Document:

Exhibit
4.3

 

 

 

 

 

 

 

 

 

 

 

 

CENTENNIAL BANK HOLDINGS, INC.

 

2005 DEFERRED COMPENSATION PLAN

 

 

Effective
June 30, 2005

 

 

Centennial Bank Holdings, Inc.
Deferred Compensation Plan

 

	
  ARTICLE
  I

  	
   

  
	
  Establishment and
  Purpose

  	
  1

  
	
   

  	
   

  
	
  ARTICLE
  II

  	
   

  
	
  Definitions

  	
  1

  
	
   

  	
   

  
	
  ARTICLE
  III

  	
   

  
	
  Eligibility and
  Participation

  	
  8

  
	
   

  	
   

  
	
  ARTICLE
  IV

  	
   

  
	
  Deferral Elections

  	
  9

  
	
   

  	
   

  
	
  ARTICLE
  V

  	
   

  
	
  Modifications to
  Payment Schedules

  	
  12

  
	
   

  	
   

  
	
  ARTICLE
  VI

  	
   

  
	
  Company Contributions

  	
  13

  
	
   

  	
   

  
	
  ARTICLE
  VII

  	
   

  
	
  Valuation of Account
  Balances; Investments

  	
  14

  
	
   

  	
   

  
	
  ARTICLE
  VIII

  	
   

  
	
  Distributions and
  Withdrawals

  	
  15

  
	
   

  	
   

  
	
  ARTICLE
  IX

  	
   

  
	
  Administration

  	
  18

  
	
   

  	
   

  
	
  ARTICLE
  X

  	
   

  
	
  Amendment and
  Termination

  	
  19

  
	
   

  	
   

  
	
  ARTICLE
  XI

  	
   

  
	
  Informal Funding

  	
  20

  
	
   

  	
   

  
	
  ARTICLE
  XII

  	
   

  
	
  Claims

  	
  21

  
	
   

  	
   

  
	
  ARTICLE
  XIII

  	
   

  
	
  General Conditions

  	
  27

  

 

Centennial Bank Holdings, Inc. Deferred Compensation Plan

 

ARTICLE I

Establishment and Purpose

 

Centennial Bank Holdings, Inc. (the “Company”)
hereby amends and restates the Centennial Bank Holdings, Inc. 2005 Deferred
Compensation Plan (the “Plan”).  This
Plan became effective for Deferrals and Company Contributions on and after the
Plan’s initial effective date of June 30, 2005. 
This document is intended to amend and restate the Plan document as of
the original effective date to reflect the requirements of Code Section 409A as
in effect on the date this document is executed.

 

The purpose of the Plan continues to be to
attract and retain key employees by providing each Participant with an
opportunity to defer receipt of a portion of their salary, bonus, and other
specified compensation.  The Plan is not
intended to meet the qualification requirements of Section 401(a) of the Code,
but is intended to meet the requirements of Code Section 409A.  The Plan is intended to be an unfunded
arrangement for eligible employees who are part of a select group of management
or highly compensated employees of the Company within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA.

 

 

ARTICLE II

Definitions

 

2.1                                 Account.  Account means a bookkeeping account maintained
by the Plan Administrator to record the Company’s payment obligation to a
Participant as determined under the terms of the Plan.  The Plan Administrator may maintain an
Account to record the total obligation to a Participant and component Accounts
to reflect amounts payable at different times and in different forms pursuant
to the terms of a Participant’s Deferral Election.  Reference to an Account means any such
Account established by the Plan Administrator, as the context requires.  Accounts are intended to constitute unfunded
obligations of the Company within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA.

 

2.2                                 Account Balance.  Account Balance means, with respect to any
Account, the total amount of the Company’s payment obligation from such Account
as of the most recent Valuation Date.

 

2.3                                 Affiliate.  Affiliate means a corporation, trade or
business that, together with the Company, is treated as a single employer under
Code Section 414(b) or (c).

 

2.4                                 Beneficiary.  Beneficiary means a natural person, estate,
or trust designated by a Participant to receive benefits to which a Beneficiary
is entitled in accordance with provisions of the Plan. The Participant’s
spouse, if living, otherwise the Participant’s estate, shall be the Beneficiary
if:

 

(i)
the Participant has not designated a natural person or trust as Beneficiary, or

 

1

 

(ii) all designated
Beneficiaries have predeceased the Participant.

 

A former spouse shall have
no interest under the Plan, as Beneficiary or otherwise, unless (i) the
Participant designates such person as a Beneficiary after dissolution of the
marriage or (ii) such interest is ordered under a domestic relations order
described in Section 8.10.

 

2.5                                 Business Day.  A Business Day is each day on which the New
York Stock Exchange is open for business.

 

2.6                                 Change in
Control.  Change in Control occurs on
the date on which there is (i) a change in the ownership of the Company, (ii) a
change in the effective control of the Company or (iii) a change in the
ownership of a substantial portion of the Company’s assets.  For purposes of this Section, a change in
ownership of the Company occurs on the date on which any one person or more
than one person acting as a group acquires ownership of stock of the Company
that, together with stock held by such person or group constitutes more than
50% of the total fair market value or total voting power of the stock of the
Company.  A change in the effective
control of the Company occurs on the date on which either (i) a person or more
than one person acting as a group acquires ownership of stock of the Company
possessing 35% or more of the total voting power of the stock of the Company or
(ii) a majority of members of the Company’s Board of Directors is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Company’s Board of Directors prior
to the date of the appointment or election. A change in the ownership of a
substantial portion of assets occurs on the date on which any one person or
more than one person acting as a group acquires assets from the Company that
have a total gross fair market value equal to or more than 40% of the total
gross fair market value of all of the assets of the Company immediately prior
to such acquisition or acquisitions.

 

Reference to the Company under this Section 2.6 also shall mean
Affiliates for whom a Participant is providing substantially all of the
services he is providing at the time of a Change in Control affecting such
Affiliate.

 

The determination as to the occurrence of a Change in Control shall be
based on objective facts and in accordance with the requirements of Code
Section 409A.

 

2.7                                 Claimant.  Claimant means a Participant or Beneficiary
filing a claim under Article XII of this Plan.

 

2.8                                 Code.  Code means the Internal Revenue Code of 1986,
as amended from time to time. 

 

2.9                                 Code Section
409A.  Code Section 409A means
section 409A of the Code, and regulations and other guidance issued by the
Treasury Department and Internal Revenue Service thereunder. Reference to
proposed Treasury Department regulations shall be 

 

2

 

construed as reference to
the corresponding provisions of the final Treasury Department regulations when
final regulations are published.

2.10                           Committee. Committee
means the Compensation, Nominating, and Governance Committee of the Board of
Directors of the Company.

 

2.11                           Company. Company means
Centennial Bank Holdings, Inc.

 

2.12                           Company
Contribution. Company Contribution means a credit by the Company
to a Participant’s Account(s) in accordance with the provisions of Article VI
of the Plan. Company Contributions are credited at the sole discretion of the
Company and the fact that a Company Contribution is credited in one year shall
not obligate the Company to continue to make such Company Contribution in
subsequent years.

 

2.13                           Company Stock.  Company Stock means shares of common stock
issued by the Company.

 

2.14                           Compensation. Compensation
means a Participant’s base salary, bonus, commission, and such other cash or
equity-based compensation (if any) approved by the Committee as Compensation
that may be deferred under this Plan. 
Compensation shall not include any compensation that has been previously
deferred under this Plan or any other arrangement subject to Code Section 409A.

 

2.15                           Death Benefit.  Death Benefit means payment to a Participant’s
Beneficiary(ies) of all remaining unpaid Account Balances in a single lump sum
in the event of such Participant’s death.

 

2.16                           Deferral.  Deferral means the credits to a Participant’s
Accounts attributable to deferrals of Compensation described in Prop. Treas.
Reg. Section 1.409A-1(b)(1) and Earnings on such amounts as provided in Prop.
Treas. Reg. Section 1.409A-1(b)(2), except where the context of the Plan
clearly indicates otherwise.

 

2.17                           Deferral
Election.  Deferral
Election means an agreement between a Participant and the Company specifying
any or all of the following: (i) the amount of each component of Compensation
subject to the Deferral Election; (ii) the investment allocation described in
Section 7.2; and (iii) the Payment Schedule. The Plan Administrator may permit
different deferral amounts for each component of Compensation and may establish
a minimum or maximum deferral amount for each such component.  Unless otherwise specified by the Plan
Administrator in the Deferral Election agreement, Participants may defer up to
80% of their base salary and up to 100% of other types of Compensation for a
Plan Year.

 

The Plan Administrator may reduce a Participant’s Deferral Election as
necessary to permit sufficient non-deferred Compensation from which the Company
may satisfy a Participant’s obligations regarding welfare plans and from which
to satisfy tax 

 

3

 

withholding obligations, and/or to conform the Deferral Election and
the Plan to applicable law

 

2.18                           Disability. Disability
means that a Participant (i) is unable to engage in any substantial gainful
activity by reason of any medically-determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, or (ii) is, by reason of
any medically-determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than twelve (12) months, receiving income replacement benefits for a
period of not less than three  (3) months
under an accident and health plan covering employees of the Company.  The determination of the existence of a
Disability shall be made by the Plan Administrator in accordance with Code
Section 409A.

 

2.19                           Disability
Benefit. Disability Benefit means a payment by the Company to a Participant of
all remaining unpaid Account Balances in a single lump sum in the event of such
Participant’s Disability.

 

2.20                           Earnings.  Earnings means an adjustment to the value of
an Account in accordance with Article VII.

