Document:

exv10w1

Exhibit 10.1

CHEMICAL FINANCIAL CORPORATION

STOCK INCENTIVE PLAN OF 2006

Effective January 17, 2006,

As Amended April 19, 2011

SECTION 1

Establishment Of Plan; Purpose Of Plan

     1.1 Establishment of Plan. The Company hereby establishes the STOCK INCENTIVE PLAN OF 2006
for its corporate and Subsidiary officers and other key employees. The Plan permits the grant and
award of Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Stock
Awards and other stock-based and stock-related awards.

     1.2 Purpose of Plan. The purpose of the Plan is to provide Participants with an increased
incentive to contribute to the long-term performance and growth of the Company and its
Subsidiaries, to join the interests of Participants with the interests of the Company’s
shareholders through the opportunity for increased stock ownership and to attract and retain
Participants. The Plan is further intended to provide flexibility to the Company in structuring
long-term incentive compensation to best promote the foregoing objectives. Within that context, it
is intended that the Plan may provide performance-based compensation under Section 162(m) of the
Code and the Plan shall be interpreted, administered and amended to achieve that purpose.

SECTION 2

Definitions

     The following words have the following meanings unless a different meaning plainly is required
by the context:

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

     2.2  “Affiliate” means any organization controlling, controlled by or under common control with
the Company.

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

     2.4  “Change in Control,” unless otherwise defined in an Incentive Award agreement, means an
occurrence of a nature that would be required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A issued under the Act. Without limiting the inclusiveness of the definition
in the preceding sentence, a Change in Control of the Company

 

 

shall be deemed to have occurred as of the first day that any one or more of the following
conditions is satisfied: (a) any Person is or becomes the “beneficial owner” (as defined in Rule
13d-3 under the Act), directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company’s then outstanding securities; (b) the failure at
any time of the Continuing Directors to constitute at least a majority of the Board; or (c) any of
the following occur: (i) any merger or consolidation of the Company, other than a merger or
consolidation in which the voting securities of the Company immediately prior to the merger or
consolidation continue to represent (either by remaining outstanding or being converted into
securities of the surviving entity) 60% or more of the combined voting power of the Company or
surviving entity immediately after the merger or consolidation with another entity; (ii) any sale,
exchange, lease, mortgage, pledge, transfer or other disposition (in a single transaction or a
series of related transactions) of assets or earning power aggregating more than 50% of the assets
or earning power of the Company on a consolidated basis; (iii) any complete liquidation or
dissolution of the Company; (iv) any reorganization, reverse stock split or recapitalization of the
Company which would result in a Change in Control as otherwise defined in this Plan; or (v) any
transaction or series of related transactions having, directly or indirectly, the same effect as
any of the foregoing.

     2.5  “Code” means the Internal Revenue Code of 1986, as amended. Each reference herein to a
section or sections of the Code shall, unless otherwise noted, be deemed to include a reference to
the rules and regulations issued under such section or sections of the Code.

     2.6  “Committee” means the Compensation and Pension Committee of the Board or such other
committee as the Board may designate from time to time. The Committee shall consist of at least
two members of the Board and all of its members shall be “non-employee directors” as defined in
Rule 16b-3 issued under the Act and “outside directors” as defined in Section 162(m) of the Code.

     2.7  “Common Stock” means the Company’s common stock, par value $1 per share.

     2.8  “Company” means Chemical Financial Corporation, a Michigan corporation, and its successors
and assigns.

     2.9  “Continuing Directors” means the individuals who were either (a) first elected or
appointed as a director prior to January 17, 2006, or (b) subsequently appointed as a director, if
appointed or nominated by at least a majority of the Continuing Directors in office at the time of
the nomination or appointment, but specifically excluding any individual whose initial assumption
of office occurs as a result of either an actual or threatened solicitation subject to Rule
14a-12(c) of Regulation 14A issued under the Act or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board.

     2.10  “Covered Employee” means any Employee who is or may become a “Covered Employee,” as
defined in Section 162(m) of the Code, and who is designated, either as an individual Employee or
class of Employees, by the Committee within the shorter of (i) 90 days after the beginning of the
Performance Period, or (ii) the period of time after the beginning of the

 

 

Performance Period and before 25% of the Performance Period has elapsed, as a “Covered Employee” under this Plan for such
applicable Performance Period.

     2.11  “Director” means a member of the Board.

     2.12  “Disability” means an inability of a Participant to perform his or her employment duties
due to physical or mental disability for a continuous period of 180 days or longer and the
Participant is eligible for benefits under the Company’s long-term disability policy.

     2.13  “Employee” means an employee of the Company or one of its Subsidiaries or Affiliates.

     2.14  “Incentive Award” means the award or grant of a Stock Option, a Stock Appreciation Right,
Restricted Stock, a Restricted Stock Unit, a Stock Award, or another stock-based or stock-related
award, to a Participant pursuant to the Plan.

     2.15  “Market Value” shall equal the closing market price of shares of Common Stock reported on
Nasdaq (or any successor exchange or system that is the primary stock exchange or system for
trading of Common Stock) on the date of grant, exercise or vesting, as applicable, or if Nasdaq (or
any such successor) is closed on that date, the last preceding date on which Nasdaq (or any such
successor) was open for trading and on which shares of Common Stock were traded. If the Common
Stock is not readily tradable on an established securities market, the Market Value shall be
determined by any means deemed fair and reasonable by the Committee, taking into account such
factors as it considers advisable in a manner consistent with the valuation principles of Section
409A of the Code, except when the Committee expressly determines not to use Section 409A valuation
principles, which determination shall be final and binding on all parties.

     2.16  “Mature Shares” means shares of Common Stock that a Participant has owned for at least
six months and that meet any other holding requirements established by the Committee for the shares
to be used for attestation.

     2.17  “Nasdaq” means The Nasdaq Stock Market.

     2.18  “Participant” means a corporate officer or any key employee of the Company or its
Subsidiaries who is granted an Incentive Award under the Plan.

     2.19  “Performance” means the level of achievement of the performance goals established by the
Committee pursuant to Section 10.1.

     2.20  “Performance Measures” means measures as described in Section 10 on which the performance
goals are based.

 

 

     2.21  “Performance Period” means the period of time during which the performance goals must be
met to determine the degree of payout, the vesting, or both, with respect to an Incentive Award
that is intended to qualify as Performance-Based Compensation.

