Document:

Ambac Financial Group, Inc. 1997 Non-Employee Directors Equity Plan

 Exhibit 10.08 
 AMBAC FINANCIAL GROUP, INC. 
 1997 NON-EMPLOYEE DIRECTORS EQUITY PLAN 
 (as amended as of December 31, 2008) 
 1.
Purpose 
 The purpose of the Ambac Financial Group, Inc. 1997 Non-Employee Directors Equity Plan (the “Plan”) is
to promote the long-term growth and financial success of the Company by attracting, motivating and retaining non-employee directors of outstanding ability and assisting the Company in promoting a greater identity of interest between the
Company’s non-employee directors and its stockholders. 
 The Plan replaces the AMBAC Inc. 1991 Non-Employee Directors Stock Plan (the
“Predecessor Plan”). From and after the effective date of the Plan as provided in Section 11 below, no further awards shall be made under the Predecessor Plan. 
 2. Definitions 
 For purposes of the Plan, the
following terms shall be defined as follows: 
 “Annual Award” means an Award of Director Options (made in respect of
Annual Meetings up to and including the 2003 Annual Meeting) or Director Annual Stock Units (made in respect of Annual Meetings beginning with the 2004 Annual Meeting), in each case as provided in Section 7 below. 
 “Annual Meeting” means an annual meeting of the Company’s stockholders. 
 “Award” means any or all (as the context requires) of Director Annual Stock Units, Director Five-Year Stock Units and Director
Options. 
 “Board” means the Board of Directors of the Company. 
 “Change in Control” means: 
 (i) the acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Common Stock then outstanding, but shall not include any such acquisition by: 

(A) the Company; 
 (B) any Subsidiary of the Company; 
 (C) any employee benefit plan of the Company or of any Subsidiary of the
Company; 
 (D) any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any
such plan; 
 (E) any Person who as of January 31, 1996 was the beneficial owner of 15% or more of the shares of Common
Stock outstanding on such date unless and until such Person, together with all affiliates and associates of such Person, becomes the beneficial owner of 25% or more of the shares of Common Stock then outstanding whereupon a Change in Control shall
be deemed to have occurred; or 

 (F) any Person who becomes the beneficial owner of 20% or more, or, with respect to a
Person described in clause (E) above, 25% or more, of the shares of Common Stock then outstanding as a result of a reduction in the number of shares of Common Stock outstanding due to the repurchase of shares of Common Stock by the Company
unless and until such Person, after becoming aware that such Person has become the beneficial owner of 20% or more, or 25% or more, as the case may be, of the then outstanding shares of Common Stock, acquires beneficial ownership of additional
shares of Common Stock representing 1% or more of the shares of Common Stock then outstanding, whereupon a Change in Control shall be deemed to have occurred or 
 (ii) individuals who, as of the date this Plan is approved by the Board, constitute the Board, and subsequently elected members of the Board whose election is approved or recommended by at least a majority of such
current members or their successors whose election was so approved or recommended (other than any subsequently elected members whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board), cease for any reason to constitute at least a majority of such Board; or 
 (iii) approval by the stockholders of the Company of (A) a merger or consolidation of the Company with any other corporation, (B) the issuance
of voting securities of the Company in connection with a merger or consolidation of the Company (or any Subsidiary) pursuant to applicable stock exchange requirements, or (C) sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets of another corporation (each, a “Business Combination”), unless, in each case, immediately following such Business Combination, all or substantially all of the individuals
and entities who were the beneficial owners of the Common Stock outstanding immediately prior to such Business Combination beneficially own, directly or indirectly, more than 70% of the then outstanding shares of common stock and 70% of the combined
voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such
Business Combination, of the Common Stock. 
 “Common Stock” means the Common Stock of the Company, par value $.01
per share, or such other class or kind of shares or other securities as may be applicable under Section 13 below. 
 “Company” means Ambac Financial Group, Inc., a Delaware corporation, or any successor to substantially all its business. 
 “Director Account” means the bookkeeping record established for each Non-Employee Director. A Director Account is established only for purposes of measuring the value of the Company’s
obligation to a Non-Employee Director in respect of Director Stock Units and earnings thereon and not to segregate assets or to identify assets that may be used to settle Director Stock Units. 
 “Director Annual Phantom Stock Unit” means a phantom stock unit granted to a Non-Employee Director pursuant to Section 7
hereof. 
 “Director Annual Restricted Stock Unit” means a restricted stock unit granted to a Non-Employee Director
pursuant to Section 7 hereof. 
 “Director Annual Stock Unit” means either a Director Annual
Phantom Stock Unit or a Director Annual Restricted Stock Unit. 
  