 

2.21                           Effective Date.  Effective Date means June 30, 2005.

 

2.22                           Eligible
Employee.  Eligible
Employee means a member of a “select group of management or highly compensated
employees” of the Company within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA, as determined by the Committee from time to time in its
sole discretion.

 

2.23                           Employee.  Employee means an employee of the Company.

 

2.24                           ERISA.  ERISA means the Employee Retirement Income
Security Act of 1974, as amended from time to time.

 

2.25                           Fiscal Year
Compensation.  Fiscal Year
Compensation means Compensation earned during one or more consecutive fiscal
years of the Company, all of which is paid after the last day of such fiscal
year or years.

 

2.26                           Participant. Participant
means an Eligible Employee who has received notification of his or her
eligibility to defer Compensation under the Plan under Section 3.1 and any
other person with an Account Balance greater than zero, regardless of whether
such individual continues to be an Eligible Employee of the Company. A
Participant’s continued participation in the Plan shall be governed by Section
3.2 and Section 3.3 of the Plan.

 

2.27                           Payment
Schedule.  Payment
Schedule means the date as of which payment under the Plan will commence and
the form in which such payment will be made.

 

4

 

(a)                                  Retirement.  Payment from a
Participant’s Retirement/Termination Account will be made as of the first day
of the seventh month following the month in which a Participant Retires.  Payment will be made in a single lump sum
unless the Participant specifies an alternative form of payment in his first
Deferral Election and prior to receiving a credit of Company Contributions to
his or her Retirement/Termination Account. 
Alternative forms of payment include (i) a lump sum payment between 0%
and 100% of the Account Balance and (ii) any remaining Account Balance payable
in a series of substantially equal annual installments from two (2) to fifteen
(15) years.  For purposes of Article V,
(i) each lump sum payment and (ii) each series of substantially equal
installment payments elected by the Participant will be treated as a single
form of payment.  If a lump sum is paid,
the payment commencement date for the installment form of payment will be the
first anniversary of the payment of the lump sum.

 

(b)                                 Termination
Benefit.  Payment from
a Participant’s Retirement/Termination Account will be made as of the first day
of the seventh month following the month in which a Participant incurs a
Separation from Service that entitles such Participant to a Termination
Benefit.  Payment will be made in a
single lump sum.

 

(c)                                  Specified
Date Payments.  Payment from a
Participant’s Specified Date Account will be made as of the first day of the
month or year specified under the elections described in Sections 4.4. Unless a
Participant specifies an alternative form of payment under Sections 4.4 and
5.1, payment will be made in a single lump sum. 
Alternative forms of payment include a series of substantially equal
annual installments payable over two (2) to five (5) years.  For purposes of Article V, a series of
installment payments will be treated as a single form of payment.

 

(d)                                 Death
Payments.  Payment to a
Participant’s Beneficiary(ies) in the event of death shall be paid in a single
lump sum.  Payment will be made as of the
first day of the month following the month in which the Plan Administrator
receives notification of the Participant’s death.

 

(e)                                  Disability.  Payment due to Disability
will be made in a single lump sum as of the first day of the month following
the month in which the Plan Administrator determines that the Participant is
Disabled.

 

2.28                           Performance-Based
Compensation. 
Performance-Based Compensation means Compensation where the amount of,
or entitlement to, the Compensation is contingent on the satisfaction of
preestablished organizational or individual performance criteria relating to a
performance period of at least twelve (12) consecutive months in which the
Participant performs services for the Company. 
Organizational or individual performance criteria are considered
preestablished if established in writing by not later than ninety (90) days
after the commencement of the period of service to which the criteria relate,
provided that the outcome is substantially uncertain at the time the criteria
are established.  Performance-Based
Compensation may include payments based on 

 

5

 

performance criteria that are not approved by the Compensation
Committee or by the stockholders of the Company.  Performance-Based Compensation does not
include any amount or portion of any amount that will be paid either regardless
of performance, or based upon a level of performance that is substantially
certain to be met at the time the criteria is established.  Performance criteria may be subjective but
must relate to the performance of the Participant, a group of Employees that includes
the Participant or a business unit (which may include the Company) for which
the Participant provides services.  The
determination that any subjective performance criteria have been met shall not
be made by the Participant or by a family member of the Participant, or by a
person under the supervision of the Participant or a Participant’s family
members where any amount of the compensation of such person is controlled in
whole or in party by the Participant or such family member.  Compensation based on Company Stock may
constitute Performance-Based Compensation if it is based solely on an increase
in the value of such stock after the date of grant or award.  The determination of whether Compensation
qualifies as “Performance-Based Compensation” will be made in accordance with
Prop. Treas. Reg. Section 1.409A-1(e) and subsequent guidance.

 

2.29                           Plan.  Plan means the “Centennial Bank Holdings,
Inc. 2005 Company Deferred Compensation Plan” as documented herein and as may
be amended from time to time hereafter.

 

2.30                           Plan
Administrator.  Plan Administrator
means the Committee, acting pursuant to the powers and authority granted under
Section 9.1 of the Plan.

 

2.31                           Plan Year.  Plan Year means January 1 through December
31.  The period from June 30, 2005
through December 31, 2005 shall constitute a “short” Plan Year.

 

2.32                           Retire/Retirement.  Retire and Retirement mean a voluntary
Separation from Service (i) on or after attaining age 65, or (ii) on or after
attaining age 55 with at least five (5) Years of Service.

 

2.33                           Retirement
Benefit.  Retirement Benefit shall mean
a payment from a Participant’s Retirement/Termination Account to such
Participant due to such Participant’s Retirement.  Payment of a Retirement Benefit will be made
as provided in Section 8.1(a) of the Plan.

 

2.34                           Retirement/Termination
Account.  Retirement/Termination Account
means an Account established by the Plan Administrator to record the amount
payable to a Participant due to his or her Separation from Service.

 

2.35                           Separation from
Service.  An Employee incurs a
Separation from Service upon termination of employment with the Company.  The occurrence of a Separation from Service
is determined by the Plan Administrator under the facts and circumstances and
in accordance with Code Section 409A.  A
Participant’s absence from work due to military leave, sick leave, or other bona fide
leave of absence (such as temporary employment by the government) shall not
constitute a Separation from Service if the period of such leave 

 

6

 

does not exceed six (6) months or such longer period as is provided
either by statute or by contract.  If the
period of leave exceeds six (6) months and the Participant’s right to
reemployment after such extended leave is not provided either by statute or by
contract, the Participant shall be deemed to have incurred a Separation from
Service on the first day immediately following such six-month period.

 

A Separation from Service shall not include a termination of employment
provided under the terms of a corporate transaction involving the Company or an
Affiliate if (i) the purchaser or successor company hires the Participant as an
employee or other service provider upon the closing of the transaction and (ii)
the purchaser or successor company assumes the liability under the Plan for
payment of such Participant’s Accounts.

 

2.36                           Specified Date
Account.  A Specified Date Account means
an Account established pursuant to Section 4.4 which will be paid (or which
will commence to be paid) at a future date as specified in the Participant’s
Deferral Election.  Unless otherwise
determined by the Plan Administrator, a Participant may maintain no more than
five (5) Specified Date Accounts.  A
Specified Date Account may be identified in enrollment materials as an “In-Service
Account”.

 

2.37                           Specified
Employees.  Specified
Employee means a “key employee” (as defined in Code Section 416(i) without
regard to Code Section 416(i)(5)) of the Company or an Affiliate any stock of
which is actively traded on an established securities market or otherwise, or
as defined in Prop. Treas. Regulation 1.409A-1(i).

 

The
Plan Administrator will identify Specified Employees if an applicable Payment
Schedule does not meet the requirements of Code Section 409A with respect to
such employees.  The determination of
which Employees are Specified Employees will be determined as of the 12-month
period ending each December 31, and will become effective with respect to
Separations from Service occurring on and after the following April 1.  The determination of Specified Employees with
respect to Separations from Service occurring from the date Plan Accounts
become subject to the requirements of Code Section 409A and ending on March 31,
2006 will be determined under a good-faith application of Code Section 409A.

 

2.38                           Substantial
Risk of Forfeiture.  Substantial
Risk of Forfeiture shall have the meaning specified in Prop. Treas. Reg.
Section 1.409A-1(d).

 

2.39                           Termination
Benefit.  Termination Benefit means a
payment from a Participant’s Retirement/Termination Account due to such
Participant’s Separation from Service other than Retirement.  Payment of a Termination Benefit will be paid
as provided in Section 8.1(b).

 

2.40                           Unforeseeable
Emergency.  An
Unforeseeable Emergency is a severe financial hardship of the Participant or
Beneficiary resulting from an illness or accident of the Participant or
Beneficiary, the Participant’s or Beneficiary’s spouse, or the Participant’s or

 

7

 

Beneficiary’s dependent (as defined in Code section 152(a)); loss of
the Participant’s or Beneficiary’s property due to casualty (including the need
to rebuild a home following damage to a home not otherwise covered by
insurance, for example,  as a result of a
natural disaster); or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant or Beneficiary.  For example,
the imminent foreclosure of or eviction from the Participant’s or Beneficiary’s
primary residence may constitute an Unforeseeable Emergency.  In addition, the need to pay for medical
expenses, including non-refundable deductibles, as well as for the costs of
prescription drug medication, may constitute an Unforeseeable Emergency.  Finally, the need to pay for the funeral
expenses of a spouse or a dependent (as defined in Code section 152(a)) may
also constitute an Unforeseeable Emergency. 
Except as otherwise provided in this section, the purchase of a home and
the payment of college tuition are not Unforeseeable Emergencies.  Whether a Participant or Beneficiary is faced
with an Unforeseeable Emergency permitting a distribution under section 8.5 of
the Plan is to be determined by the Plan Administrator based on the relevant facts
and circumstances of each case, but, in any case, a distribution on account of
Unforeseeable Emergency may not be made to the extent that such emergency is or
may be reimbursed through insurance or otherwise, by liquidation of the
Participant’s assets, to the extent the liquidation of such assets would not
cause severe financial hardship, or by cessation of deferrals under this Plan.