     2.22  “Performance-Based Compensation” means compensation under an Incentive Award that
satisfies the requirements of Section 162(m) of the Code for certain “performance-based
compensation” paid to Covered Employees. Notwithstanding the foregoing, nothing in this Plan shall
be construed to mean that an Incentive Award which does not satisfy the requirements for
performance-based compensation under Section 162(m) of the Code does not constitute
performance-based compensation for other purposes, including Section 409A of the Code.

     2.23  “Person” has the same meaning as set forth in Sections 13(d) and 14(d)(2) of the Act.

     2.24  “Plan” means the Chemical Financial Corporation Stock Incentive Plan of 2006 as set forth
herein, as it may be amended from time to time.

     2.25  “Restricted Period” means the period of time during which Restricted Stock, Restricted
Stock Units or other stock-based or stock-related awards that are awarded under the Plan are
subject to the risk of forfeiture, restrictions on transfer and other restrictions or conditions
pursuant to Sections 7 or 8. The Restricted Period may differ among Participants and may have
different expiration dates with respect to shares of Common Stock covered by the same Incentive
Award.

     2.26  “Restricted Stock” means Common Stock awarded to a Participant pursuant to Section 7 of
the Plan while such Common Stock remains subject to the risk of forfeiture, restrictions on
transfer and other restrictions or conditions pursuant to Section 7.

     2.27  “Restricted Stock Unit” means an award to a Participant pursuant to Section 7 of the Plan
and described as a “Restricted Stock Unit” in Section 7.

     2.28  “Retirement” means the voluntary termination of all employment by the Participant after
the Participant has attained 55 years of age and completed 10 years of service with the Company or
any of its Subsidiaries or as otherwise may be set forth in the Incentive Award agreement or other
grant document with respect to a Participant and a particular Incentive Award.

     2.29  “Stock Appreciation Right” or “SAR” means any right granted to a Participant pursuant to
Section 6 of the Plan.

     2.30  “Stock Award” means an award of Common Stock awarded to a Participant pursuant to Section
8 of the Plan.

 

 

     2.31  “Stock Option” means the right to purchase Common Stock at a stated price for a specified
period of time. For purposes of the Plan, a Stock Option may only be a nonqualified stock option.

     2.32  “Subsidiary” means any corporation or other entity of which 50% or more of the
outstanding voting stock or voting ownership interest is directly or indirectly owned or
controlled by the Company or by one or more Subsidiaries of the Company. The term “Subsidiary”
includes present and future Subsidiaries of the Company.

     2.33  “Termination” or “Cessation” of employment shall be considered to occur on the date on
which the Employee is no longer obligated to perform services for the Company or any of its
Subsidiaries and the Employee’s right to re-employment is not guaranteed by statute, contract or
written policy of the Company, regardless of whether the Employee continues to receive compensation
from the Company or any of its Subsidiaries after such date. The following shall not be considered
such a termination or cessation: (i) a transfer of an employee among the Company and its
Subsidiaries; (ii) a leave of absence, duly authorized in writing by the Company, for military
service or for any other purpose approved by the Company if the period of such leave does not
exceed 90 days; (iii) a leave of absence in excess of 90 days, duly authorized in writing by the
Company, provided that the employee’s right to re-employment is guaranteed by statute, contract or
written policy of the Company; or (iv) a termination of employment as an officer with continued
service as an Employee or director.

SECTION 3

Administration

     3.1 Power and Authority. The Committee shall administer the Plan. The Committee may delegate
any, some or all of its record keeping, calculation, payment and other ministerial or
administrative authority and responsibility from time to time to and among one or more individuals,
who may be members of the Committee or Employees, but all actions taken pursuant to delegated
authority and responsibility shall be subject to such review, change and approval by the Committee
as the Committee considers appropriate. Except as limited in the Plan or as may be necessary to
ensure, to the extent that the Committee so desires, that the Plan provides Performance-Based
Compensation, the Committee shall have all of the express and implied powers and duties set forth
in the Bylaws of the Company and the Plan, shall have full power and authority to interpret the
provisions of the Plan and Incentive Awards granted under the Plan and shall have full power and
authority to supervise the administration of the Plan and Incentive Awards granted under the Plan
and to make all other determinations and do all things considered necessary or advisable for the
administration of the Plan. All determinations, interpretations and selections made by the
Committee regarding the Plan shall be final and conclusive. The Committee shall hold its meetings
at such times and places as it considers advisable. Action may be taken by a written instrument
signed by all of the members of the Committee and any action so taken shall be fully as effective
as if it had been taken at a meeting duly called and held. The

 

 

Committee shall make such rules and
regulations for the conduct of its business as it considers advisable.

     3.2 Grants or Awards to Participants. In accordance with and subject to the provisions of the
Plan, the Committee shall have the authority to determine all provisions of Incentive Awards as the
Committee may consider necessary or desirable and as are consistent
with the terms of the Plan, including, without limitation, the following: (a) the persons who
shall be selected as Participants; (b) the nature and, subject to the limitations set forth in
Sections 4.1 and 4.2 of the Plan, extent of the Incentive Awards to be made to each Participant
(including the number of shares of Common Stock to be subject to each Incentive Award, any exercise
or purchase price, the manner in which an Incentive Award will vest or become exercisable and the
form of payment for the Incentive Award); (c) the time or times when Incentive Awards will be
granted; (d) the duration of each Incentive Award; and (e) the restrictions and other conditions to
which payment or vesting of Incentive Awards may be subject.