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 “Director Five-Year Phantom Stock Unit” means a phantom stock unit granted to a
Non-Employee Director pursuant to Section 6 hereof. 
 “Director Five-Year Restricted Stock Unit” means a
restricted stock unit granted to a Non-Employee Director pursuant to Section 6 hereof. 
 “Director Five-Year Stock
Unit” means either a Director Five-Year Phantom Stock Unit or a Director Five-Year Restricted Stock Unit. 
 “Director Option” means a right to purchase shares of Common Stock granted to a Non-Employee Director pursuant to Section 7 hereof. 
 “Director Phantom Stock Unit” means either a Director Five-Year Phantom Stock Unit or a Director Annual Phantom Stock Unit. A Director Phantom Stock Unit shall represent the right to receive a
cash payment equal to the Fair Market Value of one share of Common Stock upon satisfaction of the conditions to vesting and settlement specified in the Plan. Director Phantom Stock Units shall be settled exclusively in cash. 
 “Director Restricted Stock Unit” means either a Director Five-Year Restricted Stock Unit or a Director Annual Restricted Stock
Unit. A Director Restricted Stock Unit shall represent the right to receive one share of Common Stock upon satisfaction of the conditions to vesting and settlement specified in the Plan. Director Restricted Stock Units shall be settled exclusively
in Common Stock. 
 “Director Stock Unit” means either a Director Phantom Stock Unit or a Director Restricted Stock
Unit. 
 “Effective Date” means the effective date of the Plan provided for in Section 11 below. 
 “Fair Market Value” means, with respect to a share of Common Stock, the fair market value thereof as of the relevant date of
determination, as determined in accordance with a valuation methodology approved by the Committee. In the absence of any alternative valuation methodology approved by the Committee, the Fair Market Value of a share of Common Stock shall equal the
closing price of a share of Common Stock as reported on the composite tape for securities listed on the New York Stock Exchange, or such other national securities exchange as may be designated by the Committee, or in the event that the Common Stock
is not listed for trading on a national securities exchange but is quoted on an automated quotation system, on such automated quotation system, in any such case on the valuation date (or if there were no sales on the valuation date, the closing
price as reported on such composite tape or automated quotation system for the most recent day during which a sale occurred). 
 “Non-Employee Director” means a member of the Board who is not an employee of the Company or any of its subsidiaries. 
 “Permanent Disability” means a physical or mental impairment rendering a Non-Employee Director substantially unable to function as a member of the Board for any period of six consecutive
months. Any dispute as to whether a Non-Employee Director is Permanently Disabled shall be resolved by a physician mutually acceptable to the Non-Employee Director and the Company, whose decision shall be final and binding upon the Non-Employee
Director and the Company. 
 “Person” means any individual, firm, corporation, partnership or other entity.

 “Predecessor Plan” has the meaning set forth in Section 1 above. 
 “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance
thereunder. 
  