 

2.41                           Valuation Date. Valuation
Date shall mean each Business Day.

 

2.42                           Year of Service.  A Year of Service shall mean each 12-month
period of continuous service with the Company, determined under rules adopted
by the Plan Administrator.

 

 

ARTICLE III

Eligibility
and Participation

 

3.1                                 Eligibility and
Participation.  An Eligible
Employee becomes eligible to file a Deferral Election upon receipt of
notification of eligibility from the Plan Administrator.

 

3.2                                 Duration.  A Participant shall be eligible to defer
Compensation and receive allocations of Company Contributions, subject to the
terms of the Plan, for as long as such Participant is an Eligible Employee.  A Participant who is no longer an Eligible
Employee but continues to be employed by the Company may not defer Compensation
under the Plan but may otherwise exercise all of the rights of a Participant
under the Plan with respect to his or her Account(s).  On and after a Separation from Service, a
Participant shall remain a Participant as long as his or her Account Balance is
greater than zero and during such time may continue to make allocation
elections as provided in Section 7.2.  An
individual shall cease being a Participant in the Plan when all benefits under
the Plan to which he or she is entitled have been paid.

 

8

 

3.3                                 Revocation of
Future Participation. 
Notwithstanding the provisions of Section 3.2, the Committee may, in its
discretion, revoke a Participant’s eligibility to make future deferrals under
this Plan.   Such revocation will not
affect in any manner a Participant’s Account Balance or other terms of this
Plan.

 

 

ARTICLE IV

Deferral
Elections

 

4.1                                 Deferral
Elections, Generally.  An
Eligible Employee shall make a Deferral Election by completing and submitting a
deferral agreement during the enrollment periods established by the Plan
Administrator and in the manner specified by the Plan Administrator, but in any
event, in accordance with Section 4.2.  A
Deferral Election that is not timely filed with respect to a service period or
component of Compensation shall be considered void and shall have no effect
with respect to such service period or Compensation.

 

4.2                                 Timing
Requirements for Deferral Elections.

 

(a)                                  First
Year of Eligibility.  Upon
notification of his or her eligible status under Section 3.1, and subject to
this paragraph (a), an Eligible Employee has up to 30 days to submit a Deferral
Election with respect to Compensation earned during such year.  The Deferral Election described in this
paragraph becomes irrevocable on the first day following such 30th
day.  An Eligible Employee may file a
Deferral Election under this Section 4.2(a) only if he or she does not
participate in any other “account balance plan” as defined in Prop.Treas. Reg.
Section 1.409A-1(c)(i)(A) maintained by the Company or an Affiliate, other than
as permitted in Prop. Treas. Reg. Section 1.409A-1(c)(ii).

 

A
Deferral Election filed under this Section 4.2(a) applies to Compensation
earned on and after the date the Deferral Election becomes irrevocable.  For Compensation that is earned based upon a
specified performance period (e.g. over a calendar year or fiscal year), where a
Deferral Election is made in the first year of eligibility but after the
beginning of the service period, the election will be deemed to apply to
Compensation paid for services performed subsequent to the election if the
election applies to the portion of the Compensation equal to the total amount
of the Compensation for the service period multiplied by the ratio of the
number of days remaining in the performance period after the Deferral Election
becomes irrevocable over the total number of days in the service period.

 

Nothing under this Section
4.2(a) precludes an Eligible Employee, in his or her initial year of
eligibility, from filing a Deferred Election under any other paragraphs of this
Section 4.2

 

(b)                                 Prior-Year
Deferral.  A
Participant may defer compensation by filing a Deferral Election no later than
December 31 of the year prior to the year in which such 

 

9

 

Compensation is earned.  A
Deferral Election described in this paragraph shall become irrevocable with
respect to such Compensation as of January 1 of the year in which such
Compensation is earned.

 

(c)                                  Performance-Based
Compensation.  A Deferral
Election may be filed with respect to Performance-Based Compensation, provided
that:

 

(i)  the Participant performs services
continuously from a date no later than the date upon which the performance
criteria for such Performance-Based Compensation are established through a date
no earlier than the date upon which the Participant submits a Deferral Election;

 

(ii)
the Deferral Election is submitted no later than the date that is six (6)
months before the end of the performance period during which such
Performance-Based Compensation is earned; and

 

(iii)
in no event may an election to defer Performance-Based Compensation be  made after such Performance-Based
Compensation has become both substantially certain to be paid and readily
ascertainable.

 

A Deferral Election becomes
irrevocable with respect to Performance-Based Compensation as of the day
immediately following the date described in paragraph (c)(ii).

 

(d)                                 Commissions.  For purposes of determining Compensation that
may be deferred under Sections 4.2(a) or (b), commissions are considered to be
earned in the year  a customer remits
payment to the Company or an Affiliate.

 

(e)                                  Deferral
Election with Respect to Fiscal Year Compensation.  A Participant may defer Fiscal Year
Compensation by filing a Deferral Election prior to the first day of the fiscal
year or years in which such Fiscal Year Compensation is earned.  The Deferral Election described in this
paragraph becomes irrevocable on the first day of the fiscal year or years to
which it applies.

 

(f)                                    Short-Term
Deferrals.  Compensation
that meets the definition of a “short-term deferral” described in Prop. Treas.
Reg. Section 1.409A-1(b)(4) may be deferred under a Deferral Election filed not
later than twelve months prior to the date on which the substantial risk of
forfeiture lapses.  The Payment Schedule
for such Deferral must specify a commencement date no earlier than five years
after the forfeiture restriction lapses.

 

(g)                                 Deferral
Election With Respect to Certain Forfeitable Rights.  With respect to a legally binding right to a
payment in a subsequent year that is subject to a forfeiture condition requiring
the Participant’s continued services for a period of at least twelve months
from the date the Participant obtains the legally binding 

 

10

 

right, an election to defer such Compensation may be made on or before
the 30th day after the Participant obtains the legally binding right
to the Compensation, provided that the election is made at least twelve months
in advance of the earliest date at which the forfeiture condition could
lapse.  The Deferral Election described
in this paragraph becomes irrevocable after such 30th day.

 

(h)                                 Deferral
Under Non-Elective Arrangement.  An arrangement satisfying the requirements of
Prop. Treas. Reg. Section 1.409A-2(a)(12) shall be treated as a valid Deferral
Election subject to the terms of the Plan if such agreement (i) incorporates
the provisions of this Plan document by reference or conduct (ii) is classified
as an “individual account plan” under Code Section 409A and (iii) otherwise
complies with Code Section 409A.

 

4.3                                 “Evergreen”
Deferral Elections.  The Plan
Administrator, in its discretion, may provide in the form of Deferral Election
that such Deferral Election remains in effect until terminated or modified by
the Participant.  Such “evergreen”
Deferral Elections become effective with respect to an item of Compensation on
the date such election becomes irrevocable under Section 4.2.  A Participant whose Deferral Election is
suspended due to an Unforeseeable Emergency will be required to file a new
Deferral Election under this Article IV in order to continue making Deferrals
under the Plan.

 

4.4                                 Specified Date
Elections.  A
Participant’s Deferral Election may establish a Specified Date Account by
specifying the Payment Schedule for Deferrals and Earnings credited to such
Account.

 

(a)                                  Allocation
of Deferrals.  A Deferral
Election may allocate Deferrals to one or more Specified Date Accounts.  The Plan Administrator may, in its
discretion, establish a minimum deferral period (for example, the third Plan
Year following the year Compensation subject to the Deferral Election is
earned).  If a Deferral Election would
result in Deferrals to a Specified Date Account with a payment date occurring
earlier than such minimum deferral period, the Deferral Election shall be
deemed to be modified, under procedures adopted by the Plan Administrator, such
that the Deferrals will be allocated to a Specified Date Account with the next
earliest payment commencement date that satisfies such minimum deferral
requirement.

 

(b)                                 Effect
of Earlier Separation From Service, Death, Disability or Change in Control.  The unpaid Account Balance of any Specified
Date Account will be combined with the Retirement/Termination Account in the
event of the Participant’s Separation from Service, Death, Disability or Change
in Control and will be paid in accordance with the applicable benefit described
in Article VIII. Notwithstanding the foregoing, the Plan Administrator, in its
sole discretion, may permit Participants to make an election (i) on the
Deferral Election form that establishes a Specified Date Account or (ii) in a
subsequent election under Article V to have such Specified Date Account paid on
the specified date, regardless of 

 

11

 

an earlier Separation from Service. 
Such election, once made, is irrevocable as to such Account.

 

4.5                                 Deductions from
Pay.  The Plan Administrator has the
authority to determine the payroll practices under which any component of
Compensation subject to a Deferral Election will be deducted from a Participant’s
Compensation.

 

 

ARTICLE V

Modifications to Payment Schedules

 

5.1                                 Participant’s
Right to Modify.   Subject to
Section 5.2, a Participant may modify the Payment Schedule with respect to an
Account, provided such modification complies with the requirements of Sections
5.1(a) and (b).

 

(a)                                  Time
of Election.  The date on
which a modification election is submitted to the Plan Administrator must be at
least twelve months prior to the date on which payment commences under the Payment
Schedule in effect prior to modification, and the date payments commence under
the modified Payment Schedule must occur no earlier than five years after the
date payment would have commenced under the Payment Schedule in effect prior to
the effective date of the modification election.  Under no circumstances may a modification
election result in an acceleration of payments in violation of Code Section
409A.

