

17

  

 

meet the obligations of the Trust.  In performing their duties, the Trustee shall have the power to do all things and execute such instruments as may be deemed necessary or proper, including the following powers:

	
  

	
(a)

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

	
  

	
(b)

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

	
  

	
(c)

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

	
  

	
(d)

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

	
  

	
(e)

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

	
  

	
(f)

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

	
  

	
(g)

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

	
  

	
(h)

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

	
  

	
(i)

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

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

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

10.4           Earnings.  All earnings, gains and losses with respect to Trust assets shall be allocated in accordance with a reasonable procedure adopted by the Committee, to bookkeeping accounts for Participants or to the general account of the Trust, depending on the nature and allocation of the assets generating such 

 

 

  

18

  

 

earnings, gains and losses.  In particular, any earnings on cash dividends received with respect to Restricted Stock Awards shall be allocated to accounts for Participants, except to the extent that such cash dividends are distributed to Participants, if such shares are the subject of outstanding Restricted Stock Awards, or, otherwise held by the Trust or returned to the Company.

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

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

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

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

19EX-10.1

 Exhibit 10.1 

EMPLOYMENT AGREEMENT 

This Employment Agreement (this “Agreement”) is entered into as of July 21, 2015, by and between Calavo Growers, Inc.,
a California corporation (the “Employer”), and B. John Lindeman (the “Employee”). 

RECITAL 
 The Employer
desires to employ the Employee as the Employer’s Chief Financial Officer, and the Employee desires to accept such employment, upon the terms set forth in this Agreement. 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the Employer and the Employee hereby agree as follows: 
  

	 	1.	EMPLOYMENT.  

 (a) Term of Employment. The Employer
hereby employs the Employee, and the Employee hereby accepts employment with the Employer (“Employment”), in accordance with the terms and conditions of this Agreement. The term of the Employee’s Employment under this
Agreement (the “Term of Employment”) shall commence on August 1, 2015. The Term of Employment shall end on the Employment termination date that is specified in writing by either the Employer or the Employee to the other
party. 
 (b) At Will Employment. The Employer has the right to terminate the Employee’s Employment at any time, with or
without prior notice, and with or without cause and for any reason or for no specified reason. The Employee has the right to terminate his Employment at any time, with or without prior notice. The Employee is employed by the Employer “at
will,” and this Agreement does not provide the Employee with any right to continue in the Employment of the Employer for any minimum or specified period. 
  

	 	2.	POSITION, DUTIES, AUTHORITY AND EXCLUSIVITY OF SERVICES.  

 (a)
Position. During the Term of Employment, the Employee shall serve as the Employer’s Chief Financial Officer (or such other title as the parties may mutually agree upon from time to time). 

(b) Reporting. The Employee shall report on a day-to-day basis directly to, and shall be subject to the supervision and
direction of, the Employer’s Chief Executive Officer (who is presently Lecil E. Cole) and the Employer’s President (who is presently Kenneth Catchot). 

(c) Duties, Responsibilities and Authority. The Employee’s duties, responsibilities and authority shall consist of the
duties of Chief Financial Officer, as determined by the Chief Executive Officer, the President or the Board of Directors of the Employer. The Employee shall be responsible for diligently and competently performing all services and acts that are
necessary or advisable to fulfill those duties and responsibilities and shall render such 

  
 1 

 
services on the terms set forth in this Agreement. The Employee shall at all times be subject to, observe and carry out such reasonable employment-related rules, regulations and policies as the
Employer’s Board of Directors, Chief Executive Officer or President may from time to time establish for the Employer’s employees, including, without limitation, the Employer’s Employee Handbook, Insider Trading Policy and Code of
Business Conduct and Ethics. 
 (d) Principal Business Office. Without restricting any requirement that the Employee engage
in reasonable business-related travel, the principal location in which the Employee shall be required to perform his duties and responsibilities shall be the Employer’s Corporate Headquarters, which are presently located at 1141A Cummings Road,
Santa Paula, California 93060. 
 (e) Exclusivity of Services. Except for sick leave and other forms of leave that are
permitted under the Employer’s rules, regulations and policies and except for the paid vacation time or paid time off to which Employee may be entitled, the Employee shall, throughout the Term of Employment, devote substantially all of his
attention and time during the Employer’s normal business hours to serving in the position described in this Agreement and to the performance of his duties and responsibilities in good faith and to the best of his ability. So long as the
Employee does not violate any of the confidentiality, noncompetition or unfair competition provisions of this Agreement or fail to perform his duties and responsibilities under this Agreement, the Employee shall be permitted reasonable time to make
and manage his personal business investments and to serve on civic, educational and charitable boards and committees. The Employee shall not serve on the board of directors of any for-profit entity without the prior written consent of the
Employer’s Chief Executive Officer. 
  