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 “Section 409A Change in Control” means a Change in Control that also constitutes
a “change in ownership” or “change in the effective control” (as such terms are defined for purposes of Section 409A) of the Company. 
 “Subsidiary” means (i) a corporation or other entity with respect to which the Company, directly or indirectly, has the power, whether through the ownership of voting securities, by
contract or otherwise, to elect at least a majority of the members of such corporation’s board of directors or analogous governing body, or (ii) any other corporation or other entity in which the Company, directly or indirectly, has an
equity or similar interest and which the Committee designates as a Subsidiary for purposes of the Plan. 
 3. Administration 
 (a) Administration by the Board. The Plan shall be administered by the Board, which may adopt rules and regulations it considers necessary
or appropriate to carry out the Plan’s purposes. The Board’s interpretation and construction of any Plan provision shall be final and conclusive. The Board may, but need not, from time to time delegate some or all of its authority under
the Plan to a committee consisting of one or more members of the Board, any such delegation to be subject to the restrictions and limits that the Board specifies at the time of such delegation or thereafter. References in the Plan to the
“Board” shall, to the extent consistent with the terms and limitations of any such delegation, be deemed to include a reference to any such committee to which the Board’s authority hereunder has been delegated. 
 (b) Award Certificate. The terms and conditions of each grant of Director Stock Units and Director Options under the Plan shall be embodied
in an award agreement or award certificate which shall incorporate the Plan by reference, shall indicate the date on which the Director Stock Units or Director Options were granted and the number of Director Stock Units or Director Options granted
on such date. Beginning with Awards of Director Stock Units made in 2009, the award agreement or award certificate shall specify whether an award of Director Stock Units shall consist of Director Phantom Stock Units, Director Restricted Stock Units
or a combination thereof. 
 4. Shares Available 
 Subject to the provisions of Section 13 below, the maximum number of shares of Common Stock which may be issued under the Plan (the “Section 4 Limit”) shall be 560,000 shares plus the number of shares of Common
Stock that remain available for issuance under the Predecessor Plan as of the date the Plan is approved by the stockholders of the Company (increased by any shares of Common Stock subject to any Award (or portion thereof) outstanding under the
Predecessor Plan on such date which lapses, expires or is otherwise terminated without the issuance of such shares or is settled by the delivery of consideration other than shares). Subject to Section 13 below, of the shares of Common Stock
available for issuance under the Plan, no more than 425,000 shares may be issued upon settlement of Director Stock Units. For purposes of determining the number of shares of Common Stock that remain available for issuance, there shall be added back
to the Section 4 Limit and again be available under the Plan any shares of Common Stock tendered to pay the exercise price of a Director Option. Either authorized and unissued shares of Common Stock or treasury shares may be delivered pursuant
to the Plan. For the avoidance of doubt, it is noted that because they do not result in the issuance of shares of Common Stock, Director Phantom Stock Units are not counted against the Section 4 limit. 
 5. Eligibility 
 Director Stock Units and Director
Options shall be granted only to Non-Employee Directors. 
 6. Director Five-Year Stock Units 
 (a) Grants of Director Five-Year Stock Units. Director Five-Year Stock Units shall be awarded under the Plan as follows: 
  

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 (i) On the date of the Annual Meeting coincident with or first succeeding a Non-Employee
Director’s initial election to the Board (or re-election to the Board after a period during which the Non-Employee Director did not serve on the Board), the Non-Employee Director shall receive a grant of a number of Director Five-Year Stock
Units calculated by dividing (x) $210,000, by (y) the Fair Market Value of one share of Common Stock on the date of the relevant Annual Meeting. All Awards of Director Five-Year Stock Units made before the 2009 Annual Meeting have
consisted exclusively of Director Five-Year Restricted Stock Units. Beginning with Awards made at the 2009 Annual Meeting, the Board shall specify on or before the date of grant whether an Award of Director Five-Year Stock Units shall consist of
Director Five-Year Phantom Stock Units, Director Five-Year Restricted Stock Units or a combination thereof. 
 (ii) As of the
date of the Annual Meeting that is closest in time to the applicable vesting date of any Director Five-Year Stock Units in accordance with Section 6(b)(i) below, or the vesting date of any restricted shares under the Predecessor Plan in
accordance with Section 6(c)(i) thereof, a Non-Employee Director shall receive an additional grant of Director Five-Year Stock Units (an “Additional Grant”), provided that (A) the Annual Meeting as of which
the Additional Grant is to be made occurs during the term of the Plan as set forth in Section 11 below, and (B) the Non-Employee Director is standing for re-election at such Annual Meeting. The number of Director Five-Year Stock Units
included in such Additional Grant shall be calculated by dividing (x) $210,000, by (y) the Fair Market Value of one share of Common Stock on the date of the relevant Annual Meeting in connection with which the Additional Grant is made. All
Additional Grants made before the 2009 Annual Meeting have consisted exclusively of Director Five-Year Restricted Stock Units. Beginning with any Additional Grants made in 2009, the Board shall specify on or before the date of grant whether the
Additional Grant shall consist of Director Five-Year Phantom Stock Units, Director Five-Year Restricted Stock Units or a combination thereof. 
 (b) Vesting; Accelerated Vesting; Deferral. 
 (i) Director Five-Year Stock
Units granted in respect of a given Annual Meeting, and any additional Director Five-Year Stock Units credited to a Director Account in respect of earnings or other distributions on such Director Five-Year Stock Units as provided in
Section 6(c), shall vest on the fifth anniversary of the date of grant and shall be settled within 15 days thereafter, provided that the Non-Employee Director shall have remained a member of the Board continuously from the date of grant
until the earlier of (A) such fifth anniversary or (B) if the Non-Employee Director declines to stand for re-election to the Board at the Annual Meeting held in the fifth calendar year following the date of grant, the date of such Annual
Meeting. 
 (ii) Notwithstanding the provisions of Section 6(b)(i) above, all Director Five-Year Stock Units granted to
a Non-Employee Director shall immediately vest upon the first to occur of (A) a Non-Employee Director ceasing to be a member of the Board as a result of retirement from the Board in accordance with the retirement policy then applicable to Board
members, (B) a Non-Employee Director ceasing to be a member of the Board as a result of death or Permanent Disability or (C) subject to the following sentence, a Change in Control, and shall be settled within 15 days thereafter,
provided, however, that in the case of any Director Five-Year Stock Units or other Awards that are deemed to provide for a deferral of compensation within the meaning of Section 409A, the foregoing clause (C) shall apply only
if the Change in Control is also a Section 409A Change in Control. Notwithstanding the preceding sentence, if any Person commences a tender offer for shares of Common Stock which, if successfully completed, would result in a Change in Control,
then all Director Five-Year Restricted Stock Units granted to a Non-Employee Director shall vest and be settled immediately prior to the scheduled expiration of such tender offer, and the Company shall have instituted procedures to enable the
Non-Employee Director, if he so desires, to tender the shares issued upon settlement of such Director Five-Year Restricted Stock Units into such offer, provided, however, that in the case of any Director Five-Year Restricted Stock
Units or other Awards that are deemed to provide for a deferral of compensation within the meaning of Section 409A, such accelerated settlement shall be made only (i) if such Change in Control constitutes a Section 409A Change in
Control and (ii) to the extent (and only to the extent) that such accelerated payment is permitted by Section 409A and would not result in the Non- 