 

(b)                                 Effective
Date.  A modification
election described in Section 5.1(a) becomes effective on the date that is
twelve months after the date the modification is filed with the Plan
Administrator

 

(c)                                  Effect
on Accounts.  An election to
modify a Payment Schedule is specific to the Specified Date or
Retirement/Termination Account to which it applies, and shall not be construed
to affect the Payment Schedules of any other Accounts.

 

(d)                                 Effect
of Modification Election Upon Death, Disability or Unforeseeable Emergency.  A modification election described in this
Section shall have no effect on the commencement date of payments due to death,
Disability or Unforeseeable Emergency.

 

5.2                                 Modifications
Authorized Under Notice 2005-1 and Proposed Regulations.
Notwithstanding any provision of this Plan to the contrary, during calendar
years 2005 and 2006, a Participant may modify any Payment Schedule of any
Account without regard to the requirements of Section 5.1(a) and (b); provided,
however, that any modification election submitted during 2006 purporting to
modify an Account with a Payment Schedule commencing during 2006 or which would
cause the commencement date of the Payment Schedule for an Account to be
accelerated into 2006 shall be null and void to the extent such election is
inconsistent with the requirements of Code Section 

 

12

 

409A.  The Plan Administrator has
the authority to prescribe the time and manner under which such modifications
may be made.

 

 

ARTICLE VI

Company Contributions

 

6.1                                 401(k) Plan
Excess and/or Make-Up Contribution. The Company may, in its
sole discretion, make a Company Contribution at the end of each Plan Year in an
amount (if any) to restore lost company matching contributions to the Company’s
401(k) plan that would have been made by the Company during the 401(k) plan
year that corresponds to this Plan Year because of deferrals into this Plan (a “Make-Up”
Company Contribution) or because of limitations imposed by Code Section
401(a)(17) on the amount of Compensation that can be considered to determine
401(k) plan matching company contributions (an “Excess” Company Contribution),
or both.  The amount of such Company
Contribution shall equal the difference between the amount of company matching
contribution that would have been made to the Participant’s account in the
Company 401(k) plan had Deferrals into this Plan not occurred and/or had Code
Section 401(a)(17) limits applied; and (ii) the actual amount of the Company
matching contribution to the 401(k) plan for such Participant during such plan
year.  Make-Up Company Contributions will
be credited to a Participant’s Retirement/Termination Account.

 

6.2                                 Other Company
Contributions.  The Company
may, from time to time in its sole and absolute discretion, credit Company
Contributions to any Participant in any amount determined by the Company.  Such contributions will be credited to a
Participant’s Retirement/Termination Account.

 

6.3                                 Vesting.  The “Make-Up” and/or “Excess” Company
Contribution described in Section 6.1 above, and the Earnings thereon, shall
vest in accordance with the same vesting schedule as is utilized in the 401(k)
plan for Company matching contributions to that plan.  Company Contributions described in Section
6.2, above, and the Earnings thereon, shall vest in accordance with the vesting
schedule(s) established by the Committee at the time that the Company
Contribution is made.  The foregoing
provisions concerning vesting of Company Contributions notwithstanding, and
subject to the requirements of Treasury Department regulations promulgated
under Code Section 409A, all Company Contributions shall become 100% vested
upon the occurrence of the earliest of: (i) the death of the Participant; (ii)
the Disability of the Participant, (iii) Retirement of the Participant, (iv) a
Change in Control, or (v) a “Change of Control”, as defined in the Company’s
2005 Stock Incentive Plan.  The Company
may, at any time, in its sole discretion, increase a Participant’s vested
interest in a Company Contribution.  The
portion of a Participant’s Accounts that remains unvested upon his or her Separation
from Service after the application of the terms of this Section 6.3 shall be
forfeited.

 

13

 

 

ARTICLE VII

Valuation of Account Balances; Investments

 

7.1                                 Valuation.  Deferrals shall be
credited to appropriate Accounts on the date such Compensation would have been
paid to the Participant absent the Deferral Election.  Company Contributions shall be credited in
accordance with the provisions of Article VI, as determined by the Plan
Administrator.  Valuation of Accounts
shall be performed under procedures approved by the Plan Administrator.

 

7.2                                 Earnings
Credit.  Each Account will be credited with Earnings
on each Business Day, based upon the Participant’s allocation of Deferrals
among a menu of investment options selected in advance by the Plan
Administrator.

 

(a)                                  Investment Options.  Investment options will consist of actual
investments, which may include stocks, bonds, mutual fund shares, Company Stock
and other investments.  The Committee, in its sole discretion, shall be permitted
to add or remove investment funds from the Plan menu from time to time provided
that any such additions or removals of investment funds shall not be effective
with respect to any period prior to the effective date of such change.

 

(b)                                 Investment Allocations. A Participant’s
investment allocation constitutes a deemed, not actual, investment among the
investment options comprising the investment menu. At no time shall a
Participant have any real or beneficial ownership in any investment option
included in the investment menu, nor shall the Company or any trustee acting on
its behalf have any obligation to purchase actual securities as a result of a
Participant’s investment allocation. A Participant’s investment allocation shall be used solely
for purposes of adjusting the value of a Participant’s Account Balances.

 

A Participant’s Deferral Election shall
specify the investment allocation for future Deferrals credited to each
Account.   Deferrals may be allocated
among the investment options in increments of 1%.  The Participant’s investment allocation will
become effective on the same Business Day or, in the case of investment
allocations received after a time specified by the Plan Administrator, the next
Business Day.  The investment allocation
will remain in effect until the Participant modifies the investment allocation
in accordance with procedures adopted by the Plan Administrator.

 

Participants may re-allocate current
Account Balances among the investment options in increments of 1% by filing a
new investment allocation at the time and in the form specified by the Plan
Administrator.  The Participant’s
investment allocation will become effective on the same Business Day or, in the
case of investment allocations received after a time specified by the Plan
Administrator, the next Business Day. 
The investment allocation shall apply prospectively to the Account or
Accounts 

 

14

 

identified in the allocation.

 

(c)                                  Unallocated Deferrals and Accounts.  If any portion of a Deferral or Account
Balance has not been allocated to an investment option, such portion shall be
invested in an investment option, the primary objective of which is the
preservation of capital, as determined by the Committee. 

 

(d)                                 Company Stock.  The Committee may include Company Stock as
one of the investment options described in Section 7.2(a).  The Committee may, in its sole discretion,
limit the investment allocation of Company Contributions to Company Stock.  The Committee may also require Deferrals
consisting of equity-based Compensation to be allocated to Company Stock.

 

(1)                                  Diversification.  A
Participant may not re-allocate an investment in Company Stock into
another investment option.  The portion
of an Account that is invested in Company Stock will be paid under Article VIII
in the form of Company Stock.

 

(2)                                  Effect on Installment Payments.  If an Account is
to be paid in installments, the Plan Administrator will determine the portion
of each payment that will be paid in the form of Company Stock.

 

(3)                                  Dividend
Equivalents.  Dividend equivalents with respect to Company
Stock will be credited to the applicable Accounts in the form of additional
shares or units of Company Stock.  The
Plan Administrator may direct that dividends will be paid in cash.

 

 

 

ARTICLE VIII

Distribution and Withdrawals

 

8.1                                 Separation
Payments.  Payments
will be made to a Participant upon a Separation from Service as follows

 

(a)                                  Retirement
Benefit.  A Retirement
Benefit will be paid to Participants who incur a Separation from Service that
qualifies as a Retirement.  The amount of
the Retirement Benefit payment will be based on the Retirement/Termination
Account Balance and will be paid in accordance with the Payment Schedule in
effect for such benefit and the provisions of Section 8.7.

 

(b)                                 Termination
Benefit.  In the event
that a Participant experiences a Separation from Service that does not qualify
as a Retirement, the Termination Benefit will be paid to such Participant.  The amount of the Termination Benefit will be
based the Retirement/Termination Account Balance and will be paid in accordance
with

 

15

 

the Payment Schedule in effect for the Termination Benefit and the
provisions of Section 8.7.

 

8.2                                 Specified Date
Accounts.  Subject to
Section 4.4(b), the Account Balance of each Specified Date Account will be paid
in accordance with the Payment Schedule in effect for such Account and the
provisions of Section 8.7.

 

8.3                                 Disability Benefit.  Upon the Plan
Administrator’s determination that a Participant is Disabled, the Company shall
pay the Disability Benefit in accordance with the
Payment Schedule and the provisions of Section 8.7.

 

8.4                                 Death Benefit.  In the event of
the Participant’s death, his or her remaining Retirement/Termination Account
Balance will be combined with his or her remaining Specified Date Account
Balances which will be paid to the Participant’s Beneficiaries in
accordance with the Payment Schedule and the provisions of Section 8.7.

 

8.5                                 Unforeseeable
Emergency.  A
Participant may submit a written request to the Plan Administrator to receive a
distribution from his or her Account Balance(s) if the Participant experiences
an Unforeseeable Emergency. Distributions of amounts in the event of an
Unforeseeable Emergency are limited to the extent reasonably needed to satisfy
the emergency need which cannot be met with other resources of the Participant.  The amount of such distribution shall be
subtracted first from the vested portion of the Participant’s
Retirement/Termination Account until depleted and then from the Specified Date
Accounts, beginning with the Specified Date Account with the latest payment
commencement date. 

 

8.6                                 Change in
Control.  A Participant who incurs a
Separation from Service within twenty four (24) months following the date of a
Change in Control shall receive payment of his or her Accounts in a single lump
sum

 

8.7                                 Valuation and
Payment.  Payment of benefits under the
Plan will be based on the valuation of the applicable Account Balance as of the
Valuation Date specified by the Plan Administrator in its discretion.