	 	3.	COMPENSATION.  

 (a) Base Salary. For services rendered
during the Term of Employment, the Employer shall pay to the Employee an annual base salary (the “Base Salary”) of not less than $300,000, payable in regular installments in accordance with the Employer’s customary
payroll practices for employees. If the Employee is entitled to receive Base Salary for any period that is less than one calendar month, the Base Salary for such period shall be computed by prorating the annual Base Salary over such period based
upon the actual number of days therein. The Employer’s Compensation Committee shall determine on an annual basis whether an increase in the Employee’s Base Salary is justified. 

(b) Annual Bonus. 

(i) With respect to each of the Employer’s fiscal years during the Term of Employment beginning with the 2016 fiscal year, the Employee
shall be eligible to receive an annual performance bonus (the “Annual Bonus”) to be determined annually by the Employer’s Compensation Committee in connection with its determination of performance-based bonuses and
performance targets, thresholds and requirements for other executive officers pursuant to the Employer’s Management Incentive Plan (“MIP”), as the MIP may be amended from time to time. In addition, with respect to each
of the Employer’s fiscal years during the Term of Employment beginning with the 2016 fiscal year, the Compensation Committee may elect to award the Employee a discretionary bonus. The Employee shall not be eligible to receive

  
 2 

 
an Annual Bonus or a discretionary bonus under this paragraph with respect to the Employer’s 2015 fiscal year in light of the Signing Bonus that the Employer has agreed to pay to the
Employee pursuant to Section 3(c) of this Agreement. 
 (ii) The Employee acknowledges that the Compensation Committee may award
bonuses to him in stock and/or cash. 
 (iii) Performance-based bonuses for which the Employee is eligible under the MIP upon the
achievement of bonus targets and performance requirements established by the Compensation Committee shall be in the range established for the Employer’s previous Chief Financial Officer for services rendered in such capacity, as compared to
bonus targets and performance requirements established for the Employer’s other executive officers. However, the bonuses and bonus targets for which the Employee is eligible may be lower than those received by the previous Chief Financial
Officer because the previous Chief Financial Officer also served as the Employer’s Chief Operating Officer. The Employee acknowledges and agrees that, as the size of the Employer increases, annual bonus thresholds and performance requirements
under the MIP may be increased by the Compensation Committee for all of the Employer’s executive officers, including for the Employee. 

(c) Signing Bonus. 

(i) The Employee shall be eligible to receive a signing bonus of $100,000 in cash and $300,000 in equity (the “Signing
Bonus”) as follows. 
 (ii) Upon commencement of the Term of Employment, the Employee shall receive an initial payment of
$50,000 (the “Initial Payment”). If the Employee terminates his employment without Good Reason or is terminated by the Employer for Cause (as those terms are defined in this Agreement) within ninety days after commencement of
the Term of Employment, the Employee shall be required to repay the Initial Payment to the Employer. The Employee shall receive a second payment of $50,000 at the time that the Employer’s other executives receive their Annual Bonuses for the
2015 fiscal year pursuant to the MIP, provided that the Employee has not terminated his Employment without Good Reason or been terminated with Cause, as those terms are defined in this Agreement. 

