Document:

Ex-10.1 2001 Stock Incentive Plan

EXHIBIT 10.1

HANCOCK FABRICS, INC.

2001 STOCK INCENTIVE PLAN

AMENDED AND RESTATED

1. Purpose.

     The purpose of the HANCOCK FABRICS, INC. 2001 STOCK INCENTIVE PLAN (the “Plan”) is to further
the earnings of HANCOCK FABRICS, INC., a Delaware corporation, and its subsidiaries (collectively,
the “Company”) by assisting the Company in attracting, retaining and motivating key employees and
directors of high caliber and potential. The Plan provides for the award of long-term incentives
to those key employees and directors who make substantial contributions to the Company by their
loyalty, industry and invention.

2. Administration.

     The Plan shall be administered by the Stock Plan Committee (the “Committee”) selected by the
Board of Directors of the Company (the “Board of Directors”) consisting solely of two or more
members who are “outside directors” as described in Section 162(m) of the Internal Revenue Code of
1986, as amended (the “Code”). Except to the extent permitted under paragraph 6(g) hereof or Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the “1934 Act”) (or any successor rule
of similar import), each Committee member shall be ineligible to receive, and shall not have been,
during the one-year period prior to appointment thereto, granted or awarded stock options or
restricted stock pursuant to this Plan or any other similar plan of the Company or any affiliate of
the Company. Without limiting the foregoing, the Committee shall have full and final authority in
its discretion to interpret the provisions of the Plan and to decide all questions of fact arising
in its application. Subject to the provisions hereof, the Committee shall have full and final
authority in its discretion to determine the employees and directors to whom awards shall be made
under the Plan; to determine the type of awards to be made and the amount, size and terms and
conditions of each such award; to determine the time when awards shall be granted; to determine the
provisions of each agreement evidencing an award; and to make all other determinations necessary or
advisable for the administration of the Plan.

3. Stock Subject to the Plan.

     The Company may grant awards under the Plan with respect to not more than a total of 6,300,000
shares of $.01 par value common stock of the Company (the “Shares”), (subject to adjustment as
provided in paragraph 18, below). Such Shares may be authorized and unissued Shares or treasury
Shares. Except as otherwise provided herein, any Shares subject to an option which for any reason
is surrendered before exercise or expires or is terminated unexercised as to such Shares shall
again be available for the granting of awards under the Plan. Similarly, if any Shares granted
pursuant to restricted stock awards are forfeited, such forfeited Shares shall again be available
for the granting of awards under the Plan.

 

 

4. Eligibility to Receive Awards.

     Persons eligible to receive awards under the Plan shall be limited to those officers, other
key employees and directors of the Company who are in positions in which their decisions, actions
and counsel have a significant impact upon the profitability and success of the Company (but
excluding members of the Committee, except as provided in paragraph 6(g)).

5. Form of Awards.

     Awards may be made from time to time by the Committee in the form of stock options to purchase
Shares, restricted stock, or any combination of the above. Stock options shall be limited to
options which do not qualify (“Nonqualified Stock Options”) as incentive stock options within the
meaning of Section 422(b) of the Code.

6. Stock Options.

     Stock options for the purchase of Shares shall be evidenced by written agreements in such form
not inconsistent with the Plan as the Committee shall approve from time to time; provided that the
maximum number of options which may be granted to any one grantee during any twelve-month period is
100,000 (except that (i) the Committee in its discretion may exceed such limitation as to executive
officers of the Company and (ii) such limitation shall be adjusted pursuant to paragraph 18 below).
Such agreement shall contain the terms and conditions applicable to the options, including in
substance the following terms and conditions:

	 	(a)	 	Number of Shares. Each option agreement shall identify the options represented
as Nonqualified Stock Options, and shall set forth the number of Shares subject to the
option (as adjusted pursuant to paragraph 18, below).
	 
	 	(b)	 	Option Price. The option exercise price to be paid by the optionee to the
Company for each Share purchased upon the exercise of an option shall be determined by
the Committee, but shall in no event be less than 100 percent of the fair market value
per Share on the date the option is granted, as determined by the Committee.
Notwithstanding anything herein to the contrary, the Committee shall not reprice any
options to a lower exercise price at any time during the term of any option granted
under this Plan.
	 
	 	(c)	 	Exercise Term. Each option agreement shall state the period or periods of time
within which the option may be exercised, in whole or in part, as determined by the
Committee and subject to such terms and conditions as are prescribed for such purpose
by the Committee, provided that no option shall be exercisable, except as provided in
paragraph 16 or in the event of Retirement (as defined below), death or Disability (as
defined below), any more rapidly than from (i) the first anniversary of the date of
grant thereof, to the extent of 25% of the Shares covered thereby, (ii) the thirteenth
month from the date of grant thereof, and each additional month thereafter, to the
extent of an additional 1/36th of the Shares covered thereby. The Committee, in its
discretion, may provide in the option agreement that the option shall become
immediately exercisable, in whole or in

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	 	 	 	part, in the event of Retirement, death or Disability. Notwithstanding the
foregoing, no option shall be exercisable after seven years from the date of grant.

	 	(d)	 	Payment for Shares. The purchase price of the Shares with respect to which an
option is exercised shall be payable in full at the time of exercise in cash, Shares at
fair market value (i.e., in either a “net” exercise or a “cashless” exercise), or by
delivery of an executed promissory note secured by the shares so purchased, or a
combination thereof, as the Committee may determine and all subject to such terms and
conditions as may be prescribed by the Committee for such purpose. If the purchase
price is paid by tendering Shares, the Committee in its discretion may grant the
optionee a new stock option for the number of Shares used to pay the purchase price.
	 
	 	(e)	 	Rights Upon Termination. In the event of Termination (as defined below) of an
optionee’s status as an employee or director of the Company for any cause other than
Retirement, death or Disability, all unexercised options shall terminate immediately
unless otherwise specified in the Option Grant Agreement or unless the Committee shall
determine otherwise. (As used herein, “Termination” means, (i) in the case of an
employee, the cessation of the grantee’s employment by the Company for any reason, and
(ii) in the case of a director, the cessation of the grantee’s service as a director of
the Company; and “Terminates” has the corresponding meaning. As used herein,
“Retirement” means (in the case of an employee) termination of employment under
circumstances entitling the participant to elect immediate payment of retirement
benefits under the Hancock Fabrics, Inc. Consolidated Retirement Plan or any successor
plan, or (in the case of a director), the same meaning as Termination or Terminates and
“Retires” has the corresponding meaning. As used herein, “Disability” means failure to
return to full-time employment duties immediately after the participant has exhausted
the short term disability benefits under the then applicable short term disability
policy or procedures of the Company, and “Disabled” has the corresponding meaning). In
the event that an optionee Retires, dies or becomes Disabled prior to the expiration of
his option and without having fully exercised his option, the optionee or his
Beneficiary (as defined below) shall have the right to exercise the option during its
term within a period of (i) one year after Termination due to Retirement, death or
Disability, or (ii) one year after death if death occurs either within one year after
Termination due to Retirement or Disability to the extent that the option was
exercisable at the time of death or Termination, or within such other period, and
subject to such terms and conditions, as may be specified by the Committee. (As used
herein, “Beneficiary” means the person or persons designated in writing by the grantee
as his Beneficiary with respect to an award under the Plan; or, in the absence of an
effective designation or if the designated person or persons predecease the grantee,
the grantee’s Beneficiary shall be the person or persons who acquire by bequest or
inheritance the grantee’s rights in respect of an award). In order to be effective, a
grantee’s designation of a Beneficiary must be on file with the Committee before the
grantee’s death, but any such designation may be revoked and a new designation
substituted therefor at any time before the grantee’s death.