     3.3 Amendments or Modifications of Incentive Awards. Subject to Section 12, the Committee
shall have the authority to amend or modify the terms of any outstanding Incentive Award in any
manner, provided that the amended or modified terms are not prohibited by the Plan as then in
effect and provided such actions do not cause an Incentive Award not already subject to Section
409A of the Code to become subject to Section 409A of the Code, including, without limitation, the
authority to: (a) modify the number of shares or other terms and conditions of an Incentive Award;
provided that any increase in the number of shares of an Incentive Award other than pursuant to
Section 4.3 shall be considered to be a new grant with respect to such additional shares for
purposes of Section 409A of the Code and such new grant shall be made at Market Value on the date
of grant; (b) extend the term of an Incentive Award to a date that is no later than the
earlier of the latest date upon which the Incentive Award could have expired by its terms under any
circumstances or the 10th anniversary of the date of grant (for purposes of
clarity, as permitted under Section 409A of the Code, if the term of a Stock Option is extended at
a time when the Stock Option exercise price equals or exceeds the Market Value, it will not be an
extension of the term of the Stock Option, but instead will be treated as a modification of the
Stock Option and a new Stock Option will be treated as having been granted); (c) accelerate the
exercisability or vesting or otherwise terminate, waive or modify any restrictions relating to an
Incentive Award; (d) accept the surrender of any outstanding Incentive Award; and (e) to the extent
not previously exercised or vested, authorize the grant of new Incentive Awards in substitution for
surrendered Incentive Awards; provided, however, that such grant of new Incentive Awards shall be
considered to be a new grant for purposes of Section 409A of the Code and shall be made at Market
Value on the date of grant and, provided further, that Incentive Awards issued under the Plan may
not be repriced, replaced, regranted through cancellation or modified without shareholder approval
if the effect of such repricing, replacement, regrant or modification would be to reduce the
exercise price or base price of such Incentive Awards to the same Participants.

     3.4 Indemnification of Committee Members. Neither any member or former member of the
Committee, nor any individual or group to whom authority or responsibility is or

 

 

has been delegated, shall be personally responsible or liable for any act or omission in connection with the
performance of powers or duties or the exercise of discretion or judgment in the administration and
implementation of the Plan. Each person who is or shall have been a member of the Committee, and
any other individual or group exercising delegated authority or responsibility with respect to the
Plan, shall be indemnified and held harmless by the Company from and against any cost, liability or
expense imposed or incurred in connection with such person’s or the Committee’s taking or failing
to take any action under the Plan or the exercise of
discretion or judgment in the administration and implementation of the Plan. This Section 3.4
shall not be construed as limiting the Company’s or any Subsidiary’s ability to terminate or
otherwise alter the terms and conditions of the employment of an individual or group exercising
delegated authority or responsibility with respect to the Plan, or to discipline any such person.
Each such person shall be justified in relying on information furnished in connection with the
Plan’s administration by any appropriate person or persons.

SECTION 4

Shares Subject to the Plan

     4.1 Number of Shares. Subject to adjustment as provided in Section 4.3 of the Plan, the
total number of shares available for Incentive Awards under the Plan shall be 1,000,000 shares of
Common Stock; plus shares subject to Incentive Awards that are canceled, surrendered, modified,
exchanged for substitute Incentive Awards or that expire or terminate prior to the exercise or
vesting of the Incentive Awards in full and shares that are surrendered to the Company in
connection with the exercise or vesting of Incentive Awards, whether previously owned or otherwise
subject to such Incentive Awards. Such shares shall be authorized and may be unissued shares,
shares issued and repurchased by the Company (including shares purchased on the open market), and
shares issued and otherwise reacquired by the Company.

     4.2 Limitation Upon Incentive Awards. No Participant shall be granted, during any calendar
year, Incentive Awards with respect to more than 25% of the total number of shares of Common Stock
available for Incentive Awards under the Plan set forth in Section 4.1 of the Plan, subject to
adjustment as provided in Section 4.3 of the Plan, but only to the extent that such adjustment will
not affect the status of any Incentive Award theretofore issued or that may thereafter be issued as
Performance-Based Compensation. The purpose of this Section 4.2 is to ensure that the Plan
provides Performance-Based Compensation and this Section 4.2 shall be interpreted, administered and
amended if necessary to achieve that purpose.

     4.3 Adjustments.

     (a) Stock Dividends and Distributions. If the number of shares of Common Stock
outstanding changes by reason of a stock dividend, stock split, recapitalization or other
general distribution of Common Stock or other securities to holders of Common Stock, the
number and kind of securities subject to outstanding Incentive Awards and

 

 

available for issuance under the Plan, together with applicable exercise prices and base prices and the
limitation provided in Section 4.2, shall be adjusted in such manner and at such time as
shall be equitable under the circumstances. No fractional shares shall be issued pursuant
to the Plan and any fractional shares resulting from such adjustments shall be eliminated
from the respective Incentive Awards.

     (b) Other Actions Affecting Common Stock. If there occurs, other than as described in
Section 4.3(a), any merger, business combination, recapitalization,
reclassification, subdivision or combination approved by the Board that would result in
the persons who were shareholders of the Company immediately prior to the effective time of
any such transaction owning or holding, in lieu of or in addition to shares of Common Stock,
other securities, money and/or property (or the right to receive other securities, money
and/or property) immediately after the effective time of such transaction, then the
outstanding Incentive Awards (including exercise prices and base prices) and reserves for
Incentive Awards under the Plan shall be adjusted in such manner and at such time as shall
be equitable under the circumstances. It is intended that in the event of any such
transaction, Incentive Awards under the Plan shall entitle the holder of each Incentive
Award to receive (upon exercise in the case of Stock Options and SARs), in lieu of or in
addition to shares of Common Stock, any other securities, money and/or property receivable
upon consummation of any such transaction by holders of Common Stock with respect to each
share of Common Stock outstanding immediately prior to the effective time of such
transaction; upon any such adjustment, holders of Incentive Awards under the Plan shall have
only the right to receive in lieu of or in addition to shares of Common Stock such other
securities, money and/or other property as provided by the adjustment.

SECTION 5

Stock Options

     5.1 Grant. A Participant may be granted one or more Stock Options under the Plan. No
Participant shall have any rights as a shareholder with respect to any shares of stock subject to
Stock Options granted hereunder until such shares have been issued. For purposes of determining
the number of shares available under the Plan, each Stock Option shall count as the number of
shares of Common Stock subject to the Stock Option. Stock Options shall be subject to such terms
and conditions, consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. In addition, the Committee may vary, among Participants and among
Stock Options granted to the same Participant, any and all of the terms and conditions of the Stock
Options granted under the Plan. Subject to the limitation imposed by Section 4.2 of the Plan, the
Committee shall have complete discretion in determining the number of Stock Options granted to each
Participant. Stock Options issued under the Plan shall be nonqualified stock options and shall not
be considered incentive stock options as defined in Section 422(b) of the Code.