(iii) Within ten days after the commencement of the Term of Employment, the Employee shall be awarded restricted shares of the
Employer’s common stock having a value of $300,000 based on the closing price of the Employer’s stock on the date of the award. The shares will vest in three equal annual installments, subject to the requirement that the Employee must be
employed with the Employer at the time the shares are to vest. Notwithstanding the foregoing, the shares will vest immediately if the Employee has terminated his Employment with Good Reason or the Employer has terminated the Employee’s
Employment without Cause, as those terms are defined in this Agreement. The parties hereto shall sign a restricted stock agreement governing the shares issued to the Employee. 

(d) Change in Control. In the event that a Change in Control, as defined in the MIP, occurs during the Term of Employment or
during any other period contemplated by this Agreement, then the effect upon any compensation paid to the Employee under the MIP shall be governed in accordance with section 13.2 of the MIP. 

  
 3 

 (e) Withholding. The Signing Bonus and all Base Salary, Annual Bonuses and other
payments to be made to the Employee under this Agreement are subject to the Employer’s right to make customary and applicable deductions and withholdings, including, without limitation, for federal and state taxes, FICA, Medicaid and other
customary payroll activities. 
 (f) Clawback Provisions. Notwithstanding any other provisions in this Agreement to the
contrary, any incentive-based compensation, or any other compensation, paid to the Employee pursuant to this Agreement or any other agreement or arrangement with the Employer which is subject to recovery under any law, government regulation or stock
exchange listing requirement will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Employer pursuant to any such
law, government regulation or stock exchange listing requirement, including but not limited to the MIP). The Employer will make any determination for clawback or recovery in its sole discretion and in accordance with its determination of any
applicable law or regulation. 
 (g) Equity Interests in the Employer. The Employee acknowledges and agrees that, except as
set forth in this Agreement, the Employer has not made any representations or promises to him regarding his receipt of (1) stock options or other rights to acquire shares of the Employer’s common stock under an employee stock plan or
otherwise or (2) equity interests in the Employer, and that nothing in this Agreement entitles him to any such stock options, shares or other equity interests except as provided herein. 

 

	 	4.	RELOCATION EXPENSES, EMPLOYEE BENEFITS, EXPENSE REIMBURSEMENT AND INDEMNIFICATION.  

(a) Relocation Expenses. The Employer shall reimburse the Employee up to $100,000 (the “Relocation
Cap”) for all reasonable relocation expenses incurred by the Employee relating to his relocation to Southern California provided that the Employee provides appropriate documentation of such expenses. Such reimbursable relocation
expenses shall include, without limitation: expenses associated with packing and unpacking personal property; expenses associated with moving personal property such as home contents, a piano and automobiles; travel expenses such as airfare, hotels
and meals incurred on one home buying trip to Southern California; temporary housing and storage expenses; closing costs (including real estate commissions and legal fees) incurred in connection with selling the Employee’s current primary
residence and purchasing a new primary residence in Southern California; and travel expenses incurred to relocating the Employee’s family to Southern California. In addition, the Employer shall make “gross-up payments” to the
Employee, subject to the Relocation Cap, that shall reimburse the Employee for estimated federal, state, local and FICA tax liabilities that he incurs if and to the extent that the reimbursements from the Employer described in the preceding two
sentences are treated as taxable income. If the Employee terminates his employment without Good Reason or is terminated by the Employer for Cause (as those terms are defined in this Agreement) prior to the ninetieth day after commencement of the
Term of Employment, the Employee shall be required to repay the Employer the gross amount of any relocation expenses reimbursed pursuant to this paragraph. 

  
 4 

 (b) Employee Benefits. During the Term of Employment, the Employee shall be
entitled to receive all benefits under any and all deferred compensation plans, retirement plans, life, disability, health, accident and other insurance programs, automobile allowances, and similar employee benefit plans and programs, sick leave,
vacation time and paid time off (if any) that the Employer elects in its sole discretion to provide from time to time to its other executive officers (collectively referred to herein as the “Benefits”). However, the Employer
reserves the right to terminate, reduce or otherwise amend any or all of the Benefits from time to time to the extent allowed by law, so long as such action applies generally to all of its executive officers. Except as otherwise required by
applicable law with respect to continued “COBRA” group health care coverage and except as expressly required by the terms of the Employer’s life, disability, health, accident and other insurance programs and similar employee benefit
plans and programs, the Employee’s right to receive Benefits shall terminate upon the termination of his Employment for any reason. 