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	 	(f)	 	Nontransferability. Except as provided in paragraph 14(b), options granted
under the Plan shall not be sold, assigned, transferred, exchanged, pledged,
hypothecated, or otherwise encumbered, other than by will or by the laws of descent and
distribution. Except as provided in paragraph 14(b), during the lifetime of the
optionee the option is exercisable only by the optionee.
	 
	 	(g)	 	Grants to Nonemployee Directors. Notwithstanding any other provision of the
Plan, the grant of options and/or restricted stock hereunder to directors who are not
also employees of the Company (“Nonemployee Directors”) shall be subject to the
following terms and conditions:

	 	(i)	 	The Nonemployee Directors of the Company installed pursuant to
the Company’s Plan of Reorganization approved on August 1, 2008, shall receive
an initial grant of 50,000 Shares of restricted stock (granted at August 4,
2008), vesting to the extent of 50% of the shares so granted on the first
anniversary of the date of grant, and 25% and 25% on the successive second and
third such anniversary dates. Subsequent grants of restricted stock and/or
Nonqualified Stock Options to Nonemployee Directors may be made at the
discretion of the Compensation Committee, subject to any limitations under
Section 16 of the Securities Exchange Act of 1934.
	 
	 	(ii)	 	Each Nonemployee Director of the Company may elect annually (at
the time of his initial election and subsequently at the time of the annual
meeting of stockholders for the election of directors), in advance, to receive
all or a portion of his compensation for services rendered as a Nonemployee
Director in Shares of restricted stock issued under this Plan in lieu of cash,
which Shares shall be granted at the time of such annual election, vesting to
the extent of 1/12th of the shares so awarded on the same date of
each subsequent month..
	 
	 	(iii)	 	The exercise price of stock subject to an option granted to
Nonemployee Directors and the price used to calculate the number of Shares of
restricted stock to be issued in lieu of cash consideration under this
paragraph 6(g) shall be equal to 100 percent of the fair market value of such
stock on the date the option is granted or the compensation would otherwise
have been paid in cash, all as determined by the Committee.
	 
	 	(iv)	 	Except as provided in paragraph 16, each option granted to
Nonemployee Directors under this paragraph 6(g) shall not be exercisable until
one year after the date of grant; provided, however, that no portion of the
option shall be exercisable any earlier than the date the Plan is approved by
the stockholders of the Company.
	 
	 	(v)	 	Unless otherwise provided in the Plan, all provisions with
respect to the terms of Nonqualified Stock Options hereunder shall be
applicable to options granted to Nonemployee Directors under this paragraph
6(g).

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	 	(vi)	 	The grants described in this paragraph 6(g) shall constitute
the only awards under the Plan permitted to be made to Nonemployee Directors.

7. Restricted Stock Awards.

     Restricted stock awards under the Plan shall consist of Shares free of any purchase price, or
for such purchase price as may be established by the Committee, restricted against transfer,
subject to forfeiture, and subject to such other terms and conditions (including attainment of
performance objectives) as may be determined by the Committee. Shares of restricted stock issued
to Nonemployee Directors shall be governed by Section 6(g) above if that section is inconsistent
with this Section 7. Restricted stock shall be evidenced by written restricted stock agreements in
such form not inconsistent with the Plan as the Committee shall approve from time to time, which
agreement shall contain the terms and conditions applicable to such awards, including in substance
the following terms and conditions:

	 	(a)	 	Restriction Period. Restrictions shall be imposed for such period or periods
as may be determined by the Committee. The Committee, in its discretion, may provide
in the agreement circumstances under which the restricted stock shall become
immediately transferable and nonforfeitable, or under which the restricted stock shall
be forfeited, provided that no restricted stock award shall become immediately
transferable and nonforfeitable, except as provided in paragraph 16 or in the event of
Retirement, death or Disability, any more rapidly than from (i) the first anniversary
of the date of grant thereof, to the extent of 50% of the Shares covered thereby, (ii)
the second anniversary of the date of grant thereof, to the extent of an additional 25%
of the Shares covered thereby, and (iii) the third anniversary of the date of grant
thereof, to the extent of an additional 25% of the Shares covered thereby.
	 
	 	(b)	 	Restrictions Upon Transfer. Restricted stock and the right to vote such Shares
and to receive dividends thereon, may not be sold, assigned, transferred, exchanged,
pledged, hypothecated, or otherwise encumbered, except as herein provided, during the
restriction period applicable to such Shares. Notwithstanding the foregoing, and
except as otherwise provided in the Plan, the grantee shall have all of the other
rights of a stockholder, including, but not limited to, the right to receive dividends
and the right to vote such Shares. Any right to receive dividends shall be limited to
a right to receive such dividends at the same time and in the same amount as dividends
which are paid to holders of unrestricted shares of capital stock of the Company.
	 
	 	(c)	 	Certificates. A certificate or certificates representing the number of
restricted Shares granted shall be registered in the name of the grantee. The
Committee, in its sole discretion, shall determine when the certificate or certificates
shall be delivered to the grantee (or, in the event of the grantee’s death, to his
Beneficiary), may provide for the holding of such certificate or certificates in escrow
or in custody by the Company or its designee pending their delivery to the grantee or
Beneficiary, and may provide for any appropriate legend to be borne by the certificate
or certificates.

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	 	(d)	 	Lapse of Restrictions. The restricted stock agreement shall specify the terms
and conditions upon which any restriction upon restricted stock awarded under the Plan
shall expire, lapse, or be removed, as determined by the Committee. Upon the
expiration, lapse, or removal of such restrictions, Shares free of the restrictive
legend shall be issued to the grantee or his legal representative.