 

 

     5.2 Stock Option Agreements. Stock Options shall be evidenced by stock option agreements,
certificates of award, or both, containing the terms and conditions applicable to such Stock
Options. To the extent not covered by a stock option agreement or certificate of award, the terms
and conditions of this Section 5 shall govern.

     5.3 Stock Option Exercise Price. The per share Stock Option exercise price shall be
determined by the Committee, but shall be a price that is equal to or greater than 100% of the
Market Value on the date of grant. The date of grant of a Stock Option shall be the date the
Stock Option is authorized by the Committee or a future date specified by the Committee as the
date for issuing the Stock Option.

     5.4 Medium and Time of Payment. The exercise price for each share purchased pursuant to a
Stock Option granted under the Plan shall be payable in cash or, if the Committee consents or
provides in the applicable stock option agreement or grant, in shares of Common Stock or other
consideration substantially equivalent to cash. The Committee may require that only Mature Shares
be used to pay the exercise price. The time and terms of payment may be amended with the consent
of a Participant before or after exercise of a Stock Option, provided that such amendment would not
cause a Stock Option to become subject to Section 409A of the Code. Except as limited by the Act,
the Sarbanes-Oxley Act of 2002 or other laws, rules or regulations, the Committee may from time to
time authorize payment of all or a portion of the Stock Option exercise price in the form of a
promissory note or other deferred payment installments according to such terms as the Committee may
approve; provided, however, that such promissory note or other deferred payment installments shall
be with full recourse and shall bear a market rate of interest. The Board may restrict or suspend
the power of the Committee to permit such loans and may require that adequate security be provided.
The Committee may implement a program for the broker-assisted cashless exercise of Stock Options.

     5.5 Limits on Exercisability. Stock Options shall be exercisable for such periods, not to
exceed 10 years and one day from the date of grant, as may be fixed by the Committee. At the time
of exercise of a Stock Option, the holder of the Stock Option, if requested by the Committee, must
represent to the Company that the shares are being acquired for investment and not with a view to
the distribution thereof. The Committee may in its discretion require a Participant to continue
the Participant’s service with the Company or its Subsidiaries for a certain length of time prior
to a Stock Option becoming exercisable and may eliminate such delayed vesting provisions.

     5.6 Restrictions on Transferability.

     (a) General. Unless the Committee otherwise consents or permits (before or after the
stock option grant) or unless the stock option agreement or grant provides otherwise, Stock
Options granted under the Plan may not be sold, exchanged, transferred, pledged, assigned or
otherwise alienated or hypothecated except by will or the laws of descent and distribution,
and, as a condition to any transfer permitted by the Committee

 

 

or the terms of the stock option agreement or grant, the transferee must execute a written agreement permitting the
Company to withhold from the shares subject to the Stock Option a number of shares having a
Market Value at least equal to the amount of any federal, state or local withholding or
other taxes associated with or resulting from the exercise of a Stock Option. All provisions
of a Stock Option that are determined with reference to the Participant, including without
limitation those that refer to the Participant’s employment with the Company or its
Subsidiaries, shall continue to be determined with reference to the Participant after any
transfer of a Stock Option.

 

 

     (b) Other Restrictions. The Committee may impose other restrictions on any shares of
Common Stock acquired pursuant to the exercise of a Stock Option under the Plan as the
Committee considers advisable, including, without limitation, holding periods or further
transfer restrictions, forfeiture or “claw-back” provisions, and restrictions under
applicable federal or state securities laws.

     5.7 Termination of Employment. Unless the Committee otherwise consents or permits (before or
after the stock option grant) or unless the stock option agreement or grant provides otherwise:

     (a) General. If a Participant is no longer employed by the Company or its Subsidiary
for any reason other than the Participant’s Retirement, death, Disability or termination for
cause, the Participant may exercise his or her Stock Options in accordance with their terms
for a period of 3 months after such termination of employment, but only to the extent the
Participant was entitled to exercise the Stock Options on the date of termination.

     (b) Death. If a Participant dies either while an Employee or otherwise during a time
when the Participant could have exercised a Stock Option, the Stock Options issued to such
Participant shall be exercisable in accordance with their terms by the personal
representative of such Participant or other successor to the interest of the Participant for
a period of one year after such Participant’s death to the extent that the Participant was
entitled to exercise the Stock Options on the date of death or termination, whichever first
occurred, but not beyond the original term of the Stock Options.

     (c) Disability. If a Participant ceases to be employed by the Company or one of its
Subsidiaries due to the Participant’s Disability, he or she may exercise his or her Stock
Options in accordance with their terms for one year after he or she ceases to be employed
unless such Stock Options earlier expire by their terms, but only to the extent that the
Participant was entitled to exercise the Stock Options on the date of such event and not
beyond the original terms of the Stock Options.

     (d) Participant Retirement. If a Participant ceases to be employed by the Company or
one of its Subsidiaries due to Retirement, the Participant may exercise his or her Stock
Options in accordance with their terms after such termination of employment unless such
Stock Options earlier expire by their terms.

     (e) Termination for Cause. If a Participant’s employment is terminated for cause, the
Participant shall have no further right to exercise any Stock Options previously granted him
or her. The Committee or officers designated by the Committee shall have absolute
discretion to determine whether a termination is for cause.

 

 

SECTION 6

Stock Appreciation Rights

     6.1 Grant. A Participant may be granted one or more Stock Appreciation Rights under the Plan
and such SARs shall be subject to such terms and conditions, consistent with the other provisions
of the Plan, as shall be determined by the Committee in its sole discretion. An SAR may relate to
a particular Stock Option and may be granted simultaneously with or subsequent to the Stock Option
to which it relates. Except to the extent otherwise modified in the grant, (i) SARs not related to
a Stock Option shall be granted subject to the same terms and conditions applicable to Stock
Options as set forth in Section 5, and (ii) all SARs related to Stock Options granted under the
Plan shall be granted subject to the same restrictions and conditions and shall have the same
vesting, exercisability, forfeiture and termination provisions as the Stock Options to which they
relate. SARs may be subject to additional restrictions and conditions. The per-share base price
for exercise or settlement of SARs shall be determined by the Committee, but shall be a price that
is equal to or greater than the Market Value of such shares on the date of the grant. Other than
as adjusted pursuant to Section 4.3, the base price of SARs may not be reduced without shareholder
approval (including canceling previously awarded SARs and regranting them with a lower base price).