(c) Business Expense Reimbursement. Provided that the Employee provides appropriate documentation of his expenses, the Employee
shall be entitled to receive full reimbursement for all reasonable out-of-pocket business expenses that are incurred by him during the Term of Employment in accordance with the policies and procedures established from time to time by the Employer.
The Employee’s rights under this paragraph shall terminate as of the date that his Employment terminates for any reason, provided that the Employer shall remain obligated to reimburse the Employee for any such expenses that were properly
incurred by his during the Term of Employment. 
 (d) Indemnification. In the event that the Employee is made a party or
threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that the Employee is or was a director or officer of the
Employer, or any affiliate of the Employer, or is or was serving at the request of the Employer as a director, officer, member, employee or agent of another corporation or a partnership, joint venture, trust or other enterprise, the Employee shall
be indemnified and held harmless by the Employer to the maximum extent permitted under applicable law and the Company’s bylaws from and against any liabilities, costs, claims and expenses, including all costs and expenses incurred in defense of
any Proceeding (including attorneys’ fees). The Employer’s obligations under this paragraph shall survive the termination of the Employee’s Employment. Notwithstanding the foregoing, this paragraph shall not apply to any Proceeding,
contest or dispute between the Employer or any of its affiliates and the Employee. 
  

	 	5.	POST-EMPLOYMENT COMPENSATION.  

 (a) General. Except as
specifically provided in this Agreement, the Employer shall have no obligation to make any compensation, severance or other payments to the Employee, or to provide any other benefits to the Employee, after the date of the termination of the
Employee’s Employment for any reason. 

  
 5 

 (b) Base Salary. Upon the termination of the Employee’s
Employment for any reason, the Employee shall not be entitled to receive any additional Base Salary payments from the Employer except: 

(i) The Employee shall have the right to receive any earned but unpaid Base Salary and, to the extent required by law, accrued vacation pay
or accrued paid time off, as of the date of the Employment termination; and 
 (ii) If the Employer terminates the Employee’s
Employment without Cause (as defined in this Agreement), or if the Employee terminates his Employment for Good Reason (as defined in this Agreement), then, provided that the Employee executes a full general release in favor of the Employer and those
acting on its behalf in a form acceptable to the Employer, the Employer shall: (1) pay the Employee an amount equal to one year of his annual Base Salary, payable at regular payroll intervals; (2) make COBRA payments on behalf of the
Employee in an amount sufficient for the Employee to maintain his then-current group health benefits for one year; and (3) provide the Employee with a pro rata portion of his Annual Bonus for the year in which his Employment terminates, payable
at the time that the Employer’s other executive officers receive their Annual Bonuses. The payments and benefits described in this paragraph shall be subject to the Employer’s right to make customary and applicable deductions and
withholdings, including, without limitation, for federal and state taxes, FICA, Medicaid and other customary payroll activities. The Employee shall not be entitled to receive the payments and benefits described in this paragraph if the Employer
terminates the Employee’s Employment for Cause or if he terminates his Employment other than for Good Reason. 
 (iii) For purposes of
this Agreement, “Cause” means: (1) willful misconduct by the Employee with respect to the Employer that has a material adverse effect on the Employer and which misconduct is not cured within ten days after written notice
of such misconduct is given by the Employer to the Employee, if such misconduct is curable; (2) the Employee’s willful refusal to attempt to follow any proper written direction of the Chief Executive Officer or the President unless the
Employee has a good faith reason to believe that such direction is illegal or is a violation of the Employer’s rules, regulations and policies, which refusal shall continue for a period of at least ten days after written notice of such refusal
is given by the Employer to the Employee; (3) the substantial and continuing refusal by the Employee to attempt to perform his duties required under this Agreement after written notice of demand for performance of such duties is delivered to
the Employee by the Employer (which notice must specifically identify the manner in which the Employer believes the Employee has substantially and continually refused to attempt to perform his duties under this Agreement) and after the Employee has
failed to cure such refusal to attempt to perform his duties for at least ten days after his receipt of such notice; (4) the Employee’s conviction of, or entry of a plea of guilty or nolo contendere to, a felony (other than a felony
involving a traffic violation); (5) the Employee’s theft, embezzlement or other criminal misappropriation of funds from the Employer; or (6) the Employee’s willful breach of any other material provision of this Agreement or of
the Employer’s Employee Handbook, Insider Trading Policy or Code of Business Conduct and Ethics. 
 (iv) For purposes of this
Agreement, “Good Reason” means the occurrence, without the Employee’s written consent, of any of the following: (1) a change in the 