8. Loans and Supplemental Cash.

     The Committee, in its sole discretion to further the purpose of the Plan, may provide for
supplemental cash payments or loans to individuals in connection with all or any part of an award
under the Plan. Supplemental cash payments shall be subject to such terms and conditions as shall
be prescribed by the Committee at the time of grant, provided that in no event shall the amount of
payment exceed:

	 	(a)	 	In the case of an option, the excess fair market value of a Share on the date
of exercise over the option price multiplied by the number of Shares for which such
option is exercised, or
	 
	 	(b)	 	In the case of a restricted stock award, the value of the Shares issued in
payment of such award.

Any loan shall be evidenced by a written loan agreement or other instrument in such form and
containing such terms and conditions (including, without limitation, provisions for interest,
payment schedules, collateral, forgiveness or acceleration) as the Committee may prescribe from
time to time.

9. General Restrictions.

     Each award under the Plan shall be subject to the requirement that if at any time the Company
shall determine that (i) the listing, registration or qualification of the Shares subject or
related thereto upon any securities exchange or under any state or federal law, or (ii) the consent
or approval of any regulatory body, or (iii) an agreement by the recipient of an award with respect
to the disposition of Shares, or (iv) the satisfaction of withholding tax or other withholding
liabilities is necessary or desirable as a condition of or in connection with the granting of such
award or the issuance or purchase of Shares thereunder, such award shall be consummated in whole or
in part only if such listing, registration, qualification, consent, approval, agreement, or
withholding shall have been effected or obtained on terms acceptable to the Company. Any such
restriction affecting an award shall not extend the time within which the award may be exercised;
and neither the Company nor its directors or officers nor the Committee shall have any obligation
or liability to the grantee or to a Beneficiary with respect to any Shares with respect to which an
award shall lapse or with respect to which the grant, issuance or purchase of Shares shall not be
effected, because of any such restriction.

10. Single or Multiple Agreements.

     Multiple awards, multiple forms of awards, or combinations thereof may be evidenced by a
single agreement or multiple agreements, as determined by the Committee.

11. Rights of the Shareholder.

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     The recipient of any award under the Plan, shall have no rights as a shareholder, except as
provided in Paragraph 7(b), with respect thereto unless and until certificates for Shares are
issued to him, and the issuance of Shares shall confer no retroactive right to dividends.

12. Rights to Terminate.

     Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon
any person the right to continue in the employment of the Company or to serve as a director, or
affect any right which the Company may have to terminate the employment or directorship of such
person.

13. Withholding.

     Prior to the issuance or transfer of Shares under the Plan, the recipient shall remit to the
Company an amount sufficient to satisfy any federal, state or local withholding tax requirements.
The amount to be withheld shall be determined by the Company and shall be the based on the minimum
statutory requirements. The recipient may satisfy the withholding requirement in whole or in part
by electing to have the Company withhold Shares having a value equal to the amount required to be
withheld. The value of the Shares to be withheld shall be the fair market value, as determined by
the Committee, of the stock on the date that the amount of tax to be withheld is determined (the
“Tax Date”). Such election must be made prior to the Tax Date, must comply with all applicable
securities law and other legal requirements, as interpreted by the Committee, and may not be made
unless approved by the Committee, in its discretion.

14. Non-Assignability.

	 	(a)	 	Except as provided in paragraph 14(b), no award under the Plan shall be sold,
assigned, transferred, exchanged, pledged, hypothecated, or otherwise encumbered, other
than by will or by the laws of descent and distribution, or by such other means as the
Committee may approve. Except as provided in paragraph 14(b), or as otherwise provided
herein, during the life of the recipient, such award shall be exercisable only by such
person or by such person’s guardian or legal representative.
	 
	 	(b)	 	The Committee may, in its sole discretion from time to time, permit the
assignment of any Nonqualified Stock Option to one or more of an optionee’s “Immediate
Family” (as defined herein). As used herein, members of an optionee’s “Immediate
Family” shall include only (i) persons who, at the time of transfer, are the optionee’s
spouse or natural or adoptive lineal ancestors or descendants, and (ii) trusts
established for the exclusive benefit of the optionee and/or one or more of the persons
described in clause (i) of this paragraph 14(b).

15. Non-Uniform Determinations.

     The Committee’s determinations under the Plan (including without limitation determinations of
the persons to receive awards, the form, amount and timing of such awards, the terms and provisions
of such awards and the agreements evidencing same, and the establishment of values and performance
targets) need not be uniform and may be made selectively among

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persons who receive, or are eligible to receive, awards under the Plan, whether or not such
persons are similarly situated.

16. Change In Control Provisions.

	 	(a)	 	In the event of a Change in Control (as defined below), the Committee in its
sole discretion may cause any stock options awarded under the Plan to vest and
restrictions on restricted stock granted under the Plan to lapse, all in accordance
with terms determined by the Committee in such event, even though such determination is
made after the date of award or grant (so long as such terms are not more restrictive
than those contained in any prior agreement with the optionees/grantees relating to the
affected options or restricted stock). The Committee may provide in grant/award
agreements issued pursuant to this Plan that the following acceleration and valuation
provisions shall be available in the event of a Change in Control (provided that more
restrictive provisions may be applicable in the discretion of the Committee) for
individual officers who (i) are involuntarily terminated upon a Change in Control as a
direct result of the Change in Control or (ii) terminate their own employment for cause
upon a Change in Control (e.g., material increase in duties, reduction of authority,
reduction of compensation or change in location) (which determination of causation in
(i) and (ii) is to be made by the Board of Directors):

	 	(i)	 	Any stock options awarded under the Plan not previously
exercisable and vested shall become fully exercisable and vested.
	 
	 	(ii)	 	Any restrictions and deferral limitations applicable to any
restricted stock to the extent not already vested under the Plan, shall lapse
and such shares shall be deemed fully vested.
	 
	 	(iii)	 	The value of all outstanding stock options and restricted
stock, in each case to the extent vested, shall, unless otherwise determined by
the Committee in its sole discretion at or after grant but prior to any Change
in Control, be cashed out on the basis of the Change in Control Price (as
defined) as of the date such Change in Control is determined to have occurred
or such other date as the Committee may determine prior to the Change in
Control.

	 	(b)	 	As used herein, the term “Change in Control” means the happening of any of the
following:

	 	(i)	 	Any person or entity, including a “group” as defined in Section
13(d)(3) of the 1934 Act, other than the Company, a subsidiary of the Company,
or any employee benefit plan of the Company or its subsidiaries, becomes the
beneficial owner of the Company’s securities having 51 percent or more of the
combined voting power of the then outstanding securities of the Company that
may be cast for the election for directors of the Company (other than as a
result of an issuance of securities initiated by the Company in the ordinary
course of business), or

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	 	(ii)	 	As the result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions, less than
a majority of the combined voting power of the then outstanding securities of
the Company or any successor corporation or entity entitled to vote generally
in the election of directors of the Company or such other corporation or entity
after such transaction, are held in the aggregate by holders of the Company’s
securities entitled to vote generally in the election of directors of the
Company immediately prior to such transactions.