  

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Employee Director being required to recognize income for United States federal income tax purposes prior to settlement or incurring additional tax or
interest under Section 409A. 
 (c) Forfeiture of Grant. Except as provided in Section 6(b)(ii)
above, all Director Five-Year Stock Units shall be forfeited, and all rights of the Non-Employee Director to or with respect to such Director Stock Units shall terminate without any obligation on the part of the Company, upon the termination of a
Non-Employee Director’s service as a member of the Board prior to the date on which such Director Five-Year Stock Units vest in accordance with Section 6(b)(i) above. 
 7. Annual Awards 
 (a) General. As of the date of each Annual Meeting,
commencing with the 1997 Annual Meeting, each Non-Employee Director shall automatically receive an Award of Director Options or Director Annual Stock Units as provided in this Section 7. A Director Option shall entitle a Non-Employee Director
to purchase a specified number of shares of Common Stock during a specified period at an exercise price per share of Common Stock determined as provided below. All Director Options provided for herein shall have the general terms and conditions set
forth in Section 9 below. 
 (b) Grants of Director Options. As of the date of each Annual Meeting,
commencing with the 1997 Annual Meeting, each Non-Employee Director shall automatically receive Director Options to purchase 3,750 shares of Common Stock provided that the Non-Employee Director shall continue to serve as a director of the Company
after such Annual Meeting, provided, however, that beginning with the 2004 Annual Meeting, no further Awards of Director Options shall be made. The exercise price per share of Common Stock of each Director Option provided for in this
Section 7(b) shall be the Fair Market Value of one share of Common Stock on the date of the relevant Annual Meeting. 
 (c) Grants of Director Annual Stock Units. As of the date of each Annual Meeting, commencing with the 2004 Annual Meeting, each Non-Employee Director shall automatically receive a number of Director Annual Stock Units
determined by dividing (i) $100,000 by (ii) the Fair Market Value of one share of Common Stock on the date of the relevant Annual Meeting. All Awards of Director Annual Stock Units made before the 2009 Annual Meeting have consisted
exclusively of Director Annual Restricted Stock Units. Beginning with Awards made at the 2009 Annual Meeting, the Board shall specify on or before the date grant whether an Award of Director Annual Stock Units shall consist of Director Annual
Phantom Stock Units, Director Annual Restricted Stock Units or a combination thereof. 
 (d) Grants to New Directors.
A Non-Employee Director who is initially elected or appointed to the Board other than in connection with an Annual Meeting shall receive, as of the date of such initial election or appointment, (i) if such appointment is made prior to
the 2004 Annual Meeting, Director Options to purchase a number of shares determined by multiplying 3,750 by a fraction (the “Proration Fraction”), the numerator of which is the number of full months remaining until the next
Annual Meeting (starting with the month following the date of election or appointment and counting the month in which the next Annual Meeting is scheduled to occur as a full month) and the denominator of which is 12 and (ii) if such appointment
is made after the 2004 Annual Meeting, a number of Director Annual Stock Units calculated by multiplying (x) the number of Director Annual Stock Units that were awarded to each Non-Employee Director in connection with the immediately preceding
Annual Meeting, times (y) the Proration Fraction. (If the date of the next Annual Meeting has not been scheduled at the time of the Non-Employee Director’s initial election or appointment, it shall be assumed that the next Annual Meeting
will occur in the same month as the immediately preceding Annual Meeting.) The exercise price per share of Common Stock of each Director Option provided for in this Section 7(d) shall be the Fair Market Value of one share of Common Stock on the
date of the Non-Employee Director’s election or appointment to the Board. All Awards of Director Annual Stock Units made pursuant to this Section 7(d) before 2009 have consisted exclusively of Director Annual Restricted Stock Units. For
Awards of Director Annual Stock Units made pursuant to this Section 7(d) on or after January 1, 2009, the Board shall specify on or before the date grant whether such Award shall consist of Director Annual Phantom Stock Units, Director
Annual Restricted Stock Units or a combination thereof 
  