     6.2 Exercise; Payment. To the extent a SAR relates to a Stock Option, the SAR may be
exercised only when the related Stock Option could be exercised and only when the Market Value of
the shares subject to the Stock Option exceeds the exercise price of the Stock Option. When a
Participant exercises such SARs, the Stock Options related to such SARs shall automatically be
cancelled with respect to an equal number of underlying shares. Unless the Committee
decides otherwise (in its sole discretion), SARs shall only be paid in cash or in shares of Common
Stock. For purposes of determining the number of shares available under the Plan, each Stock
Appreciation Right shall count as one share of Common Stock, without regard to the number of
shares, if any, that are issued upon the exercise of the Stock Appreciation Right and upon such
payment.

SECTION 7

Restricted Stock and Restricted Stock Units

     7.1 Grant. Subject to the limitations set forth in Sections 4.1 and 4.2 of the Plan,
Restricted Stock and Restricted Stock Units may be granted to Participants under the Plan. Shares
of Restricted Stock are shares of Common Stock the retention, vesting and/or transferability of
which is subject, during specified periods of time, to such conditions (including continued
employment and/or achievement of performance goals established by the Committee pursuant to Section
10) and terms as the Committee deems appropriate. Restricted Stock Units are Incentive Awards
denominated in units of Common Stock under which the issuance of shares of Common Stock is subject
to such conditions (including continued employment and/or

 

 

achievement of performance goals established by the Committee pursuant to Section 10) and
terms as the Committee deems appropriate. For purposes of determining the number of shares
available under the Plan, each Restricted Stock Unit shall count as the number of shares of Common
Stock subject to the Restricted Stock Unit. Unless determined otherwise by the Committee, each
Restricted Stock Unit shall be equal to one share of Common Stock and shall entitle a Participant
to either shares of Common Stock or an amount of cash determined with reference to the value of
shares of Common Stock. To the extent determined by the Committee, Restricted Stock and Restricted
Stock Units may be satisfied or settled in cash, in shares of Common Stock or in a combination
thereof. Restricted Stock Units shall be settled no later than the 15th day of the third month
after the Restricted Stock Units vest. Restricted Stock and Restricted Stock Units granted
pursuant to the Plan need not be identical but shall be consistent with the terms of the Plan.
Subject to the requirements of applicable law, the Committee shall determine the price, if any, at
which awards of Restricted Stock or Restricted Stock Units, or shares of Common Stock issuable
pursuant to Restricted Stock Unit awards, shall be sold or awarded to a Participant, which may vary
from time to time and among Participants.

     7.2 Restricted Stock Agreements. Awards of Restricted Stock and Restricted Stock Units shall
be evidenced by restricted stock or restricted stock unit agreements or certificates of award
containing such terms and conditions, consistent with the provisions of the Plan, as the Committee
shall from time to time determine. Unless the restricted stock or restricted stock unit agreement
or certificate of award provides otherwise, awards of Restricted Stock and Restricted Stock Units
shall be subject to the terms and conditions set forth in this Section 7.

     7.3 Vesting. The grant, issuance, retention, vesting and settlement of shares of Restricted
Stock and Restricted Stock Units shall occur at such time and in such installments as determined by
the Committee or under criteria established by the Committee. The Committee shall have the right to
make the timing of the grant and/or issuance of, the ability to retain and the vesting and/or the
settlement of Restricted Stock Units and shares of Restricted Stock subject to continued
employment, passage of time and/or such performance criteria as deemed appropriate by the
Committee.

     7.4 Termination of Employment. Unless the Committee otherwise consents or permits (before or
after the grant of Restricted Stock or Restricted Stock Units) or unless the restricted stock or
restricted stock unit agreement or grant provides otherwise:

     (a) General. If a Participant ceases to be an Employee during the Restricted Period
for any reason other than death, Disability, Retirement or termination for cause, each share
of Restricted Stock and Restricted Stock Unit still subject in full or in part to
restrictions at the date of such termination shall automatically be forfeited and returned
to the Company.

     (b) Death, Retirement or Disability. In the event a Participant terminates his or her
employment with the Company because of death, Disability or Retirement during the Restricted
Period, the restrictions remaining on any or all shares of Restricted

 

 

Stock and Restricted Stock Units shall terminate automatically with respect to that respective number of such
shares or Restricted Stock Units (rounded to the nearest whole
number) equal to the respective total number of such shares or Restricted Stock Units
granted to such Participant multiplied by the number of full months that have elapsed since
the date of grant divided by the total number of full months in the respective Restricted
Period; provided, that if such Restricted Stock or Restricted Stock Units are subject to
attainment of performance goals, then the restrictions shall not lapse until the end of the
applicable performance period and then only after it is determined that the Company shall
have attained such performance goals. All remaining shares of Restricted Stock and
Restricted Stock Units shall be forfeited and returned to the Company; provided, that the
Committee may, in its sole discretion, waive the restrictions remaining on any or all such
remaining shares of Restricted Stock and Restricted Stock Units either before or after the
death, Disability or Retirement of the Participant.

     (c) Termination for Cause. If a Participant’s employment is terminated for cause, the
Participant shall have no further right to receive any Restricted Stock or Restricted Stock
Units and all Restricted Stock and Restricted Stock Units still subject to restrictions at
the date of such termination shall automatically be forfeited and returned to the Company.
For purposes of the Plan, the Committee or officers designated by the Committee shall have
absolute discretion to determine whether a termination is for cause.

     7.5 Restrictions on Transferability.

     (a) General. Unless the Committee otherwise consents or permits or unless the terms of
the restricted stock or restricted stock unit agreement or grant provide otherwise: (i)
neither shares of Restricted Stock nor Restricted Stock Units may be sold, exchanged,
transferred, pledged, assigned or otherwise alienated or hypothecated during the Restricted
Period except by will or the laws of descent and distribution; and (ii) all rights with
respect to Restricted Stock and Restricted Stock Units granted to a Participant under the
Plan shall be exercisable during the Participant’s lifetime only by such Participant or his
or her guardian or legal representative.

     (b) Other Restrictions. The Committee may impose other restrictions on any shares of
Common Stock acquired pursuant to an award of Restricted Stock or issuable pursuant to
Restricted Stock Unit awards under the Plan as the Committee considers advisable, including,
without limitation, holding periods or further transfer restrictions, forfeiture or
“claw-back” provisions, and restrictions under applicable federal or state securities laws.