	 	(c)	 	As used herein, the term “Change in Control Price” means, as to (b)(i) above,
the average closing price per share as reported on the exchange on which the Shares are
then traded during the 60 day period immediately preceding the occurrence of the Change
in Control, or as to (b)(ii) above, the actual price paid in any transaction (or the
weighted average price paid in the case of a combination of transactions) related to
the Change in Control, in each case as determined by the Committee.

17. Non-Competition Provision.

     Unless the award agreement relating to a stock option or restricted stock specifies otherwise,
a grantee shall forfeit all unexercised, unearned and/or unpaid awards, including, but not by way
of limitation, awards earned but not yet paid, all unpaid dividends and dividend equivalents, and
all interest, if any, accrued on the foregoing, if the grantee, without the written consent of the
Company, engages directly or indirectly in any manner or capacity as principal, agent, partner,
officer, director, employee or otherwise, in any business or activity which is, in the opinion of
the Committee, (i) competitive with the business conducted by the Company or any of its
subsidiaries, or (ii) inimical to the best interests of the Company or any of its subsidiaries.

18. Adjustments.

     In the event of any change in the outstanding common stock of the Company, by reason of a
stock dividend or distribution, recapitalization, merger, consolidation, reorganization, split-up,
combination, exchange of Shares or the like, the Board of Directors, in its discretion, may adjust
proportionately the number of Shares which may be issued under the Plan, the number of Shares
subject to outstanding awards, and the option exercise price of each outstanding option, and may
make such other changes in outstanding options and restricted stock awards, as it deems equitable
in its absolute discretion to prevent dilution or enlargement of the rights of grantees, provided
that any fractional Shares resulting from such adjustments shall be eliminated. Provided, however,
that no change in the terms may provide the holder of options with a direct or indirect reduction
in the ratio of the option exercise price to the fair market value of the Shares.

19. Amendment.

     The Board of Directors may terminate, amend, modify or suspend the Plan at any time, except
that the Board shall not, without the authorization of the holders of a majority of Company’s
voting securities, modify existing awards respecting the number of shares, exercise

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price or extension of terms, issue new awards in exchange for the cancellation of outstanding
awards, increase the maximum number of Shares which may be issued under the Plan (other than
pursuant to paragraph 18 hereof), extend the last date on which awards may be granted under the
Plan, extend the date on which the Plan expires, change the class of persons eligible to receive
awards, or change the minimum option price. In no event, however, shall the provisions of
paragraph 6(g) be amended more often than once every six months, other than to comport with changes
in the Code, the Employment Retirement Income Security Act of 1974, as amended, or the rules
thereunder. No termination, modification, amendment or suspension of the Plan shall adversely
affect the rights of any grantee or Beneficiary under an award previously granted, unless the
grantee or Beneficiary shall consent; but it shall be conclusively presumed that any adjustment
pursuant to paragraph 18 hereof does not adversely affect any such right.

20. Effect on Other Plans.

     Participation in this Plan shall not affect a grantee’s eligibility to participate in any
other benefit or incentive plan of the Company. Any awards made pursuant to this Plan shall not be
used in determining the benefits provided under any other plan of the Company unless specifically
provided therein.

21. Effective Date and Duration of the Plan.

     The Plan shall become effective when adopted by the Board of Directors, provided that the Plan
is approved by the holders of a majority of the Company’s voting securities on the date of its
adoption by the Board or before the first anniversary of that date. Unless it is sooner terminated
in accordance with paragraph 19 hereof, the Plan shall remain in effect until all awards under the
Plan have been satisfied by the issuance of Shares or payment of cash or have expired or otherwise
terminated, but no award shall be granted more than ten years after the earlier of the date the
Plan is adopted by the Board of Directors or is approved by the holders of the Company’s voting
securities.

22. Unfunded Plan.

     The Plan shall be unfunded, except to the extent otherwise provided in accordance with Section
7 hereof. Neither the Company nor any affiliate shall be required to segregate any assets that may
be represented by stock options and neither the Company nor any affiliate shall be deemed to be a
trustee of any amounts to be paid under any stock option. Any liability of the Company or any
affiliate to pay any grantee or Beneficiary with respect to an option shall be based solely upon
any contractual obligations created pursuant to the provisions of the Plan; no such obligations
will be deemed to be secured by a pledge or encumbrance on any property of the Company or an
affiliate.

23. Governing Law.

     The Plan shall be construed and its provisions enforced and administered in accordance with
the laws of the State of Delaware except to the extent that such laws may be superseded by any
federal law.

ADOPTED BY THE BOARD OF DIRECTORS OF HANCOCK FABRICS, INC., ON THE 14th DAY OF JUNE
2001.

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	By:  	 	 	 
	 	 	 	 

As amended June 9, 2005, June 7, 2006 and August 4, 2008

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STOCK OPTION AGREEMENT

PURSUANT TO THE HANCOCK FABRICS, INC.

2001 STOCK INCENTIVE PLAN

     HANCOCK FABRICS, INC., a Delaware corporation (the “Company”), hereby grants to v1 (the
“Optionee”) an option (“Option”) to purchase a total of v2 shares of $.01 par value common stock of
the Company (the “Shares”), at the price determined as provided herein, and in all respects subject
to the terms, definitions and provisions of the 2001 STOCK INCENTIVE PLAN (the “Plan”) adopted by
the Company which is incorporated herein by reference.

     1. Nature of the Option. This Option is not intended to be an “incentive stock option” within
the meaning of section 422 of the Internal Revenue Code of 1986, as amended.

     2. Option Price. The option price is $v3 for each Share.

     3. Exercise of Option. This Option shall be exercisable only in accordance with the
provisions of the Plan, and only by written notice which shall:

	 	(a)	 	state the election to exercise the Option, the number of Shares in respect of
which it is being exercised, the person in whose name the stock certificate or
certificates for such Shares is to be registered, his or her address and Social
Security Number (or if more than one, the names, addresses and Social Security Numbers
of such persons);
	 
	 	(b)	 	contain such representations and agreements as to the holder’s investment
intent with respect to such Shares as may be required by the Company pursuant to the
Plan or this Agreement;
	 
	 	(c)	 	be signed by the person or persons entitled to exercise the Option, and if the
Option is being exercised by any person or persons other than the Optionee, be
accompanied by proof, satisfactory to the Company, of the right of such person or
persons to exercise the Option;
	 
	 	(d)	 	be in writing and delivered in person or by certified mail to the Secretary of
the Company; and
	 
	 	(e)	 	be accompanied by payment in full (including applicable withholding taxes, if
any, as described in Section 8 of this Agreement). Payment of the purchase price shall
be in cash, currency, by certified or bank cashier’s check and/or Shares, or a
combination thereof pursuant to the provisions of the Plan.