 

Payment is treated as made upon the payment commencement date under the
applicable Payment Schedule if the payment is made on or after such date in the
same calendar year or, if later, by the 15th day of the third
calendar month following the date specified under the arrangement.  If a calculation of the amount of the payment
is not administratively practical due to events beyond the control of the
Participant, the payment will be treated as made upon the date specified under
the Payment Schedule if the payment is made during the first calendar year in
which the payment becomes administratively practicable.

 

16

 

8.8                                 Installments;
Declining Balance Calculation.  If a Payment Schedule specifies installment
payments, annual payments will be made beginning as of the payment commencement
date for such installments and shall continue on each anniversary thereof until
the number of installment payments specified in the Payment Schedule has been
paid. The amount of each installment payment shall be determined by dividing
(a) by (b):

 

(a)                                  equals the Account Balance as of the Valuation Date and

(b)                                 equals the remaining number of installment payments.

 

8.9                                 “De Minimis Account” Balance.  Any provision in
this Plan to the contrary notwithstanding, payment to a Participant or
Beneficiary will be made in a single lump sum, provided (i) the payment
accompanies payment of the entirety of the Participant’s interest in the Plan
and all similar arrangements that constitute a nonqualified deferred
compensation arrangement under Prop. Treas. Reg. Section 1.409A-1(c); (ii) the
payment is made on or before the later of December 31 of the calendar year in
which occurs the Participant’s Separation from Service (if applicable), or the
15th day of the third month following the Participant’s Separation
from Service (if applicable); (iii) the payment is not greater than
$10,000.  Any Payment Schedule contrary
to the provisions of this Section 8.9 shall be null and void.

 

8.10                           Domestic Relations Order.  Notwithstanding
any benefit, Payment Schedule or other provision of this Plan regarding the
time and form of payment, the Plan Administrator may pay all or a portion of a
Participant’s Accounts to an “alternate payee” as specified under the terms of
a domestic relations order (defined in Code Section 414(p)(1)(B)).  If a time or form of payment is not specified
in such order, payment will be made to such alternate payee(s) in a single lump
sum as soon as is administratively practical following the Plan Administrator’s
determination that the order meets the requirements of this Section 8.10.

 

8.11                           Payments to Avoid Nonallocation Year Under Section 409(p).  Notwithstanding
any benefit, Payment Schedule or other provision of this Plan regarding the
time and form of payment, payment will be made to prevent the occurrence of a
nonallocation year (within the meaning of Section 409(p)(3) of the Code in the
plan year of an employee stock ownership plan next following the current plan
year, provided that the amount paid may not exceed 125 percent of the minimum
amount of payment necessary to avoid the occurrence of a nonallocation year.

 

8.12                           Permissible
Payment Delays.  The Company
may delay any payment to a Participant upon the Plan Administrator’s reasonable
anticipation of one or more of the following:

 

(a)                                  The Company’s
income tax deduction with respect to such payment would be limited or
eliminated by application of Code Section 162(m); or

 

(b)                                 Making such
payment would violate a term of a loan agreement to which the Company or an
Affiliate is a party, or other similar contract to which the 

 

17

 

Company, or an Affiliate, is a party, and such violation would cause
material harm to the Company or an Affiliate; or

 

(c)                                  Making such
payment would violate federal securities laws or other applicable law.

 

 

ARTICLE IX

Administration

 

9.1                                 Plan
Administration. This Plan shall be administered by the
Compensation, Nominating and Governance Committee of the Board of Directors of
the Company, which shall act as the Plan Administrator. The Plan
Administrator  shall have discretionary
authority to make, amend, interpret and enforce all appropriate rules and
regulations for the administration of this Plan and to utilize its discretion
to decide or resolve any and all questions, including but not limited to
eligibility for benefits and interpretations of this Plan and its terms, as may
arise in connection with the Plan. Claims for benefits shall be filed with the
Plan Administrator and resolved in accordance with the claims procedures in
Article XII.

 

9.2                                 Administration
Upon Change in Control.  Upon
a Change in Control, the Committee, as constituted immediately prior to such
Change in Control, shall continue to act as the Plan Administrator.  The individual who was the Chief Executive
Officer of the Company (or if such person is unable or unwilling to act, the
next highest ranking officer) prior to the Change in Control shall have the
authority (but shall not be obligated) to appoint an independent third party to
act as the Plan Administrator in lieu of the Committee.  For purposes of this Section, “Change of
Control” includes the definition under this Plan and the definition of “Change
in Control” under the Company’s 2005 Stock Incentive Plan.

 

Upon such Change in Control, the Company may not remove the Plan
Administrator, unless 2/3rds of the members of the Board of Directors of the
Company and a majority of Participants and Beneficiaries with Account Balances
consent to the removal and replacement Plan Administrator.    Notwithstanding the foregoing, neither the
Committee members nor the officer described above shall have authority to
direct investment of trust assets under any rabbi trust described in Section
11.2.

 

 The Company shall, with respect
to the Plan Administrator identified under this Section, (i) pay all reasonable
expenses and fees of the Plan Administrator, (ii) indemnify the Plan
Administrator (including individual Committee members) against any costs,
expenses and liabilities including, without limitation, attorneys’ fees and
expenses arising in connection with the performance of the Plan Administrator
hereunder, except with respect to matters resulting from the Plan Administrator’s
gross negligence or willful misconduct and (iii) supply full and timely
information to the Plan Administrator on all 

 

18

 

matters related to the Plan, any rabbi trust, Participants,
Beneficiaries and Accounts as the Plan Administrator may reasonably require.

 

9.3                                 Withholding.  The Company shall have the right to withhold
from any payment due under the Plan (or any amount deferred into the Plan) any
taxes required by law to be withheld in respect of such payment (or Deferral).

 

9.4                                 Indemnification.  The Company shall indemnify and hold harmless
each employee, officer, director, agent or organization, to whom or to which it
delegated duties, responsibilities, and authority under the Plan or otherwise
with respect to administration of the Plan, including, without limitation, the
Plan Administrator, the Committee and their agents, against all claims,
liabilities, fines and penalties, and all expenses reasonably incurred by or
imposed upon him or it (including but not limited to reasonable attorney fees)
which arise as a result of his or its actions or failure to act in connection
with the operation and administration of the Plan to the extent lawfully
allowable and to the extent that such claim, liability, fine, penalty, or
expense is not paid for by liability insurance purchased or paid for by the
Company. Notwithstanding the foregoing, the Company shall not indemnify any
person or organization if his or its actions or failure to act are due to gross
negligence or willful misconduct or for any such amount incurred through any
settlement or compromise of any action unless the Company consents in writing
to such settlement or compromise.

 

9.5                                 Delegation of
Authority.  In the
administration of this Plan, the Plan Administrator may, from time to time,
employ agents and delegate to them such administrative duties as it sees fit,
and may from time to time consult with legal counsel who shall be legal counsel
to the Company.

 

9.6                                 Binding
Decisions or Actions.  The
decision or action of the Plan Administrator in respect of any question arising
out of or in connection with the administration, interpretation and application
of the Plan and the rules and regulations thereunder shall be final and
conclusive and binding upon all persons having any interest in the Plan.

 

 

ARTICLE X

Amendment and Termination

 

10.1                           Amendment and
Termination.  The Company
may at any time and from time to time amend the Plan or may terminate the Plan
as provided in this Section 10.1.

 

(a)                                  Amendments. The Company,
by action taken by its Board of Directors, may amend the Plan at any time,
provided that any such amendment shall not reduce the vested Account Balances
of any Participant accrued as of the date of any such amendment or restatement
(as if the Participant had incurred a voluntary Separation from Service on such
date) or reduce any rights of a Participant under the Plan or other Plan
features with respect to Deferrals made prior to the date of 

 

19

 

any such amendment or restatement without the consent of the
Participant.  The Board of Directors may
delegate to the Plan Administrator the authority to amend the Plan without the
consent of the Board of Directors for the purpose of (i) conforming the Plan to
the requirements of law, (ii) to facilitate administration, (iii) to clarify provisions
based on the Plan Administrator’s interpretation of the document and (iv) to
make such other amendments as the Board of Directors may authorize.

 

(b)                                 Termination.  The Company, by action taken by its Board of
Directors and having considered the requirements of Code Section 409A, may
terminate the Plan and pay Participants and Beneficiaries their Account
Balances in a single lump sum at any time.

 

10.2                           Accounts Taxable Under Code
Section 409A.  The Plan is
intended to constitute a plan of deferred compensation that meets the
requirements for deferral of income taxation under Code Section 409A.  The Plan Administrator, pursuant to its
authority to interpret the Plan, may sever from the Plan or any Deferral
Election any provision or exercise of a right that otherwise would result in a
violation of Code Section 409A.  If,
after application of the preceding sentence, the Plan Administrator determines
that a Participant’s Accounts are taxable or if such Participant receives a
notice of deficiency from the Internal Revenue Service due to a violation of
Code Section 409A, such Participant will receive payment from his or her
Accounts in a single lump sum.  The
amount of the payment shall not exceed the lesser of (i) the Participant’s
Account Balance or (ii) an amount equal to the amount of income included
in taxable income as a result of such violation, plus an additional amount, to
the extent permissible under Treasury Department regulations, for penalties
under Code Section 409A, other taxes and interest or other costs.  Payment under this Section 10.2,
including the amount of any taxes, penalties, interest or other costs, shall be
applied against the Participant’s Accounts and shall constitute fulfillment of
the Company’s payment obligation to such Participant under the Plan to the
extent of any such payments.