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 (e) Vesting. Annual Awards shall vest as of the first anniversary of the
date of grant, assuming that the Non-Employee Director has continued to serve as a member of the Board until the earlier of (A) such first anniversary or (B) if the Non-Employee Director declines to stand for reelection to the Board at the
Annual Meeting held in the calendar year following the date of grant, the date of such Annual Meeting. Notwithstanding the preceding sentence, all Annual Awards shall be considered fully vested upon the earlier to occur of (X) termination of
the Non-Employee Director’s service on the Board by reason of death or Permanent Disability or (Y) subject to the following sentence, a Change in Control, and, in the case of Director Annual Stock Units, shall be settled within 15 days
thereafter, provided, however, that in the case of any Director Annual Stock Units that are deemed to provide for a deferral of compensation within the meaning of Section 409A, the foregoing clause (Y) shall apply only if the
Change in Control is also a Section 409A Change in Control. Notwithstanding the preceding sentence, if any Person commences a tender offer for shares of Common Stock which, if successfully completed, would result in a Change in Control, then
all Annual Awards granted to a Non-Employee Director shall vest and, in the case of Director Annual Restricted Stock Units, be settled immediately prior to the scheduled expiration of such tender offer, and the Company shall have instituted
procedures to enable the Non-Employee Director, if he so desires, to tender the shares issued upon the exercise of Director Option or settlement of Director Annual Restricted Stock Units into such offer; provided, however, that in the
case of any Director Annual Restricted Stock Units that are deemed to provide for a deferral of compensation within the meaning of Section 409A, such accelerated settlement shall be made only (i) if such Change in Control constitutes a
Section 409A Change in Control and (ii) to the extent (and only to the extent) that such accelerated payment is permitted by Section 409A and would not result in the Non-Employee Director being required to recognize income for United
States federal income tax purposes prior to settlement or incurring additional tax or interest under Section 409A. 
 8. General Terms and Conditions
of Director Stock Units 
 (a) Accounts. As of any date as of which a Non-Employee Director is granted
Director Stock Units, the Director Account of such Non-Employee Director will be credited with the number of Director Stock Units so granted. In the event that the Company pays any cash or other dividend or makes any other distribution in respect of
the Common Stock, each Director Account will be credited with an additional number of Director Stock Units (including fractions thereof) determined by dividing (A) the amount of cash, or the value (as determined by the Board) of any securities
or other property, paid or distributed in respect of one outstanding share of Common Stock by (B) the Fair Market Value of a share of Common Stock for the date of such payment or distribution, and multiplying the result of such division by
(C) the number of Director Stock Units that were credited to the Director Account immediately prior to the date of the dividend or other distribution. Credits shall be made effective as of the date of the dividend or other distribution in
respect of the Common Stock. 
 (b) Deferral Election. Notwithstanding the provisions of Sections 6(b)(i),
6(b)(ii) and 7(e) above, a Non-Employee Director may elect to defer settlement of any or all Director Stock Units to a date subsequent to the vesting date of such Director Stock Units, provided that no such deferral may extend beyond the
earlier of (i) the Non-Employee Director’s termination of service on the Board or (ii) the Non-Employee’s death. Settlement of any deferred Director Stock Units shall be made within 15 days following the date specified by
the Non-Employee Director in the relevant deferral election or, if applicable, the earlier of the dates specified in clauses (i) and (ii) of the preceding sentence. 
 (c) Settlement of Director Stock Units. 
 (i) Settlement of Director Restricted Stock Units. Within 15 days following the vesting of Director Restricted Stock Units as
provided in Sections 6(b)(i), 6(b)(ii) or 7(e) above, or the date for deferred settlement as provided in Section 8(b) above, Director Restricted Stock Units shall be settled either by: (i) delivery to the Non-Employee Director of a share
certificate for the number of shares corresponding to such Director Restricted Stock Units (any fractional Director Restricted Stock Unit shall be rounded 