     Unless the sale of Shares pursuant to this Option has been registered under the Securities Act
of 1933 on Form S-8 or successor form, the certificate or certificates for Shares as to which the
Option shall be exercised shall contain the following legend:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT
WITH A

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VIEW TO THE DISTRIBUTION THEREOF, AND SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED
UNLESS SUCH SALE OR TRANSFER IS REGISTERED UNDER SUCH ACT OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE ACT, AND UNLESS SUCH SALE OR TRANSFER IS AUTHORIZED UNDER APPLICABLE STATE LAW.”

     4. Extent of Exercise. This Option shall be exercisable at any time in such amounts and at
such times as are set forth below:

	 	(a)	 	Exercisable to the extent of 25% of the Shares covered hereby on or after the
first anniversary of the date of grant set forth below (“Date of Grant”); further
exercisable to the extent of 1/36th of the remaining Shares covered hereby on or after
the last day of the thirteenth month from the Date of Grant, and on or after the last
day each additional month thereafter.
	 
	 	(b)	 	Notwithstanding paragraph 4(a) hereof, the entire unexercised portion of this
Option shall be exercisable on or after the date of Optionee’s Retirement (as defined
in the Plan), death or Disability (as defined in the Plan).
	 
	 	(c)	 	Notwithstanding paragraphs 4(a) and 4(b) hereof, no portion of this Option
shall be exercisable any earlier than the date the Plan is approved by the stockholders
of the Company.

     5. Restrictions on Exercise. This Option may not be exercised if the issuance of such Shares
upon such exercise would constitute a violation of any applicable federal or state securities laws
or other law or regulation. As a condition to the exercise of this Option, the Company may
require the Optionee to make any representation and warranty to the Company as may be required by
any applicable law or regulation or may otherwise be appropriate.

     6. Nontransferability of Option.

	 	(a)	 	Except as provided in paragraph 6(b), this Option may not be sold, assigned,
transferred, exchanged, pledged, hypothecated, or otherwise encumbered, other than by
will or by the laws of descent and distribution. Except as provided in paragraph 6(b),
during the lifetime of the Optionee this Option is exercisable only by the Optionee.
The terms of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
	 
	 	(b)	 	The Optionee may transfer this Option, with the permission of the Committee in
its sole discretion, to a member of the Optionee’s Immediate Family by satisfying all
of the following terms and conditions:

	 	(1)	 	the Optionee and the transferee execute and deliver to the
Company an assignment in form and substance satisfactory to the Company and its
counsel;

13

 

	 	(2)	 	the transferee agrees to be subject to all of the terms and
conditions of this Agreement and the Plan; and
	 
	 	(3)	 	The transferee shall have no right to further assign or
transfer this Option.

     7. Term of Option. This Option may not be exercised more than seven (7) years from the date
of grant of this Option and may be exercised during such term only in accordance with the Plan and
the terms of this Agreement.

     8. Withholding. Prior to the issuance of Shares under this Option, the Optionee shall remit
to the Company an amount sufficient to satisfy the minimum statutory federal, state or local
withholding tax requirements. The Optionee may satisfy the withholding requirement in whole or in
part by electing to have the Company withhold Shares having a value equal to the amount required to
be withheld. The value of the Shares to be withheld shall be the fair market value, as determined
by the Committee, of the stock on the date that the amount of tax to be withheld is determined (the
“Tax Date”). Such election must be made prior to the Tax Date, must comply with all applicable
securities law and other legal requirements, as interpreted by the Committee, and may not be made
unless approved in advance by the Committee, in its discretion. The Company reserves the right to
make whatever further arrangements it deems appropriate for the withholding of any taxes in
connection with any transaction contemplated by this Agreement or the Plan.

     9. Merger. This Agreement supersedes any other agreement, written or oral, between the
parties with respect to the subject matter hereof.

     10. Optionee Acknowledgment. Optionee acknowledges receipt of a copy of the Plan, which is
annexed hereto, and represents that he or she is familiar with the terms and provisions thereof,
and hereby accepts this Option subject to all the terms and provisions thereof. Optionee hereby
agrees to accept as binding, conclusive and final decisions or interpretations of the Committee
upon any questions arising under the Plan.

DATE OF GRANT:       
        
                  
        

	 	 	 	 	 
	 	HANCOCK FABRICS, INC.
 	 
	 	By:  	 	 
	 	 	Its: 	 	 
	 	 	 
	 	Agreed to and accepted this ___ day
of        
             , 200__.  	 
	 	 	 
	 	 	 
	 	v1 	 
	 

14

 

	 	 	 	 	 

RESTRICTED STOCK AGREEMENT

PURSUANT TO THE HANCOCK FABRICS, INC.

2001 STOCK INCENTIVE PLAN

(Director)

     HANCOCK FABRICS, INC., a Delaware corporation (the “Company”), hereby grants to
                                         (the “Participant”), a member of the Board of Directors of the Company, a
restricted stock award (“Award”) for a total of
         
           
shares of $.01 par value common stock
of the Company (the “Shares”), and in all respects subject to the terms, definitions and provisions
of the 2001 STOCK INCENTIVE PLAN (the “Plan”) adopted by the Company which is incorporated herein
by reference.

Nature of the Award. The Company wishes to provide an incentive for the Participant to
contribute to the growth of the Company’s business. In consideration of the foregoing, the
parties hereto agree as follows:

     1. The Company hereby awards to Participant, subject to the terms, conditions and restrictions
hereof and of the Plan (“Restrictions”), the above stated number of shares of the Company’s common
stock, $.01 par value (“Award”).

     2. Participant shall have no right to transfer any common stock covered by the Award except in
accordance with the provisions hereof and of the Plan.

     3. A certificate or certificates representing the common stock awarded pursuant to the Award
and subject to the Restrictions shall be registered in Participant’s name and shall bear such
legend as the Company deems appropriate. The Award is conditioned upon the Company’s receipt from
Participant of a stock power, endorsed in blank, relating to such stock.

     4. In the event that the Participant’s status as a Director of the Company is terminated for
any reason, any common stock subject to the Restrictions shall automatically be forfeited. No
rights or privileges of a shareholder or otherwise in respect of any common stock that has been
forfeited shall inure to Participant or to any other person.