     7.6 Legending of Restricted Stock. In addition to any other legend that may be set forth on a
Participant’s share certificate, any certificates evidencing shares of Restricted Stock awarded
pursuant to the Plan shall bear the following legend:

The shares represented by this certificate were issued subject to certain

 

 

restrictions under the Chemical Financial Corporation Stock Incentive Plan of 2006
(the “Plan”). This certificate is held subject to the terms and conditions contained
in a restricted stock agreement that includes a prohibition against the

sale or transfer of the stock represented by this certificate except in compliance
with that agreement and that provides for forfeiture upon certain events. Copies of
the Plan and the restricted stock agreement are on file in the office of the
Secretary of the Company.

The Committee may require that certificates representing shares of Restricted Stock be retained and
held in escrow by a designated employee or agent of the Company or any Subsidiary until any
restrictions applicable to shares of Restricted Stock so retained have been satisfied or lapsed.

     7.7 Rights as a Shareholder. A Participant shall have all dividend, liquidation and other
rights with respect to Restricted Stock held of record by such Participant as if the Participant
held unrestricted Common Stock; provided, that the unvested portion of any award of Restricted
Stock shall be subject to any restrictions on transferability or risks of forfeiture imposed
pursuant to this Section 7 and the terms and conditions set forth in the Participant’s restricted
stock agreement. Unless the Committee otherwise determines or unless the terms of the applicable
restricted stock unit agreement or grant provide otherwise, a Participant shall have all dividend
and liquidation rights with respect to shares of Common Stock subject to awards of Restricted Stock
Units held by such Participant as if the Participant held unrestricted Common Stock. Unless the
Committee determines otherwise or unless the terms of the applicable restricted stock or restricted
stock unit agreement or grant provide otherwise, any noncash dividends or distributions paid with
respect to shares of unvested Restricted Stock and shares of Common Stock subject to unvested
Restricted Stock Units shall be subject to the same restrictions and vesting schedule as the shares
to which such dividends or distributions relate. Any dividend payment with respect to
Restricted Stock or Restricted Stock Units shall be made no later than the 15th day of the third
month following the date the dividends are paid to shareholders. 

     7.8 Voting Rights. Unless otherwise determined by the Committee, Participants holding shares
of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares
during the Restricted Period. Participants shall have no voting rights with respect to shares of
Common Stock underlying Restricted Stock Units unless and until such shares are reflected as issued
and outstanding shares on the Company’s stock ledger.

SECTION 8

Stock-Based Awards

     8.1 Grant. Subject to the limitations set forth in Sections 4.1 and 4.2 of the Plan, in
addition to any Stock Options, Stock Appreciation Rights, Restricted Stock, or Restricted Stock
Units that a Participant may be granted under the Plan, a Participant may be granted one or more

 

 

other types of awards based on or related to shares of Common Stock (including the grant of Stock
Awards). Such awards shall be subject to such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee in its sole discretion. Notwithstanding the previous sentence, the shares of stock subject to Stock Awards shall be
issued no later than the 15th day of the third month after the end of the calendar
year in which the award is granted. Such awards shall be expressed in terms of shares of Common
Stock or denominated in units of Common Stock. For purposes of determining the number of shares
available under the Plan, each such unit shall count as the number of shares of Common Stock to
which it relates.

     8.2 Rights as a Shareholder.

     (a) Stock Awards. A Participant shall have all voting, dividend, liquidation and other
rights with respect to shares of Common Stock issued to the Participant as a Stock Award
under this Section 8 upon the Participant becoming the holder of record of the Common Stock
granted pursuant to such Stock Award; provided, that the Committee may impose such
restrictions on the assignment or transfer of Common Stock awarded pursuant to a Stock Award
as it considers appropriate. Any dividend payment with respect to a Stock Award shall be
made no later than the 15th day of the third month following the date the dividends are paid
to shareholders.

     (b) General. With respect to shares of Common Stock subject to awards granted under
the Plan other than Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted
Stock Units and Stock Awards, a Participant shall have such rights as determined by the
Committee and set forth in the respective award agreements; and the Committee may impose
such restrictions on the assignment or transfer of Common Stock awarded pursuant to such
awards as it considers appropriate.

SECTION 9

Change in Control

     9.1 Acceleration of Vesting. If a Change in Control of the Company occurs, then, unless the
Committee or the Board otherwise determines and expressly states in the agreements governing one or
more Incentive Awards, without action by the Committee or the Board: (a) all outstanding Stock
Options and Stock Appreciation Rights shall become vested and exercisable in full immediately prior
to the effective time of a Change in Control and shall remain exercisable during the remaining
terms thereof, regardless of whether the Participants to whom such Stock Options and Stock
Appreciation Rights have been granted remain in the employ or service of the Company or any
Subsidiary; and (b) all other outstanding Incentive Awards shall become immediately fully vested
and exercisable and nonforfeitable.

 

 

     9.2 Cash Payment for Stock Options and Stock Appreciation Rights. If a Change in Control of
the Company occurs, then the Committee, in its sole discretion and without the consent of any
Participant affected thereby, may determine that some or all Participants holding outstanding Stock
Options and/or Stock Appreciation Rights shall receive, with respect to and in lieu of some or all
of the shares of Common Stock subject to such Stock Options and/or Stock Appreciation Rights, as of
the effective date of any such Change in Control of the Company,
cash in an amount equal to the excess of the greater of (a) the highest sales price of the
shares on Nasdaq on the date immediately prior to the effective date of such Change in Control of
the Company or (b) the highest price per share actually paid in connection with any Change in
Control of the Company, over the exercise price per share of such Stock Options and/or the base
price per share of such Stock Appreciation Rights. Upon a Participant’s receipt of such amount
with respect to some or all of his or her Stock Options and/or Stock Appreciation Rights, the
respective Stock Options and/or Stock Appreciation Rights shall be cancelled and may no longer be
exercised by such Participant.