 

 

ARTICLE XI

Informal
Funding

 

11.1                           General Assets.  Obligations
established under the terms of the Plan may be satisfied from the
general funds of the Company, an Affiliate, or a trust described in Section
11.2.  No Participant, spouse or
Beneficiary shall have any right, title or interest whatever in assets of the
Company or an Affiliate.  Nothing
contained in this Plan, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind, or a fiduciary
relationship, between the Company or its Affiliates and any Employee, spouse,
or Beneficiary.  To the extent that any
person acquires a right to receive payments from the Company hereunder, such
rights are no greater than the right of an unsecured general creditor of the
Company.

 

20

 

11.2                           Rabbi Trust.  The Company
or an Affiliate may, at its sole discretion, establish a grantor trust,
commonly known as a rabbi trust, as a vehicle for accumulating assets to pay
benefits under the Plan.  Payments under
the Plan may be paid from the general assets of the Company or from the assets
of any such rabbi trust.  Payment from
any such source shall reduce the Company’s obligation to the Participant or
Beneficiary under the Plan.

 

If a rabbi trust is in existence upon the
occurrence of a “change in control”, as defined in such trust, the Company
shall, upon such change in control, and on each anniversary of the change in
control, contribute in cash or liquid securities such amounts as are necessary
so that the value of assets after making the contributions exceed the total
value of all Account Balances by 125%.

 

 

ARTICLE XII

Claims

 

12.1                           Filing a Claim. Any
controversy or claim arising out of or relating to the Plan shall be filed in
writing with the Plan Administrator which shall make all determinations
concerning such claim. Any claim filed with the Plan Administrator and any
decision by the Plan Administrator denying such claim shall be in writing and
shall be delivered to the Participant or Beneficiary filing the claim (the “Claimant”).

 

12.2                           In General.  Notice of a denial of benefits (other than
Disability benefits) will be provided within ninety (90) days of the Plan
Administrator’s receipt of the Claimant’s claim for benefits. If the Plan
Administrator determines that it needs additional time to review the claim, the
Plan Administrator will provide the Claimant with a notice of the extension
before the end of the initial ninety (90) day period. The extension will not be
more than ninety (90) days from the end of the initial ninety (90) day period
and the notice of extension will explain the special circumstances that require
the extension and the date by which the Plan Administrator expects to make a
decision.

 

12.3                           Disability
Benefits.  Notice of
denial of Disability benefits will be provided within forty-five (45) days of
the Plan Administrator’s receipt of the Claimant’s claim for Disability
benefits.  If the Plan Administrator determines
that it needs additional time to review the Disability claim, the Plan
Administrator will provide the Claimant with a notice of the extension before
the end of the initial forty-five (45) day period.  If the Plan Administrator determines that a decision
cannot be made within the first extension period due to matters beyond the
control of the Plan Administrator, the time period for making a determination
may be further extended for an additional thirty (30) days.  If such an additional extension is necessary,
the Plan Administrator shall notify the Claimant prior to the expiration of the
initial thirty (30) day extension.  Any
notice of extension shall indicate the circumstances necessitating the
extension of time, the date by which the Plan Administrator expects to furnish
a notice of decision, the specific standards on which such entitlement to a
benefit is based, the unresolved issues that prevent a decision on the claim
and any additional information needed to resolve those issues.  A Claimant will be 

 

21

 

provided a minimum of forty-five (45) days to submit any necessary
additional information to the Plan Administrator.  In the event that a thirty (30) day extension
is necessary due to a Claimant’s failure to submit information necessary to
decide a claim, the period for furnishing a notice of decision shall be tolled
from the date on which the notice of the extension is sent to the Claimant
until the earlier of the date the Claimant responds to the request for
additional information or the response deadline.

 

12.4                           Contents of
Notice.  If a claim for benefits is
completely or partially denied, notice of such denial shall be in writing and
shall set forth the reasons for denial in plain language.  The notice shall (i) cite the pertinent
provisions of the Plan document and (ii) explain, where appropriate, how the
Claimant can perfect the claim, including a description of any additional
material or information necessary to complete the claim and why such material
or information is necessary. The claim denial also shall include an explanation
of the claims review procedures and the time limits applicable to such
procedures, including a statement of the Claimant’s right to bring a civil
action under Section 502(a) of ERISA following an adverse decision on
review.  In the case of a complete or
partial denial of a Disability benefit claim, the notice shall provide a
statement that the Plan Administrator will provide to the Claimant, upon
request and free of charge, a copy of any internal rule, guideline, protocol,
or other similar criterion that was relied upon in making the decision.

 

12.5                           Appeal of
Denied Claims. A Claimant whose claim has been completely or
partially denied shall be entitled to appeal the claim denial by filing a
written appeal with the Plan Administrator. 
A Claimant who timely requests a review of the denied claim (or his or
her authorized representative) may review, upon request and free of charge, copies
of all documents, records and other information relevant to the denial and may
submit written comments, documents, records and other information relevant to
the claim to the Plan Administrator.  All
written comments, documents, records, and other information shall be considered
“relevant” if the information (i) was relied upon in making a benefits
determination, (ii) was submitted, considered or generated in the course of
making a benefits decision regardless of whether it was relied upon to make the
decision, or (iii) demonstrates compliance with administrative processes and
safeguards established for making benefit decisions. The Plan Administrator
may, in its sole discretion and if it deems appropriate or necessary, decide to
hold a hearing with respect to the claim appeal.

 

(a)                                  In
General.  Appeal of a
denied benefits claim (other than a Disability benefits claim) must be filed in
writing with the Plan Administrator no later than sixty (60) days after receipt
of the written notification of such claim denial.  The Plan Administrator shall make its
decision regarding the merits of the denied claim within sixty (60) days
following receipt of the appeal (or within one hundred and twenty (120) days
after such receipt, in a case where there are special circumstances requiring
extension of time for reviewing the appealed claim).  If an extension of time for reviewing the
appeal is required because of special circumstances, written notice of the
extension shall be furnished to the Claimant prior to the commencement of the
extension. The notice will indicate the special circumstances requiring the
extension of time and the date by which the Plan 

 

22

 

Administrator expects to render the determination on review.  The review will take into account comments,
documents, records and other information submitted by the Claimant relating to
the claim without regard to whether such information was submitted or
considered in the initial benefit determination.

 

(b)                                 Disability
Benefits.  Appeal of a
denied Disability benefits claim must be filed in writing with the Plan
Administrator no later than one hundred eighty (180) days after receipt of the
written notification of such claim denial. 
The review shall be conducted by the Plan Administrator (exclusive of
the person who made the initial adverse decision or such person’s
subordinate).  In reviewing the appeal,
the Plan Administrator shall (i) not afford deference to the initial denial of
the claim, (ii) consult a medical professional who has appropriate training and
experience in the field of medicine relating to the Claimant’s disability and
who was neither consulted as part of the initial denial nor is the subordinate
of such individual and (iii) identify the medical or vocational experts whose
advice was obtained with respect to the initial benefit denial, without regard
to whether the advice was relied upon in making the decision.  The Plan Administrator shall make its
decision regarding the merits of the denied claim within forty-five (45) days
following receipt of the appeal (or within ninety (90) days after such receipt,
in a case where there are special circumstances requiring extension of time for
reviewing the appealed claim).  If an
extension of time for reviewing the appeal is required because of special circumstances,
written notice of the extension shall be furnished to the Claimant prior to the
commencement of the extension. The notice will indicate the special
circumstances requiring the extension of time and the date by which the Plan
Administrator expects to render the determination on review.  Following its review of any additional
information submitted by the Claimant, the Plan Administrator shall render a
decision on its review of the denied claim.

 

(c)                                  Contents
of Notice.  If a
benefits claim is completely or partially denied on review, notice of such
denial shall be in writing and shall set forth the reasons for denial in plain
language.

 

(1)                                  The decision on
review shall set forth (i) the specific reason or reasons for the denial, (ii)
specific references to the pertinent Plan provisions on which the denial is
based, (iii) a statement that the Claimant is entitled to receive, upon request
and free of charge, reasonable access to and copies of all documents, records,
or other information relevant (as defined above) to the Claimant’s claim, and
(iv) a statement describing any voluntary appeal procedures offered by the plan
and a statement of the Claimant’s right to bring an action under Section 502(a)
of ERISA.

 

(2)                                  For the denial
of a Disability benefit, the notice will also include a statement that the
Committee will provide, upon request and free of charge, (i) any internal rule,
guideline, protocol or other similar criterion 

 

23

 

relied
upon in making the decision, (ii) any medical opinion relied upon to make the
decision and (iii) the required statement under Section 2560.503-1(j)(5)(iii)
of the Department of Labor regulations.

 

(d)                                 Claims
Appeals Upon Change in Control.  Upon a Change in Control, the Committee, as
constituted immediately prior to such Change in Control, shall continue to act
as the Plan Administrator.  For purposes
of this Section, “Change of Control” includes the definition under this Plan
and the definition of “Change in Control” under the Company’s 2005 Stock
Incentive Plan.

 

Upon
such Change in Control, the Company may not remove any member of the Committee,
but may replace resigning members if 2/3rds of the members of the Board of
Directors of the Company and a majority of Participants and Beneficiaries with
Account Balances consent to the replacement.

 

The
Plan Administrator shall have the exclusive authority at the appeals stage to
interpret the terms of the Plan and resolve appeals under the Claims Procedure.