  

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up to the next whole Director Restricted Stock Unit) or (ii) the transfer of the corresponding number of shares equal to the number of Director
Restricted Stock Units being settled (any fractional Director Restricted Stock Unit shall be rounded up to the next whole Director Restricted Stock Unit) to the brokerage account designated by the Non-Employee Director to the Company in writing
prior to settlement. Shares delivered in settlement of Director Restricted Stock Units shall be free of all such restrictions, except any that may be imposed under applicable law or the Company’s trading policy. 
 (ii) Settlement of Director Phantom Stock Units. Within 15 days following the vesting of Director Phantom Stock Units as provided
in Sections 6(b)(i), 6(b)(ii) or 7(e) above, or the date for deferred settlement as provided in Section 8(b) above, Director Phantom Stock Units shall be settled by cash payment to the Non-Employee Director in an amount equal to the product of
(x) Fair Market Value of a share of Common Stock as of the date of vesting and (y) the number of Director Phantom Stock Units being settled (including any fractional Director Phantom Stock Unit). 
 (d) No Stockholder Rights. The crediting of Director Stock Units to a Director Account shall not confer on the
relevant Non-Employee Director any rights as a stockholder of the Company. 
 9. General Terms and Conditions Director Options 
 (a) Option Term. Each Director Option shall expire on the date of the Annual Meeting held in the seventh calendar year following the date
of grant, subject to earlier expiration as provided herein, provided, however, that Director Options granted to a Non-Employee Director whose initial election occurs other than in connection with an Annual Meeting shall be treated for this purpose
as though they had been granted at the first Annual Meeting following such initial election. 
 (b) Vesting; Accelerated Vesting;
Effect of Termination of Service. 
 (i) Exercisability. Director Options shall become exercisable upon
vesting. 
 (ii) Exercise Following Termination of Service. Following termination of a Non-Employee Director’s
service on the Board, the former Non-Employee Director (or the former Non-Employee Directors’ estate, personal representative or beneficiary, as the case may be) shall have the right, subject to the other terms and conditions hereof, to
exercise all Director Options that had vested as of or in connection with the termination of service: 
 (A) at any time
within three years after the date of termination of service, if such termination was by reason of death, Permanent Disability or retirement from the Board in accordance with the retirement policy then in effect for Board members, or 
 (B) in all other cases, at any time within one year after the date of termination of service; subject, in all case, to earlier expiration
of the Director Option pursuant to Section 9(a) above. 
 (c) Notice of Exercise. Subject to the other terms and
conditions of the Plan, a Non-Employee Director may exercise all or any portion of a vested Director Option by giving written notice of exercise to the Company or its designated agent, provided, however, that no fewer than 10 shares of Common
Stock may be purchased upon any exercise of a Director Option unless the number of shares purchased at such time is the total number of shares in respect of which the Director Option is then exercisable, and provided, further, that in no
event shall the Option be exercisable for a fractional share. The date of exercise of an Option shall be the later of (i) the date on which the Company or its agent receives such written notice or (ii) the date on which the conditions
provided in Sections 9(d) and 9(e) below are satisfied. 
 (d) Payment. The exercise price of a Director Option may be paid in
cash or previously owned shares or a combination thereof or by any other method approved by the Board. 
  