  
 6 

 
Employee’s duties requiring him to perform the majority of his hours of employment more than 35 miles from the Employer’s Corporate Headquarters, if the Employer fails to remedy such
change within thirty days after written notice is given by the Employee to the Employer; (2) a material reduction by the Employer in the Employee’s title, duties, responsibilities or authority under this Agreement, which reduction is not
cured by the Employer within thirty days after written notice is given by the Employee to the Employer, excluding, however, any such reduction that occurs in connection with a termination of the Employee’s Employment for Cause, (3) any
breach by the Employer of any material provision of this Agreement, which breach is not cured by the Employer within thirty days after written notice of such breach is given by the Employee to the Employer; or (4) the failure of any successor
to the Employer (whether direct or indirect or whether by merger, acquisition of assets, consolidation or otherwise) to assume in a writing delivered to the Employee the obligations of the Employer under this Agreement, if such assumption agreement
is not delivered to the Employee within ten days after he provides the successor to the Employer with written notice of his desire to receive such agreement. Notwithstanding the foregoing, the Employee shall be deemed to have terminated his
Employment for Good Reason for purposes of this Agreement only if he terminates his Employment within thirty days after the occurrence of the event described in this paragraph that permits him to terminate his Employment for Good Reason. 

 

	 	6.	CONFIDENTIALITY; UNFAIR COMPETITION. 

 (a) Confidentiality.
The Employee shall at no time, either during his Employment or after the termination of his Employment for any reason, use or disclose to any person, directly or indirectly, any confidential or proprietary information concerning the business of the
Employer, including, without limitation, any business secret, trade secret, financial information, software, internal procedure, business plan, marketing plan, pricing strategy or policy or customer list, except to the extent that such use or
disclosure is (1) necessary to the performance of the Employee’s Employment during the period that he is so employed, (2) required by an order of a court of competent jurisdiction, or (3) authorized in writing by the
Employer’s Chief Executive Officer or President. The prohibition that is contained in the preceding sentence shall not apply to any information that is or becomes generally available to the public other than through a disclosure by the Employee
or by a person acting in concert with him. Within five days after the termination of his Employment, the Employee shall return to the Employer all memoranda, notes and other documents in his possession or control that relate to the confidential
information of the Employer. Upon the Employer’s request, the Employee agrees to execute and deliver to the Employer any form of confidentiality agreement that the Employer requires generally from its employees. 

(b) Competition During the Term of Employment. During his Employment, the Employee shall not, directly or indirectly (as owner,
principal, agent, partner, officer, employee, independent contractor, consultant, shareholder or otherwise), (1) hire (or solicit for the purpose of hiring) or cause any other person to hire (or solicit for the purpose of hiring) any employee
or officer of the Employer or (2) compete in any manner with the business then being conducted by the Employer. The prohibition that is set forth in the preceding sentence shall not be construed as prohibiting the Employee from acquiring and
owning up to one percent of the outstanding common stock of any corporation whose common stock is traded on a national securities exchange. 