SECTION 10

Performance Measures

     10.1 Performance Measures. Unless and until the Committee proposes for shareholder vote and
the shareholders approve a change in the general Performance Measures set forth in this Section 10,
the performance goals upon which the payment or vesting of an Incentive Award to a Covered Employee
that is intended to qualify as Performance-Based Compensation may be based shall be limited to the
following Performance Measures:

	 	(a)	 	Net income (before or after taxes, interest, depreciation, and/or
amortization);
	 
	 	(b)	 	Net income per share;
	 
	 	(c)	 	Return on equity;
	 
	 	(d)	 	Cash earnings;
	 
	 	(e)	 	Cash earnings per share (reflecting dilution of the Common Stock as the
Committee deems appropriate and, if the Committee so determines, net of or including
dividends);
	 
	 	(f)	 	Cash earnings return on equity;
	 
	 	(g)	 	Operating income;
	 
	 	(h)	 	Operating income per share;
	 
	 	(i)	 	Operating income return on equity;
	 
	 	(j)	 	Return on assets;
	 
	 	(k)	 	Cash flow;
	 
	 	(l)	 	Cash flow return on capital;
	 
	 	(m)	 	Return on capital;
	 
	 	(n)	 	Productivity ratios;
	 
	 	(o)	 	Share price (including without limitation growth measures, total shareholder
return or comparison to indices);
	 
	 	(p)	 	Expense or cost levels;

 

 

	 	(q)	 	Margins;
	 
	 	(r)	 	Operating efficiency;
	 
	 	(s)	 	Efficiency ratio;
	 
	 	(t)	 	Customer satisfaction, satisfaction based on specified objective goals or a
Company-sponsored customer survey;
	 
	 	(u)	 	Economic value added measurements;
	 
	 	(v)	 	Market share or market penetration with respect to specific designated products
or services, product or service groups and/or specific geographic areas;
	 
	 	(w)	 	Reduction of losses, loss ratios, expense ratios or fixed costs;
	 
	 	(x)	 	Employee turnover; and
	 
	 	(y)	 	Specified objective social goals.

One or more Performance Measures may be used to measure the performance of one or more of the
Company, its Subsidiaries, its Affiliates, or any combination of the foregoing, compared to
pre-determined levels, as the Committee may deem appropriate, or compared to the performance of a
pre-established peer group, or published or special index that the Committee, in its sole
discretion, deems appropriate. The Committee also has the authority to provide for accelerated
vesting of any Incentive Award based on the achievement of performance goals pursuant to the
Performance Measures specified in this Section 10.

     10.2 Evaluation of Performance. The Committee may provide in any such Incentive Award that
any evaluation of Performance may include or exclude any of the following events or their effects
that occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments
or settlements, (c) changes in tax laws, accounting principles, or other laws or provisions
affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary
nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in
management’s discussion and analysis of financial condition and results of operations appearing in
the Company’s annual report to shareholders for the applicable fiscal year, (f) acquisitions,
mergers, divestitures or accounting changes, (g) amortization of goodwill or other intangible
assets, (h) discontinued operations, and (i) other special charges or extraordinary items. To the
extent such inclusions or exclusions affect Incentive Awards to Covered Employees, they shall be
prescribed in a form that meets the requirements of Section 162(m) of the Code for deductibility.

     10.3 Committee Discretion. In the event that applicable tax laws, securities laws, or both,
change to permit Committee discretion to alter the governing Performance Measures without obtaining
shareholder approval of such changes, the Committee shall have sole discretion to make such changes
without obtaining shareholder approval. In addition, in the event that the Committee determines
that it is advisable to grant Incentive Awards that shall not qualify as Performance-Based
Compensation, the Committee may make such grants without satisfying the requirements of Section
162(m) of the Code and may base vesting on Performance Measures other than those set forth in
Section 10.1.

 

 

     10.4 Adjustment of Performance-Based Compensation. Incentive Awards that are designed to
qualify as Performance-Based Compensation, and that are held by Covered Employees, may not be
increased or adjusted upward. The Committee shall retain the discretion to decrease or adjust such
Incentive Awards downward, and such Incentive Awards may be forfeited in whole or in part.

     10.5 Performance-Based Compensation Conditioned on Performance. Payment of Performance-Based
Compensation to a Participant for a Performance Period under this Plan shall
be entirely contingent upon achievement of the performance goals established by the Committee
pursuant to this Section 10, the satisfaction of which must be substantially uncertain when
established by the Committee for the Performance Period.

     10.6 Time of Determination of Performance Goals by Committee. All performance goals to be
made by the Committee for a Performance Period pursuant to this Section 10 shall be established in
writing by the Committee during the first 90 days of such Performance Period and before 25% of the
Performance Period has elapsed.

     10.7 Objective Standards. Performance-Based Compensation shall be based solely upon objective
criteria, consistent with this Section 10, from which an independent third party with knowledge of
the facts could determine whether the performance goal or range of goals is met and from that
determination could calculate the Performance-Based Compensation to be paid. Although the
Committee has authority to exercise reasonable discretion to interpret this Plan and the criteria
it shall specify pursuant to this Section 10 of the Plan, it may not amend or waive such criteria
after the 90th day of the respective Performance Period. The Committee shall have no authority or
discretion to increase any Performance-Based Compensation or to construct, modify or apply the
measurement of a Participant’s Performance in a manner that will directly or indirectly increase
the Performance-Based Compensation for the Participant for any Performance Period above the amount
determined by the applicable objective standards established within the time period set forth in
Section 10.6.

SECTION 11

General Provisions

     11.1 No Rights to Incentive Awards. No Participant or other person shall have any claim to be
granted any Incentive Award under the Plan and there is no obligation of uniformity of treatment of
Participants or holders or beneficiaries of Incentive Awards under the Plan. The terms and
conditions of Incentive Awards of the same type and the determination of the Committee to grant a
waiver or modification of any Incentive Award and the terms and conditions thereof need not be the
same with respect to each Participant or the same Participant.

     11.2 Withholding. The Company or a Subsidiary shall be entitled to: (a) withhold and deduct
from future wages of a Participant (or from other amounts that may be due and owing

 

 

to a Participant from the Company or a Subsidiary), or make other arrangements for the collection of,
all legally required amounts necessary to satisfy any and all federal, state, local and foreign
withholding and employment-related tax requirements attributable to an Incentive Award, including,
without limitation, the grant, exercise or vesting of, or payment of dividends with respect to, an
Incentive Award or a disqualifying disposition of Common Stock received upon exercise of an
incentive stock option; or (b) require a Participant promptly to remit the amount of such
withholding to the Company before taking any action with respect to an Incentive Award. Unless the
Committee determines otherwise, withholding may be satisfied by withholding Common Stock to be
received upon exercise or vesting of an Incentive Award or by
delivery to the Company of previously owned Common Stock. The Company may establish such
rules and procedures concerning timing of any withholding election as it deems appropriate.