     5. Provided that Participant remains a Director of the Company through each of the following
dates, the Restrictions shall lapse as to fifty percent (50%) of the Shares on the first
anniversary of the Date of Award (see below), as to twenty-five percent (25%) of the Shares on the
second anniversary of the Date of Award, and as to twenty-five percent (25%) of the Shares on the
third anniversary of the Date of Award; provided that nothing herein shall be deemed to affect the
provisions of the Plan respecting lapse in the event of the Retirement, Death or Disability of
Participant; and provided further that the Restrictions shall lapse as to all such stock upon the
occurrence of a change of control to the fullest extent provided in the Plan.

     6. As promptly as is reasonable following the time that the Restrictions shall have lapsed as
to any common stock, the Company shall deliver to Participant (or to Participant’s legal
representative or the person to whom Participant’s common stock has been transferred by

15

 

will or the laws of descent and distribution) the certificate or certificates (or evidence of
transfer agent book entry) representing such stock.

     7. Participant shall have the right to receive dividends on and vote the common stock pursuant
to the Award. No other rights or privileges of a shareholder of the Company in respect of any of
such stock shall inure to Participant or to any other person unless and until the certificate (or
evidence of transfer agent book entry) representing the stock has been delivered as provided in
Paragraph 6 hereof.

     8. The Restrictions shall not lapse, and the related certificate or certificates shall not be
issued or delivered, as to any common stock awarded pursuant to the Award: (a) if lapse, issuance
or delivery would constitute a violation of any provision of, or any regulation or order entered
pursuant to, any law purporting to regulate wages, salaries or compensation; or

     (b) if any requisite approval, permit or consent of any stock exchange upon which the securities of
the Company may then be listed, or of the Securities and Exchange Commission or other governmental
authority having jurisdiction over the issuance of such stock, shall not have been secured.

     9. Participant shall execute and furnish such documents as the Company in its discretion may
deem necessary to assure compliance with applicable rules and regulations of any stock exchange or
governmental authority.

     10. This Agreement shall be binding upon and inure to the benefit of the parties hereto and
the successors and assigns of the Company and any subsidiary, but except as otherwise provided in
the Plan, the common stock subject to the Restrictions shall not be transferred, assigned, pledged
or hypothecated in any way, whether by the operation of law or otherwise. Upon any attempt to do
anything prohibited by this Paragraph, as to any common stock then subject to the Restrictions the
Award shall immediately become null and void and such stock shall be forfeited.

     11. Nothing contained herein or in the Plan shall affect any rights to terminate Participant’s
status as a Director of the Company.

16

 

     12. Participant agrees to pay to the Company on demand the amount of any taxes that the
Company may be required to withhold or pay with respect to the common stock subject to the Award
and authorizes the Company, in lieu of such payment, to withhold such amount from sums otherwise
payable to Participant. The Company shall not be required to issue any stock or deliver any
certificate (or evidence of transfer agent book entry) therefore unless and until Participant’s
obligations under this Paragraph shall have been satisfied.

Date of Award:       
                  
                

	 	 	 	 	 
	 	HANCOCK FABRICS, INC.

 	 
	 	By  	 	 
	 	 	Chief Executive Officer 	 
	 
	 	Agreed to and accepted this ___ day of        
             ,
2008	 
	 	 	 
	 	 	 

17EX-10.5

Exhibit 10.5

FIRST PLACE BANK

CHANGE IN CONTROL SEVERANCE AGREEMENT

     This Agreement is effective                     , and is entered into between First Place Bank (the
“Bank”), a federally chartered savings association, 185 East Market Street, Warren, Ohio 44481, and
                                                             (“Executive”).

     First Place Financial Corp. (the “Holding Company”) is the parent holding company of the Bank.
By signing this Agreement, the Holding Company agrees to guarantee the obligations of the Bank.

     The Bank wishes to provide Executive with certain benefits in event of termination of
Executive’s employment under conditions described below following a change in control of the Bank
or the Holding Company.

     The parties agree as follows:

1. Term of Agreement. The initial Term of this Agreement shall continue from the above
effective date through June 30, 2009. The Term may be extended by the Board of Directors in
one-year increments as set forth below.

2. Extension of Term. Commencing on July 1, 2008, and continuing annually
thereafter, the Board of Directors of the Bank (the “Board”) will review this Agreement, the needs
of the Bank, and the Executive’s performance. The Board may extend the Term of this Agreement for
an additional year or may elect for any reason not to extend the Term. The Board will include the
extension or non-extension in the minutes of the Board’s meeting and will notify the Executive of
any non-extension within a reasonable time following the board meeting.

3. Change in Control followed by Termination of Employment. Upon occurrence of a Change in
Control of the Bank or the Holding Company followed by termination of Executive’s employment within
two years following the effective date of the Change in Control, the provisions of Section 5 below
shall apply unless the termination is because of death, disability, retirement, or Termination for
Cause. Executive may elect to terminate the employment in the event that the Executive suffers any
of the following within the two (2) years following the effective date of the Change in Control:
(i) any material demotion or reassignment of duties and responsibilities to duties and
responsibilities not consistent with Executive’s experience, expertise, and position with the Bank
prior to the Change in Control; (ii) any material reduction or removal of title, office,
responsibility, or authority; (iii) any material reduction in annual compensation or benefits; (iv)
relocation of Executive’s principal office if the relocation increases Executive’s one-way travel
distance to the office by more than 50 miles. Such election to terminate shall be deemed to be an
involuntary termination provided that (i) Executive provides written notice to the Bank of the
existence of one of the conditions described above within ninety (90) days of the initial existence
of the condition and the Bank shall be provided with a period of thirty (30) days during which it
may remedy the condition and not pay the payments or continue the insurance coverage as set forth
in Section 5 below, and (ii) the date of termination is within two (2) years of the initial
existence of the condition.

- Page 1 -

 