  
 7 

 (c) Remedies. If the Employee breaches any of the provisions of this Section or if
the Employee breaches any of the terms of any other confidentiality or unfair competition agreement that he may enter into with the Employer, the Employer may, among its other remedies and notwithstanding any provision to the contrary in this
Agreement, terminate all payments that are otherwise owed to the Employee under this Agreement, and the Employer shall be relieved of any obligation to make such payments to the Employee. Furthermore, the Employee acknowledges that damages and such
termination of payments would be an inadequate remedy for his breach of any of the provisions of this Section, and that his breach of any of such provisions will result in immeasurable and irreparable harm to the Employer. Therefore, in addition to
any other remedy to which the Employer may be entitled by reason of the Employee’s breach of any such provision, the Employer shall be entitled to seek and obtain temporary, preliminary and permanent injunctive relief restraining the Employee
from committing or continuing any breach of any provision of this Section. 
  

	 	7.	INVENTIONS/WORK PRODUCT 

 (a) Work Product. The Employee
acknowledges and agrees that all writings, works of authorship, technology, inventions, discoveries, ideas and other work product of any nature whatsoever that are created, prepared, produced, authored, edited, amended, conceived or reduced to
practice by the Employee individually or jointly with others during the period of his Employment by the Employer and relating in any way to the business or contemplated business, research or development of the Employer (regardless of when or where
the Work Product is prepared or whose equipment or other resources is used in preparing the same) and all printed, physical and electronic copies, all improvements, rights and claims related to the foregoing, and other tangible embodiments thereof
(collectively, “Work Product”), as well as any and all rights in and to copyrights, trade secrets, trademarks (and related goodwill), patents and other intellectual property rights therein arising in any jurisdiction
throughout the world and all related rights of priority under international conventions with respect thereto, including all pending and future applications and registrations therefor, and continuations, divisions, continuations-in-part, reissues,
extensions and renewals thereof (collectively, “Intellectual Property Rights”), shall be the sole and exclusive property of the Employer. 

(b) Work Made for Hire; Assignment. The Employee acknowledges that, by reason of being employed by the Employer at the
relevant times, to the extent permitted by law, all of the Work Product consisting of copyrightable subject matter is “work made for hire” as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by the Employer. To the
extent that the foregoing does not apply, the Employee hereby irrevocably assigns to the Employer, for no additional consideration, the Employee’s entire right, title and interest in and to all Work Product and Intellectual Property Rights
therein, including the right to sue, counterclaim and recover for all past, present and future infringement, misappropriation or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Agreement shall
be construed to reduce or limit the Employer’s rights, title or interest in any Work Product or Intellectual Property Rights so as to be less in any respect than that the Employer would have had in the absence of this Agreement. 

(c) Further Assurances; Power of Attorney. During and after his Employment, the Employee agrees to reasonably cooperate
with the Employer to (1) apply for, 

  
 8 

 
obtain, perfect and transfer to the Employer the Work Product as well as an Intellectual Property Right in the Work Product in any jurisdiction in the world, and (2) maintain, protect and
enforce the same, including, without limitation, executing and delivering to the Employer any and all applications, oaths, declarations, affidavits, waivers, assignments and other documents and instruments as shall be requested by the Employer. The
Employee hereby irrevocably grants the Employer a power of attorney to execute and deliver any such documents on the Employee’s behalf in his name and to do all other lawfully permitted acts to transfer the Work Product to the Employer and
further the transfer, issuance, prosecution and maintenance of all Intellectual Property Rights therein, to the full extent permitted by law, if the Employee does not promptly cooperate with the Employer’s request (without limiting the rights
the Employer shall have in such circumstances by operation of law). The power of attorney is coupled with an interest and shall not be affected by the Employee’s subsequent incapacity. 

 

	 	8.	GENERAL PROVISIONS. 

 (a) Entire Agreement. This Agreement (and
any separate confidentiality agreements that may be entered into between the Employer and the Employee) constitutes the entire agreement of the Employer and the Employee relating to the terms and conditions of the Employee’s Employment and
supersedes all prior oral and written understandings and agreements relating to such subject matter. 
 (b) Notices. All
notices required or permitted by this Agreement to be given by one party to the other party shall be delivered in writing, by registered or certified United States mail (postage prepaid and return receipt requested) or by reputable overnight
delivery service, to the Employer or the Employee, as applicable, at the address that appears on the signature page of this Agreement (or to such other address that one party gives the other in the foregoing manner or, in the case of the Employee,
to his principal residential address on file with the Employer after the Employee’s relocation to Southern California). Any such notice that is sent in the foregoing manner shall be deemed to have been delivered three days after deposit in the
United States mail or one day after delivery to an overnight delivery service. 
 (c) Expenses. Each party to this
Agreement shall bear its own costs and expenses (including, without limitation, attorneys’ fees) incurred in connection with this Agreement. 