 

The
Company shall, with respect to the Plan Administrator identified under this
Section, (i) pay all reasonable expense and fees of the Appeals Committee, (ii)
indemnify the Plan Administrator (including individual Committee members)
against any costs, expenses an liabilities including, without limitation,
attorneys’ fees and expenses arising in connection with the performance of the
Plan Administrator hereunder, except with respect to matters resulting from the
Plan Administrator’s gross negligence or willful misconduct and (iii) supply
full and timely information to the Plan Administrator on all matters related to
the Plan, any rabbi trust, Participants, Beneficiaries and Accounts as the Plan
Administrator may reasonably require.

 

12.6                           Legal Action.  A Claimant may not bring any legal action,
including commencement of any arbitration, relating to a claim for benefits
under the Plan unless and until the Claimant has followed the claims procedures
under the Plan and exhausted his or her administrative remedies under such claims
procedures.

 

If a Participant or Beneficiary prevails in a legal proceeding brought
under the Plan to enforce the rights of such Participant or any other similarly
situated Participant or Beneficiary, in whole or in part, the Company shall
reimburse such Participant or Beneficiary for all legal costs, expenses,
attorneys’ fees and such other liabilities incurred as a result of such
proceedings.  If the legal proceeding is
brought in connection with a Change in Control, or a “change in control” as
defined in a rabbi trust described in Section 11.2, the Participant or
Beneficiary may file a claim directly with the trustee for reimbursement of
such costs, expenses and fees.  For
purposes of the preceding sentence, the amount of the claim shall be treated as
if it were an addition to the Participant’s or Beneficiary’s Account Balance
and will be included in determining the Company’s trust funding obligation
under Section 11.2.

 

24

 

12.7                           Discretion of
Plan Administrator.  All
interpretations, determinations and decisions of the Plan Administrator with
respect to any claim shall be made in its sole discretion, and shall be final
and conclusive.

 

 

12.8                           Arbitration.

 

(a)                                  Prior
to Change in Control. If, prior to a
Change in Control, any claim or controversy between the Company and a
Participant or Beneficiary is not resolved through the claims procedure set
forth in Article XII, such claim shall be submitted to and resolved exclusively
by expedited binding arbitration by a single arbitrator. For purposes of this
Section, “Change of Control” includes the definition under this Plan and the
definition of “Change in Control” under the Company’s 2005 Stock Incentive
Plan. Arbitration shall be conducted in accordance with the following
procedures:

 

i.                                          The complaining
party shall promptly send written notice to the other party identifying the
matter in dispute and the proposed remedy. 
Following the giving of such notice, the parties shall meet and attempt
in good faith to resolve the matter. In the event the parties are unable to
resolve the matter within twenty one (21) days, the parties shall meet and
attempt in good faith to select a single arbitrator acceptable to both
parties.  If a single arbitrator is not
selected by mutual consent within ten (10) Business Days following the giving
of the written notice of dispute, an arbitrator shall be selected from a list
of nine persons each of whom shall be an attorney who is either engaged in the
active practice of law or recognized arbitrator and who, in either even, is
experienced in serving as an arbitrator in disputes between employers and
employees, which list shall be provided by the main County of Denver office of
either JAMS, the American Arbitration Associate (“AAA”) or the Federal
Mediation and Conciliation Service. If, within three Business Days of the
parties’ receipt of such list, the parties are unable to agree unable an
arbitrator from the list, then the parties shall each strike names
alternatively from the list, with the first to strike being determined by the
flip of a coin.  After each party has had
four strikes, the remaining name on the list shall be the arbitrator.  If such person is unable to serve for any
reason, the parties shall repeat this process until an arbitrator is selected.

 

ii.                                       Unless the
parties agree otherwise, within sixty (60) days of the selection of the
arbitrator, a hearing shall be conducted before such arbitrator at a time and a
place agreed upon by the parties. In the event the parties are unable to agree
upon the time or place of the arbitration, the time and place within the County
of Denver shall be designated by the arbitrator after consultation with the
parties. Within thirty (30) days of the 

 

25

 

conclusion
of the arbitration hearing, the arbitrator shall issue an award, accompanied by
a written decision explaining the basis for the arbitrator’s award.

 

iii.                                    In any
arbitration hereunder, the Company shall pay all administrative fees of the arbitration
and all fees of the arbitrator, except that the Participant or Beneficiary may,
if he/she/it wishes, pay up to one-half of those amounts.  Each party shall pay its own attorneys’ fees,
costs, and expenses, unless the arbitrator orders otherwise. The prevailing
party in such arbitration, as determined by the arbitrator, and in any
enforcement or other court proceedings, shall be entitled, to the extent
permitted by law, to reimbursement from the other party for all of the
prevailing party’s costs (including but not limited to the arbitrator’s
compensation), expenses, and attorneys’ fees. The arbitrator shall have no
authority to add to or to modify this Plan, shall apply all applicable law, and
shall have no lesser and no greater remedial authority than would a court of
law resolving the same claim or controversy. 
The arbitrator shall have no authority to add to or to modify this Plan,
shall apply all applicable law, and shall have no lesser and no greater remedial
authority than would a court of law resolving the same claim or controversy.
The arbitrator shall, upon an appropriate motion, dismiss any claim without an
evidentiary hearing if the party bringing the motion establishes that it would
be entitled to summary judgment if the matter had been pursued in court
litigation.

 

The parties shall be
entitled to discovery as follows: Each party may take no more than three
depositions. Company may depose the Participant or Beneficiary plus two other
witnesses, and Participant or Beneficiary may depose the Company, pursuant to
Rule 30(b)(6) of the Federal Rules of Civil Procedure, plus two other
witnesses. Each party may make such reasonable document discovery requests as
are allowed in the discretion of the arbitrator.

 

iv.                                   The decision of
the arbitrator shall be final, binding, and non-appealable, and may be enforced
as a final judgment in any court of competent jurisdiction.

 

v.                                      This
arbitration provision of the Plan shall extend to claims against any parent,
subsidiary, or affiliate of each party, and, when acting within such capacity,
any officer, director, shareholder, Participant, Beneficiary, or agent of any
party, or of any of the above, and shall apply as well to claims arising out of
state and federal statutes and local ordinances as well as to claims arising
under the common law or under this Plan.

 

26

 

vi.                                   Notwithstanding
the foregoing, and unless otherwise agreed between the parties, either party
may apply to a court for provisional relief, including a temporary restraining
order or preliminary injunction, on the ground that the arbitration award to
which the applicant may be entitled may be rendered ineffectual without
provisional relief.

 

vii.                                Any arbitration
hereunder shall be conducted in accordance with the Federal Arbitration Act:
provided, however, that, in the event of any inconsistency between the rules
and procedures of the Act and the terms of this Plan, the terms of this Plan
shall prevail.

 

viii.                             If any of the
provisions of this Section 12.8 are determined to be unlawful or otherwise
unenforceable, in the whole part, such determination shall not affect the
validity of the remainder of this Section 12.8, and this Section 12.8 shall be
reformed to the extent necessary to carry out its provisions to the greatest
extent possible and to insure that the resolution of all conflicts between the
parties, including those arising out of statutory claims, shall be resolved by
neutral, binding arbitration.  If a court
should find that the provisions of this Section 12.8 are not absolutely
binding, then the parties intend any arbitration decision and award to be fully
admissible in evidence in an y subsequent action, given great weight by any
finder of fact and treated as determinative to the maximum extent permitted by
law.

 

ix.                                     The parties do
not agree to arbitrate any putative class action or any other representative
action. The parties agree to arbitrate only the claims(s) of a single
Participant or Beneficiary.

 

(b)                                 Upon
Change in Control. If, upon the
occurrence of a Change in Control, any dispute, controversy or claim arises
between a Participant or Beneficiary and the Company out of or relating to or
concerning the provisions of the Plan, such dispute, controversy or claim shall
be finally settled by a court of competent jurisdiction in the City of New York
which, notwithstanding any other provision of the Plan, shall apply a de novo
standard of review to any determination made by the Company, the Board or the
Committee.

 

 

ARTICLE XIII

General
Conditions

 

13.1                           Anti-assignment
Rule.  No interest of any
Participant, spouse or Beneficiary under this Plan and no benefit payable
hereunder shall be assigned as security for a loan, and any such purported
assignment shall be null, void and of no effect, nor shall any such interest or
any such benefit be subject in any manner, either voluntarily or involuntarily,
to anticipation, sale, transfer, assignment or encumbrance by or through any
Participant, spouse or Beneficiary.

 

27

 

13.2                           No Legal or
Equitable Rights or Interest. No Participant or other
person shall have any legal or equitable rights or interest in this Plan that
are not expressly granted in this Plan. Participation in this Plan does not
give any person any right to be retained in the service of the Company or any
of its subsidiaries or affiliated companies. The right and power of the Company
to dismiss or discharge an Employee is expressly reserved.  Notwithstanding the provisions of Section
10.2, the Company makes no representations or warranties as to the tax
consequences to a Participant or a Participant’s beneficiaries resulting from a
deferral of income pursuant to the Plan.

 

13.3                           No Employment
Contract.  Nothing
contained herein shall be construed to constitute a contract of employment
between an Employee and the Company or any of its subsidiaries or affiliated
companies.

 

13.4                           Notice.  Any notice or filing required or permitted to
be delivered to the Plan Administrator under this Plan shall be delivered in
writing, in person, or through such electronic means as is established by the
Plan Administrator.  Notice shall be
deemed given as of the date of delivery or, if delivery is made by mail, as of
the date shown on the postmark on the receipt for registration or
certification.  Written transmission
shall be sent by certified mail to:

 

 

CENTENNIAL
BANK HOLDINGS, INC.

ATTN:
DIRECTOR OF HUMAN RESOURCES

1331
17TH STREET, SUITE 300

DENVER,
CO 80202

 

Any notice or filing
required or permitted to be given to a Participant under this Plan shall be
sufficient if in writing or hand-delivered, or sent by mail to the last known
address of the Participant.