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 (e) Limitation on Exercise. A Director Option shall not be exercisable unless the Common
Stock subject thereto has been registered under the Securities Act of 1933, as amended (the “1933 Act”), and qualified under applicable state “blue sky” laws in connection with the offer and sale thereof, or the
Company has determined that an exemption from registration under the 1933 Act and from qualification under such state “blue sky” laws is available. 
 (f) Issuance of Shares. Subject to the foregoing conditions, as soon as is reasonably practicable after its receipt of a proper notice of exercise and payment of the exercise price for the number of
shares with respect to which a Director Option is exercised, the Company shall deliver to the exercising Non-Employee Director, at the principal office of the Company or at such other location as may be acceptable to the Company and the Non-Employee
Director, one or more stock certificates for the appropriate number of shares of Common Stock issued in connection with such exercise. Such shares shall be fully paid and nonassessable and shall be issued in the name of the Non-Employee Director.

 10. Transferability 
 Director Stock
Units (including interests in a Director Account) and Director Options may not be transferred, pledged, assigned or otherwise disposed of except by will or the laws of descent and distribution or pursuant to a domestic relations order, provided,
however, that Director Options may be transferred to a member or members of a Non-Employee Director’s immediate family (as defined below) or to one or more trusts or partnerships established in whole or in part for the benefit of one or
more of such immediate family members (collectively as “Permitted Transferees”), subject to such rules and procedures as may from time to time be adopted or imposed by the Board. If a Director Stock Option is transferred to a
Permitted Transferee, it shall be further transferable only by will or the laws of descent and distribution or, for no consideration, to another Permitted Transferee of the Non-Employee Director. A Non-Employee Director shall notify the Company in
writing prior to any proposed transfer of a Director Option to a Permitted Transferee and shall furnish the Company, upon request, with information concerning such Permitted Transferee’s financial condition and investment experience. For
purposes of the Plan, a Non-Employee Director’s “immediate family” means any child, stepchild, grandchild, spouse, son-in-law or daughter-in-law and shall include adoptive relationships; provided, however, that if the Company
adopts a different definition of “immediate family” (or similar term) in connection with the transferability of employee stock options awarded to employees of the Company, such definition shall apply, without further action of the Board,
to the Plan. 
 11. Term 
 (a)
Effective Date; Expiration. The Effective Date shall be the date of the 1997 Annual Meeting, assuming the Plan is approved by the stockholders of the Company at such Annual Meeting. Unless earlier terminated in accordance with
Section 12 below, the Plan shall expire on the date of the Annual Meeting held in 2013. Grants of Director Five-Year Stock Units and Director Annual Stock Units shall be made in connection with the Annual Meeting held in 2013, and shall be the
last grants made under the Plan. Expiration of the Plan in connection with the Annual Meeting held in 2013 shall not affect Awards made prior to such Annual Meeting, which Awards shall remain outstanding subject to the terms hereof. 
 (b) Coordination with Predecessor Plan. Awards of “Directors Shares” (as such term is defined in the Predecessor Plan) shall be
made under the Predecessor Plan in connection with the 1997 Annual Meeting. Assuming the Plan is approved by the stockholders of the Company at the 1997 Annual Meeting, no further Awards shall be made under the Predecessor Plan after the Effective
Date. Awards outstanding under the Predecessor Plan (including Awards made in connection with the 1997 Annual Meeting) shall remain outstanding after the Effective Date subject to the terms thereof. 
  

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 12. Amendments 
 Subject to the requirements of Section 13, the Board or any committee of the Board may at any time and from time to time alter, amend, suspend or terminate the Plan in whole of in part, including without
limitation to amend the provisions for determining the amount of Director Stock Units or Directors Options to be issued to a Non-Employee Director, provided, however, that: 
 (i) any amendment which under the requirements of applicable law or stock exchange rule must be approved by the stockholders of the
Company shall not be effective unless and until such stockholder approval has been obtained in compliance with such law or rule; 
 (ii) except as provided in Section 13 below, neither the Board nor any committee of the Board may, without the approval of the Company’s stockholders, increase the number of shares available for issuance under the Plan pursuant to
Section 4 above or the number of Director Restricted Stock Units or Director Options to be issued to any Non-Employee Director pursuant to Section 6 or Section 7 above or reduce the exercise price of a Director Option. 
 No termination or amendment of the Plan that would adversely affect a Non-Employee Director’s rights under the Plan with respect to any Award made
prior to such action shall be effective as to such Non-Employee Director unless he or she consents thereto; provided, however, that such consent shall not be required for any amendment that the Board or any committee of the Board
considers necessary or advisable (i) to comply with any law, regulation, ruling, judicial decision, accounting standard, regulatory guidance or other legal requirement or (ii) to ensure that a Non-Employee Director is not subject to United
States federal, state or local income tax or any equivalent taxes in territories outside the United States prior to the settlement of Director Stock Units or the exercise of Director Options. 
 13. Adjustment of and Changes in Shares 
 In the
event of any merger, consolidation, recapitalization, reclassification, stock split, stock dividend, distribution of property, special cash dividend, split-up, spin-off or other transaction or change in corporate structure affecting the shares, the
Board or any committee of the Board shall make (i) such equitable adjustments as it considers appropriate in the number and kind of shares authorized for issuance hereunder in order to preserve, but not increase, the benefits or potential
benefits intended to be made available hereunder and/or (ii) such other adjustments as it deems appropriate. The Board’s or such committee’s determination as to what, if any, adjustments shall be made shall be final and binding on the
Company and all Non-Employee Directors who receive grants under the Plan. 
 14. No Right to Re-election 
 Nothing in the Plan shall be deemed to create any obligation on the part of the Board to nominate any of its members for re-election by the
Company’s stockholders, nor confer upon any Non-Employee Director the right to remain a member of the Board for any period of time, or at any particular rate of compensation. 
 15. Governing Law 
 The Plan and all agreements entered into under the Plan shall be construed in
accordance with and governed by the laws of the State of Delaware. 
 16. No Restriction on Right of Company to Effect Corporate Changes 