(d) Amendment and Termination. This Agreement may be amended or terminated only pursuant to a writing executed by the Employer
and the Employee. 
 (e) Successors and Assigns. This Agreement shall be binding upon, and shall benefit, the Employer and
the Employee and their respective successors and assigns (including, without limitation, the Employee’s personal representative and beneficiaries and any corporation or other entity into which the Employer is merged); provided, however, that
the Employee is not entitled to assign his obligations hereunder to another person. A successor of the Employer shall include, without limitation, any corporation or other entity that acquires, directly or indirectly, all or substantially all of the
Employer’s assets, whether by merger, acquisition, lease or another form of transaction. Any such successor to the Employer referred to in this paragraph shall thereafter be deemed the “Employer” for purposes of this Agreement. 

  
 9 

 (f) Calculation of Time. Wherever in this Agreement a period of time is stated in
a number of days, it shall be deemed to mean calendar days. However, when any period of time so stated would end upon a Saturday, Sunday or legal holiday, such period shall be deemed to end upon the next day following that is not a Saturday, Sunday
or legal holiday. 
 (g) Further Assurances. Each of the Employer and the Employee shall perform any further acts and execute
and deliver any further documents that may be reasonably necessary to carry out the provisions of this Agreement. 
 (h) Provisions
Subject to Applicable Law. All provisions of this Agreement shall be applicable only to the extent that they do not violate any applicable law and are intended to be limited to the extent necessary so that they will not render this Agreement
invalid, illegal or unenforceable under any applicable law. If any provision of this Agreement or any application thereof shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of other provisions of this
Agreement or of any other application of such provision shall in no way be affected thereby. 
 (i) Waiver of Rights. Neither
party shall be deemed to have waived any right or remedy that it has under this Agreement unless this Agreement expressly provides a period of time within which such right or remedy must be exercised and such period has expired or unless such party
has expressly waived the same in writing. The waiver by either party of a right or remedy hereunder shall not be deemed to be a waiver of any other right or remedy or of any subsequent right or remedy of the same kind. 

(j) Headings; Gender and Number. The headings contained in this Agreement are for reference purposes only and shall not affect
in any manner the meaning or interpretation of this Agreement. Where appropriate to the context of this Agreement, use of the singular shall be deemed also to refer to the plural, and use of the plural to the singular, and pronouns of one gender
shall be deemed to comprehend either or both of the other genders. The terms “hereof,” “herein,” “hereby” and variations thereof shall, whenever used in this Agreement, refer to this Agreement as a whole and not to any
particular section of this Agreement. The term “person” refers to any natural person, corporation, partnership, limited liability company or other association or entity, as applicable. 

(k) Representation of the Employee; Interpretation of This Agreement. The Employee acknowledges and agrees that he has had an
adequate opportunity to review this Agreement with his counsel prior to executing this Agreement, and that he is freely entering into this Agreement without coercion from any source. The Employer and the Employee have negotiated the terms of this
Agreement, and the language used herein was chosen by the parties to express their mutual intent. This Agreement shall be construed without regard to any presumption or rule requiring construction against the party causing the instrument to be
drafted. 
 (l) Counterparts. This Agreement may be executed in counterparts and by facsimile or electronic transmission in
PDF format, each of which will be deemed an original but both of which together will constitute a single instrument. 

  
 10 

 (m) Governing Laws. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of California. 
  