4. Definitions.

     (A) Change in Control. A “Change in Control” of the Bank or Holding Company shall
mean an event of a nature that: (i) would be required to be reported in response to Item 1 of the
Current Report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”); or (ii) results in a Change in
Control of the Bank or the Holding Company within the meaning of the Home Owners’ Loan Act of 1933,
as amended, the Federal Deposit Insurance Act, or rules and regulations of the Office of Thrift
Supervision (“OTS”) (or its predecessor agency), as in effect on the date of this Agreement
(provided, that in applying the definition of change in control as set forth under the Rules and
Regulations of the OTS, the Board shall substitute its judgment for that of the OTS); or (iii)
without limitation such a Change in Control shall be deemed to have occurred at such time as (a)
any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of voting securities of the Bank or the Holding Company representing 50% or more of the Bank’s or
the Holding Company’s outstanding voting securities or right to acquire such securities except for
any voting securities of the Bank purchased by the Holding Company and any voting securities
purchased by any employee benefit plan of the Bank or the Holding Company, or (b) individuals who
constitute the Board on the date hereof (the “Incumbent Board”) cease for any reason to constitute
at least a majority thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters of the Directors comprising
the Incumbent Board, or whose nomination for election by the Holding Company’s stockholders was
approved by a Nominating Committee solely composed of members which are Incumbent Board members,
shall be, for purposes of this clause (b), considered as though he were a member of the Incumbent
Board, or (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Holding Company or similar transaction occurs or is effectuated in which
the Bank or Holding Company is not the resulting entity. Notwithstanding the foregoing, “Change in
Control” shall not include a transaction in which First Place Bank merges with and into another
savings association or bank that is also a wholly owned subsidiary of First Place Financial Corp.
and the following conditions are met: (i) the name of the surviving entity is First Place Bank or
is changed to First Place Bank upon the closing of the merger; (ii) the headquarters of the
surviving entity is located in, or relocated to, Warren, Ohio; (iii) the individuals constituting
the board of directors of First Place Bank before the transaction are elected to be the members of
the board of directors of the surviving entity; (iv) Executive is elected to a senior officer
position with the surviving entity, and such position and the corresponding title are the same as
or equivalent to the position and title held by the Executive immediately prior to the transaction;
and (v) the surviving entity continues to be bound by all of the terms and conditions of this
Change in Control Severance Agreement or the surviving entity and Executive enter into a new Change
in Control Severance Agreement with substantially the same terms and conditions as this Agreement.

     (B) Termination for Cause. “Termination for Cause” shall mean termination because of
Executive’s personal dishonesty, incompetence, willful misconduct, conduct damaging the reputation
of the Bank or the Holding Company, any breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any final cease and desist
order, willful violation of any law, rule, or regulation (other than traffic violations or similar
offenses), or material breach of any provision of this Agreement. Notwithstanding the foregoing,
Executive shall not be deemed to have been Terminated for

- Page 2 -

 

Cause unless and until there shall have been delivered to Executive a Notice of Termination,
which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the members of the Board at a meeting of the Board called and held for that purpose,
finding that in the good faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail. Upon determination by the
Board, the Bank’s obligation to pay Executive through the Date of Termination may be subject to
offset depending on the facts and circumstances constituting Cause. Executive shall not have the
right to receive compensation or other benefits for any period after the Date of Termination for
Cause. During the period beginning on the date of the Notice of Termination for Cause pursuant to
Section 6 hereof through the Date of Termination for Cause, stock options and related limited
rights granted to Executive under any stock option plan shall not be exercisable nor shall any
unvested awards granted to Executive under any stock benefit plan of the Bank, the Holding Company,
or any subsidiary or affiliate thereof, vest. At the Date of Termination for Cause, such stock
options and related limited rights and such unvested awards shall become null and void and shall
not be exercisable by or delivered to Executive at any time subsequent to such Date of Termination
for Cause.

5. Termination Benefits. Upon the occurrence of a Change in Control, followed by
termination of the Executive’s employment within two years following the Change in Control due to
(i) Termination by Executive for reasons described in the second sentence of Section 3 above, or
(ii) Executive’s dismissal by the Bank, the Bank shall be obligated to Executive as follows:

     (A) Sum Payable. The Bank shall pay Executive, or in the event of his subsequent
death, his beneficiary or beneficiaries, or his estate, as the case may be, a lump sum equal to two
(2) times Executive’s average annual compensation for the five most recent taxable years that
Executive has been employed by the Bank or such lesser number of years in the event that Executive
shall have been employed by the Bank for less than five years. Such average annual compensation
shall include base salary, commissions, bonuses, any other cash compensation, contributions or
accruals on behalf of Executive to any pension and/or profit sharing plan, contributions to any
incentive plan, director or committee fees, and fringe benefits paid or to be paid to the Executive
in any such year.

     (B) Time of Payment. Such payment shall be made (i) not later than the second
payroll pay date following Executive’s Date of Termination, or (ii) on the first payroll pay date
following the date that is six (6) months after the Date of Termination if, on the date of
termination, Executive is a Specified Employee as defined in Internal Revenue Code § 409A, and such
code section and the associated regulations so require.

     (C) Regulatory Capital Limitation. In the event that the Bank is not in compliance
with its minimum capital requirements, or if payment pursuant to Section (A) above would cause the
Bank’s capital to be reduced below its minimum regulatory capital requirements, payment shall be
deferred until the earliest date at which the Bank or its successor reasonably anticipates that
payment will not cause a capital compliance violation.

     (D) Life and Medical Insurance Coverage. For a period of twenty-four months from the
Date of Termination, the Bank shall cause to be continued for Executive life and medical insurance
coverage substantially equivalent to the coverage maintained by the Bank for Executive prior to his
termination, except to the extent such coverage may be changed in its application to all Bank
employees on a nondiscriminatory basis, and provided that Executive

- Page 3 -

 

shall continue to contribute to the cost of the coverage, i.e., the cost of premiums, copays,
and deductibles, at the same rate as the Bank’s then current employees.

     (E) Section 280G. Notwithstanding the preceding paragraphs of this Section 5, in no
event shall the aggregate payments or benefits to be made or afforded to Executive under said
paragraphs (the “Termination Benefits”) constitute an “excess parachute payment” under Section 280G
of the Code or any successor thereto, and in order to avoid such a result, Termination Benefits
will be reduced, if necessary, to an amount (the “Non-Triggering Amount”), the value of which is
one dollar ($1.00) less than an amount equal to three (3) times Executive’s “base amount,” as
determined in accordance with said Section 280G. The allocation of the reduction required hereby
among the Termination Benefits provided by the preceding paragraphs of this Section 5 shall be
determined by Executive.

6. Notice of Termination.

     (A) Form. Any termination by the Bank or by Executive in connection with a Change in
Control shall be communicated by a written “Notice of Termination” which shall include, if
applicable, the specific termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated.

     (B) Date of Termination. “Date of Termination” shall mean the date specified in the
Notice of Termination (which, in the instance of Termination for Cause, shall not be less than
thirty (30) days from the date such Notice of Termination is given); provided, however, that if a
dispute regarding the Executive’s termination exists, the “Date of Termination” shall be determined
in accordance with Section 6(C) of this Agreement.