The Plan shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. 
  

 10 

 17. Unfunded Plan 
 The Plan is unfunded. Prior to the payment or settlement of any Award of Director Stock Units or the exercise of any Director Options, nothing contained herein shall give any non-Employee Director any rights that are
greater than those of a general creditor of the Company. In its sole discretion, the Board may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Common Stock with respect to Awards
hereunder. 
  

 11Summary of Management Incentive Cash Bonus Program.

 Exhibit 10.8 
 Summary of Management Incentive Cash Bonus Program 
 Commonwealth Bankshares Inc. (the
“Company”) maintains a management incentive cash bonus program to reward superior performance for the year. Executive bonuses are paid based on an evaluation of each executive’s current year performance, taking into consideration the
Committee’s assessment of the overall financial, market and competitive performance of the Company and, for the commercial loan officers, their loan productivity and profitability levels. Cash bonuses are typically paid at the end of the fiscal
year based on performance through the end of October of said year. 
 In establishing the Chief Executive Officer and Chief Financial Officer
bonuses, in addition to the above, the Personnel/Compensation Committee (the “Committee”) considers the level of and/or increases in return on average assets and return on average equity without encouraging short-term profitability through
unreasonable risk-taking or a deterioration of long-term asset quality; consideration of individual as well as combined measures of progress of the Company including the quality of the loan and investment portfolio, desirable changes in capital
ratios, the overall growth of the Company, the improvement of market share, the improvement in book value per share, the improvement in earnings per share, the level of non-performing loans, other real estate owned and other objectives as may be
established by the Board of Directors; the State Corporation Commission and Federal Reserves’ CAMELS ratings; and the compensation and benefit levels of comparable positions at peer institutions within the financial services industry operating
in Virginia. There is no minimum or maximum bonus opportunity for the Chief Executive Officer and the Chief Financial Officer. The Committee determines the amount of the cash bonus based on its evaluation of all of these factors with no minimum
target or maximum award in mind. 
 The executive commercial loan officers’ annual bonuses are set as a percentage of base salary and
are tied to the achievement of several targets. The maximum potential bonus an executive commercial loan officer may be awarded is 50% of his base salary. The payout percentage is based on the officer’s average outstanding loan volume under
management at the end of October of each year subject to increase or decrease based on satisfaction of the factors below. For every $2 million increase in average loan volume above the base volume of $10 million, the bonus will increase by 1% of the
officer’s base salary beginning at 1%. In order to achieve the maximum bonus payout several factors will be considered: the Company must achieve certain profitability and performance levels which are set at the beginning of each year by the
Committee; the credit quality of the commercial loan officer’s individual portfolio must be acceptable in the opinion of and based solely on the judgment of the President and Chief Executive Officer, the Chief Credit Officer and the Committee;
and management of the commercial loan officer’s loan portfolio regarding quality of loan write-ups, monitoring collateral and financial statement exceptions, monitoring past due loans and monitoring maturity issues, must be up to established
Company standards and deemed acceptable by the President and Chief Executive Officer, Chief Credit Officer and the Committee. If the above goals are not met or performance is not in line with established Company standards, the bonus level, if any,
awarded to the executive commercial loan officer is at the sole discretion of the Committee.

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