 

13.5                           Headings.  The headings of Sections are included solely
for convenience of reference, and if there is any conflict between such
headings and the text of this Plan, the text shall control.

 

13.6                           Invalid or
Unenforceable Provisions. If any provision of this Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof and the Plan Administrator may elect in its sole
discretion to construe such invalid or unenforceable provisions in a manner
that conforms to applicable law or as if such provisions, to the extent invalid
or unenforceable, had not been included.

 

13.7                           Governing Law.  To the extent not preempted by ERISA, the
laws of the State/Commonwealth of New York shall govern the construction and
administration of the Plan.

 

28

 

IN WITNESS WHEREOF, the
undersigned executed this Plan as of the 12th day of June, 2006 to
be effective as of the Effective Date.

 

 

Centennial
Bank Holdings, Inc.

 

	
  By:

  	
  /s/ Zsolt K. Besskó

  	
   

  
	
   

  	
  Zsolt K. Besskó

  	
   

  
	
   

  	
  Executive Vice President and

  	
   

  
	
   

  	
  General Counsel

  	
   

  

 

29

 

AMENDMENT

TO THE
CENTENNIAL BANK HOLDINGS, INC.

DEFERRED
COMPENSATION PLAN

 

This Amendment to the Centennial Bank
Holdings, Inc. Deferred Compensation Plan (the “Plan”) is adopted coincident
with the adoption of the Plan.  The
purpose of the Amendment is to permit Directors of the Company to defer
compensation paid for services as Directors.

 

The provisions of the Plan shall remain in
effect, except as modified below with respect to Deferrals by Directors.  This Amendment shall not be construed as
modifying the Plan with respect to any other Participant, Beneficiary or
Eligible Employee as defined in the Plan document.

 

(1)                                  “Compensation”
shall mean Directors’ fees, which may include annual fees, meeting fees and
such other Compensation as is paid to the Directors for services performed in
such capacity.

 

(2)                                  “Director”
means a member of the Board of Directors of the Company.

 

(3)                                  “Eligible
Employee” shall mean a Director of the Company’s Board of Directors.

 

(4)                                  “Separation
Payments” under the “Payment Schedule” definition shall mean (a) a single lump
sum or (b) substantially equal installment payments paid over a period of two
(2) to fifteen (15) years.

 

(5)                                  “Separation
from Service” shall mean the first day in which the Director is no longer
performing services for the Company in the capacity of a Director or other
independent contractor, either due to resignation or removal.

 

(6)                                  Section 3.1 is
modified to read as follows: “A Director becomes an Eligible Employee upon commencement
of services as a Director.”

 

(7)                                  Section 3.2 is
modified to read as follows: “A Director shall remain a Participant eligible to
defer Compensation until such time as he or she incurs a Separation from
Service.”

 

(8)                                  Directors are
permitted to submit Deferral Elections under Article IV, but may not allocate
deferrals to Specified Date Accounts. 
All allocations are made to the Retirement/Termination Account.

 

(9)                                  Directors are
eligible for benefits described in Sections 8.1 (Separation from Service), 8.4
(death) 8.6 (Change in Control) and 8.10 (Domestic Relations Orders).

 

Except as modified above, the rights of
Directors shall be the same as all other Participants, except where the context
would indicate otherwise.

 

 

30Exhibit
10.1

 

FORM OF AMENDMENT TO NONQUALIFIED STOCK OPTION AGREEMENT

 

This
AMENDMENT TO NONQUALIFIED STOCK OPTION AGREEMENT (this “Amendment”) is made
and entered into as of             ,
2006, by and between Venoco, Inc., a Delaware corporation (the “Company”), and                         
(“Participant”).

RECITALS

A.            The Company and Participant are
parties to that certain Nonqualified Stock Option Agreement dated             
entered into pursuant to the terms of the Company’s 2000 Stock Incentive Plan
(the “Option Agreement”).

B.            The Company and Participant have
determined that in connection with the Company’s agreement to enter into that
certain Bonus Payment Agreement, dated as of the date hereof, between the
Company and Participant, Participant has agreed to amend the Option Agreement,
in the manner set forth herein.

AGREEMENT

In
consideration of the terms and conditions of this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

1.             Amended Provisions.

(a)           Section 4.2 of the
Option Agreement is hereby deleted and replaced in its entirety with the
following:

4.2            For the
purpose of this Option Agreement, a “Change
in Control” shall mean the occurrence of one of the following
events:

(a)          Any “person” (as such term is used in
Section 13(d) and 14(d) of the Exchange Act) other than Timothy M. Marquez,
Bernadette B. Marquez, their respective legal representatives, devisees, donees
and heirs and any Trust for the benefit of either or both of Timothy M. Marquez
and Bernadette B. Marquez and/or the issue of either of them (the “Marquez
Family”) becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of securities of the
Company representing more than 50% of the combined voting power of the Company’s
then outstanding securities;

(b)          the
stockholders of the Company approve a merger or consolidation of the Company
with any other Company, other than (a) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities 

 

1

 

of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company (or such surviving entity) outstanding immediately
after such merger or consolidation or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which
no “person” (as such term is used in Section 13(d) and 14(d) of the Exchange
Act) other than the Marquez Family acquires more than 50% of the combined
voting power of the Company’s then outstanding securities;

(c)             the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets. 
For purposes of this clause (iv), the term “the sale or disposition by
the Company of all or substantially all of the Company’s assets” shall mean a
sale or other disposition transaction or series of related transactions  involving assets of the Company or of any
direct or indirect subsidiary of the Company (including the stock of any direct
or indirect subsidiary of the Company) in which the value of the assets or
stock being sold or otherwise disposed of (as measured by the purchase price
being paid therefor or by such other method as the Board of Directors of the
Company determines is appropriate in a case where there is no readily
ascertainable purchase price) constitutes more than two-thirds of the “fair
market value of the Company” (as hereinafter defined).  For purposes of the preceding sentence, the “fair
market value of the Company” shall be the aggregate market value of the Company’s
outstanding common stock (on a fully diluted basis) plus the aggregate market
value of the Company’s other outstanding equity securities.  The aggregate market value of the Company’s
equity securities shall be determined by multiplying the number of shares of
the Company’s common stock (on a fully diluted basis) outstanding on the date
of the execution and delivery of a definitive agreement with respect to the
transaction or series of related transactions (the “Transaction Date”) by the
average closing price of such security for the ten trading days immediately
preceding the Transaction Date, or if not publicly traded, by such other method
as the Board of Directors of the Company shall determine is appropriate; or

(d)  the
Marquez Family is no longer the largest beneficial owner of the Company’s
outstanding voting securities and Timothy Marquez is no longer the Chief
Executive Officer or Chairman of the Board of Directors of the Company.

(b)           Section 11.7(d) of
the Option Agreement is hereby deleted and replaced in its entirety with the
following:

(d) 
if the stock is not listed or admitted to trade on a national securities
exchange, is not reported on the National Market Reporting System and if bid
and asked prices for the stock are not furnished by the NASD or a similar
organization, the “fair market value” as that term is used in proposed or final

 

2

 

regulations promulgated under
Section 409A of the Internal Revenue Code, as determined by an independent
third party selected by the Participant and the Company.  Such fair market value shall be based on the
trading values of a comparable group of public companies with appropriate
discounts for the illiquidity and minority status of the Shares, and any other
factors necessary for a reasonable valuation method.  If the Company and the Participant are unable
to select promptly a mutually agreeable independent third party for this
determination, the independent third party shall be selected pursuant to C.R.S.
Section 13-22-205.  All fees and expenses
of the independent third party shall be borne equally by the Company and the
Participant.

(c)           Section
15 of the Option Agreement is hereby deleted in its entirety.

2.             No
Other Changes.  Except as modified or
supplemented by this Agreement, the Option Agreement remains unmodified and in
full force and effect.

3.             Assignability.  Participant may not assign or transfer any of
his rights or obligations under this Agreement in any manner whatsoever.  The Company shall have the right to assign
this Agreement and to delegate all rights, duties and obligations hereunder,
either in whole or in part, to any parent, affiliate, successor or subsidiary
organization of the Company, so long as the obligations of the Company under
this Agreement remain the obligations of the Company.

4.             Validity.  The validity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

5.             Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Participant and such officer as may be
specifically authorized by the Board.  No
waiver by either party hereto at any time of any breach by the other party
hereto of, or in compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.  This Agreement is an integration
of the parties’ agreement; no agreement or representation, oral or otherwise,
express or implied, with respect to the subject matter hereof had been made by
either party which is not set forth expressly in this Agreement.  The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Delaware.

6.             Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together will constitute one and the same instrument.

7.             Arbitration.  Either party shall be permitted (but not
required) to elect that any dispute or controversy arising under or in
connection with this Agreement be settled by arbitration in Denver, Colorado,
in accordance with the rules of the American Arbitration 

 

3

 

Association
then in effect.  Judgment may be entered
on the arbitrator’s award in any court having jurisdiction.

8.             Knowledge
of Terms and Conditions.  Participant
has received a copy of this Agreement in advance of his execution hereof and
has had the opportunity to consult with his own attorney with respect to the
terms and conditions hereof and the transactions contemplated under this
Agreement.  Participant has executed this
Agreement with full knowledge of the terms and conditions contained herein and
acknowledges that he has had the opportunity to obtain information regarding
the Company and concerning the terms and conditions of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Amendment
to Nonqualified Stock Option Agreement effective as of the date first above
written.

 

	
   

  	
  VENOCO,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Timothy
  M. Marquez

  
	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  

 

 

4

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