     (C) Dispute. If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a dispute exists
concerning the termination, except upon the occurrence of a Change in Control and voluntary
termination by the Executive in which case the Date of Termination shall be the date specified in
the Notice, the Date of Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected) and provided further that the Date of
Termination shall be extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute in connection with a Change in Control, in the
event that the Executive is terminated for reasons other than Termination for Cause, the Bank shall
continue to pay Executive the payments and benefits due under this Agreement in effect when the
notice giving rise to the dispute was given (including, but not limited to, Executive’s current
annual salary) and continue Executive as a participant in all compensation, benefit, and insurance
plans in which Executive was participating when the notice of dispute was given, until the earlier
of: (1) the resolution of the dispute in accordance with this Agreement; or (2) the expiration of
the remaining Term of this Agreement. Amounts paid under this Section 6(C) shall be credited
against amounts due under this Agreement. In the event of a binding arbitration award or final
court judgment, order, or decree finding that Executive was not entitled to such payments,
Executive shall refund to the Bank the amounts paid under this Section 6 (C).

- Page 4 -

 

7. Source of Payments. It is intended by the parties hereto that all payments provided in
this Agreement shall be paid in cash or check from the general funds of the Bank. The Holding
Company guarantees such payment and provision of all amounts and benefits due hereunder to
Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by
the Bank, such amounts and benefits shall be paid or provided by the Holding Company.

8. Effect on Prior Agreements and Existing Benefit Plans. This Agreement supersedes and
cancels all prior change in control severance agreements between the Bank and Executive. No
provision of this Agreement shall be interpreted to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement. Nothing in this
Agreement shall confer upon Executive the right to continue in the employ of Bank or shall impose
on the Bank any obligation to employ or retain Executive in its employ for any period.

9. No Attachment; No Assignment; Successors.

     (A) Except as required by law, no right to receive payments or benefits under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge,
pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by
operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be
null, void, and of no effect. Executive may not assign his rights or obligations under this
Agreement to any other person or entity.

     (B) This Agreement shall be binding upon, and inure to the benefit of, Executive, the Bank,
and their respective successors and permitted assigns.

10. Modification and Waiver.

     (A) This Agreement may not be modified or amended except by an instrument in writing signed by
all parties to this Agreement.

     (B) No term or condition of this Agreement shall be deemed to have been waived, nor shall
there be any estoppel against the enforcement of any provision of this Agreement, except by written
instrument of the party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate
only as to the specific term or condition waived and shall not constitute a waiver of such term or
condition for the future or as to any act other than that specifically waived.

11. Effect of Action Under Holding Company Agreement. Notwithstanding any provision
herein to the contrary, to the extent that payments and benefits are paid to or received by
Executive under any agreement between Executive and the Holding Company, the amount of such
payments and benefits paid by the Holding Company will be subtracted from any amount due
simultaneously to Executive under similar provisions of this Agreement.

12. Required Regulatory Provisions.

     (A) The Board of Directors may terminate Executive’s employment at any time, but any
termination by the Board of Directors, other than Termination for Cause, shall not prejudice
Executive’s right to compensation or other benefits under this Agreement. Executive shall not

- Page 5 -

 

have the right to receive compensation or other benefits for any period after Termination for
Cause.

     (B) If Executive is suspended from office and/or temporarily prohibited from participating in
the conduct of the Bank’s affairs by a notice served under Section 8 (e)(3) or 8 (g)(1) of the
Federal Deposit Insurance Act (12 U.S.C. §1818(e)(3) or (g)(1)), the Bank’s obligations under this
contract shall be suspended as of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or
part of the compensation withheld while the contract obligations were suspended and (ii) reinstate
(in whole or in part) any of the obligations which were suspended.

     (C) If Executive is removed and/or permanently prohibited from participating in the conduct of
the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. §1818(e)(4) or (g)(1)), all obligations of the Bank under this contract
shall terminate as of the effective date of the order, but vested rights of the contracting parties
shall not be affected.

     (D) If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance
Act, all obligations of the Bank under this contract shall terminate as of the date of default, but
this paragraph shall not affect any vested rights of the contracting parties.

     (E) All obligations under this contract shall be terminated, except to the extent determined
that continuation of the contract is necessary for the continued operation of the Bank: (i) by the
Director of the Office of Thrift Supervision (or his or her designee) at the time the Federal
Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the
Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act; or (ii)
by the Director of the Office of Thrift Supervision (or his or her designee) at the time the
Director (or his or her designee) approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall not be affected by
such action.

     (F) Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to
and conditioned upon compliance with 12 U.S.C. §1828(k) and any rules and regulations promulgated
thereunder.

13. Reinstatement of Benefits Under Section 12(B). In the event Executive is suspended
and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice
described in Section 12(B) hereof (the “Notice”) during the term of this Agreement and a Change in
Control, as defined herein, occurs, the Bank will assume its obligation to pay and Executive will
be entitled to receive all of the termination benefits provided for under Section 5 of this
Agreement upon the Bank’s receipt of a dismissal of charges in the Notice.

14. Severability. If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision of this Agreement
or any part of such provision not held so invalid, and each such other provision and part thereof
shall to the full extent consistent with law continue in full force and effect.

- Page 6 -

 

15. Headings for Reference Only. The headings of sections and paragraphs herein are
included solely for convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement. In addition, references to the masculine shall apply
equally to the feminine.

16. Governing Law. The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Ohio, but only to the extent not preempted
by Federal law.

17. Arbitration. Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel of three
arbitrators sitting in a location selected by Executive within fifty (50) miles from the location
of the Bank’s main office, in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of
his right to be paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.

18. Payment of Costs and Legal Fees. All reasonable costs and legal fees paid or incurred
by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall
be paid or reimbursed by the Bank (which payments are guaranteed by the Holding Company pursuant to
Section 7 hereof) if Executive is determined to be the prevailing party in a legal judgment,
arbitration award, or settlement agreement.

19. Indemnification.

     (A) The Bank shall provide Executive (including his heirs, executors and administrators) with
coverage under a standard directors’ and officers’ liability insurance policy at its expense and
shall indemnify Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Federal law against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may be involved by
reason of his having been a director or officer of the Bank (whether or not he continues to be a
director or officer at the time of incurring such expenses or liabilities), such expenses and
liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the
cost of reasonable settlements.

     (B) Any payments made to Executive pursuant to this Section are subject to and conditioned
upon compliance with 12 C.F.R. §545.121 and any rules or regulations promulgated thereunder.

20. Successor to the Bank. The Bank shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all
the business or assets of the Bank, expressly and unconditionally to assume and agree to perform
the Bank’s obligations under this Agreement, in the same manner and to the same extent that the
Bank would be required to perform if no such succession or assignment had taken place.

- Page 7 -

 

	 	 	 	 	 	 	 	 	 	 	 
	FIRST PLACE BANK	 	 	 	EXECUTIVE	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Steven R. Lewis,	 	 	 	 	 	 	 	 
	Chief Executive Officer	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	FIRST PLACE FINANCIAL CORP.

     (Guarantor)	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Steven R. Lewis,	 	 	 	 	 	 	 	 
	President and Chief Executive Officer	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

- Page 8 -

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