	 	9.	ARBITRATION. 

 (a) Submission to Arbitration. Any dispute,
controversy or claim arising out of or related to this Agreement, any breach of this Agreement or the Employee’s employment with the Employer shall be submitted to and decided exclusively by binding arbitration in Los Angeles, California.
Claims covered by this provision include, but are not limited to, the following: (1) alleged violations of federal, state and/or local constitutions, statutes, regulations or ordinances, including, but not limited to, laws dealing with unlawful
discrimination and harassment; (2) claims for misappropriation of trade secrets, breach of fiduciary duty, or other duties owed by the Employee to the Employer; (3) claims based on any purported breach of contractual obligation, including
but not limited to breach of the covenant of good faith and fair dealing, wrongful termination or constructive discharge; (4) violations of public policy; (5) claims relating to a transfer, reassignment, denial of promotion, demotion,
reduction in pay, or any other term or condition of employment; (6) claims based on contract or tort; and (7) any and all other claims arising out of the Employee’s employment with or termination by the Employer. This includes, but is
not limited to, claims brought under Title VII of the Civil Rights Act of 1964; California Government Code Section 12960 et seq.; and any other federal, state or local anti-discrimination laws relating to discrimination, including, but
not limited to, those based on the following protected categories: genetic information or characteristics; sex and gender; race; religion; national origin; mental or physical disability (including claims under the Americans With Disabilities Act);
medical condition; veteran or military status; marital status; sexual orientation or preference; age; pregnancy; and retaliation or wrongful termination in violation of public policy for alleging or filing or participating in any grievance or
otherwise complaining of any wrong relating to the aforementioned categories or any public policy. 
 (b) Exclusion of
Claims. The following claims are expressly excluded and not covered by this Agreement for final and binding arbitration: (1) claims related to Workers’ Compensation and Unemployment Insurance; (2) administrative filings with
governmental agencies such as the California Department of Fair Employment & Housing, the Equal Employment Opportunity Commission, the U.S. Department of Labor or the National Labor Relations Board; (3) claims that are expressly
excluded by statute or are expressly required to be arbitrated under a different procedure pursuant to the terms of an employee benefit plan; and (4) claims within the jurisdictional limits of small claims court. Nor does this Agreement
preclude either party from seeking appropriate interim injunctive relief pursuant to the California Code of Civil Procedure or applicable federal law before arbitration or while arbitration proceedings are pending. 

(c) Arbitration Provider and Rules. Any claim arising between the Employee and the Employer covered by the arbitration
provisions of this Agreement shall be submitted to final and binding arbitration in the rules and procedures of JAMS, or any successor entity thereto, in effect upon the date the claim is submitted in writing to the Employer or the Employee, to
which rules and procedures the parties hereby expressly agree. Such rules may be found at http://www.jamsadr.com/rules-employment-arbitration/. Such rules allow for discovery by each party as ordered by the arbitrator. The arbitrator must allow discovery adequate to arbitrate all claims, including access to essential documents and witnesses. In making
his or her award, the arbitrator shall have the authority to make any finding and provide any remedy. 

  
 11 

 (d) Written Award Required. The arbitrator must issue a written award. The
arbitrator shall, in the award or separately, make specific findings of fact, and set forth such facts in support of his or her decision, as well as the reasons and basis for his or her opinion. Should the arbitrator exceed the jurisdiction or
authority here conferred, any party aggrieved thereby may file a petition to vacate, amend or correct the arbitrator’s award in a court of competent jurisdiction, pursuant to applicable law. 

(e) Fees and Costs. To the extent required by law, the Employer shall pay the arbitrator’s fees and other
administrative costs of arbitration, and other reasonable costs as specified by the arbitrator under applicable law so that Employee does not have to bear any cost which he would not have to bear in court beyond any amount which would have to be
paid as a filing fee in a superior court. The arbitrator shall award attorneys’ fees and costs to the prevailing party. 
 [signature
page follows] 

  
 12 

 IN WITNESS WHEREOF, the Employer and the Employee have executed and delivered this Agreement as
of the date first written above. 
  

			
	CALAVO GROWERS, INC.
		
	By:	 	  

		 	Lecil E. Cole
		 	Chief Executive Officer
	
	Current Address:
	
	1141A Cummings Road
	Santa Paula, CA 93060

  

	
	
	  

	B. JOHN LINDEMAN
	
	Current Address:
	
	331 Mallwyd Road
	Merion Station, PA 19066

  
 13

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