     11.3 Compliance With Laws; Listing and Registration of Shares. All Incentive Awards granted
under the Plan (and all issuances of Common Stock or other securities under the Plan) shall be
subject to all applicable laws, rules and regulations, and to the requirement that if at any time
the Committee shall determine, in its discretion, that the listing, registration or qualification
of the shares covered thereby upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the grant of such Incentive Award or the issuance or purchase
of shares thereunder, such Incentive Award may not be exercised in whole or in part, or the
restrictions on such Incentive Award shall not lapse, unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.

     11.4 No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent
the Company or any Subsidiary from adopting or continuing in effect other or additional
compensation arrangements, including the grant of Stock Options and other stock-based and
stock-related awards, and such arrangements may be either generally applicable or applicable only
in specific cases.

     11.5 No Right to Employment. The grant of an Incentive Award shall not be construed as giving
a Participant the right to be retained in the employ of the Company or any Subsidiary. The Company
or any Subsidiary may at any time dismiss a Participant from employment, free from any liability or
any claim under the Plan, unless otherwise expressly provided in the Plan or in any written
agreement with the Participant.

     11.6 No Liability of Company. The Company and any Subsidiary or Affiliate which is in
existence or hereafter comes into existence shall not be liable to a Participant or any other
person as to: (a) the non-issuance or non-sale of Common Stock as to which the Company has been
unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any shares hereunder; (b) any tax
consequence to any Participant or other person due to the receipt, exercise or settlement of any
Incentive Award granted hereunder; and (c) any provision of law or legal restriction that prohibits
or restricts the transfer of shares of Common Stock issued pursuant to
any Incentive Award.

 

 

     11.7 Suspension of Rights under Incentive Awards. The Company, by written notice to a
Participant, may suspend a Participant’s and any transferee’s rights under any Incentive Award for
a period not to exceed 60 days while the termination for cause of that Participant’s employment
with the Company and its Subsidiaries is under consideration.

     11.8 Governing Law. The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws of the State of
Michigan and applicable federal law.

     11.9 Severability. In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan
and the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included, unless such construction would cause the Plan to fail in its essential purposes.

SECTION 12

Termination and Amendment

     12.1 Board and Committee Actions. The Board may terminate the Plan at any time or may from
time to time amend or alter the Plan or any aspect of it as it considers proper and in the best
interests of the Company; provided, that no such amendment may be made, without the approval of
shareholders of the Company, that would (i) reduce the exercise price at which Stock Options, or
the base price at which Stock Appreciation Rights, may be granted below the prices provided for in
Sections 5.3 and 6.1, respectively (ii) reduce the exercise price of outstanding Stock Options or
the base price of outstanding Stock Appreciation Rights, (iii) increase the individual maximum
limits in Section 4.2 or (iv) otherwise amend the Plan in any manner requiring shareholder approval
by law or under Nasdaq listing requirements or other applicable Nasdaq rules, and provided further
that the Plan may not be amended in any way that causes the Plan to fail to comply with or be
exempt from Section 409A of the Code.

     12.2 No Impairment. Notwithstanding anything to the contrary in Section 12.1, no such
amendment or alteration to the Plan or to any previously granted award agreement or Incentive Award
shall be made which would impair the rights of the holder of the Incentive Award, without such
holder’s consent; provided, that no such consent shall be required if the Committee determines in
its sole discretion and prior to the date of any Change of Control that such amendment or
alteration is required or advisable in order for the Company, the Plan or the Incentive Award to
satisfy any law or regulation or to meet the requirements of or avoid adverse financial accounting
consequences under any tax or accounting standard, law or regulation.

 

 

SECTION 13

Effective Date and Duration of the Plan

     The Plan shall take effect January 17, 2006, subject to approval by the shareholders at the
2006 Annual Meeting of Shareholders or any adjournment thereof or at a Special Meeting of
Shareholders. Unless earlier terminated by the Board of Directors, no Incentive Award shall be
granted under the Plan after January 16, 2016.exv10w3

Exhibit 10.3

SUPPLEMENT TO CONVEYANCE OF NET PROFITS INTEREST

     This Supplement to Conveyance of Net Profits Interest (this “Supplement”) is made
effective as of [•], 2011 (the “Supplement Effective Date”) by and between Enduro Operating
LLC, a Delaware limited liability company (“Grantor”), and The Bank of New York Mellon
Trust Company, N.A., with offices at 919 Congress Avenue, Suite 500, Austin, Texas 78701,
Attention: Michael J. Ulrich, as trustee (the “Trustee”), acting not in its individual
capacity but solely as trustee of Enduro Royalty Trust (the “Trust”), a Delaware statutory
trust created under the Delaware Statutory Trust Act as of May 3, 2011. Grantor and the Trustee,
acting as trustee of the Trust, are sometimes referred to herein individually as a “Party”
and collectively as the “Parties.” Capitalized terms used but not defined in this
Supplement shall have the meanings ascribed to them in that certain Conveyance of Net Profits
Interest dated [•], 2011 (the “Conveyance”) between Grantor and Enduro Texas LLC, a Texas
limited liability company (“Enduro Texas”), reflecting the creation of the Net Profits
Interest (as described therein) and the allocation to, and vesting in, Enduro Texas of all right,
title and interest in and to the Net Profits Interest in accordance with the terms of the Grantee
Merger.

     Subsequent to the Effective Time, Enduro Texas entered into an Agreement and Plan of Merger
dated [•], 2011 with the Trust, pursuant to which Enduro Texas will merge with and into the Trust,
with the Trust surviving the merger (the “Trust Merger”). By virtue of the Trust Merger,
all right, title and interest in and to the Net Profits Interest (including the right to enforce
the Conveyance against the Grantor) will vest in the Trust.

     In consideration of the mutual obligations contemplated herein, the Conveyance is supplemented
as follows:

	 	1.	 	The Trustee, acting as trustee of the Trust, shall be deemed to be the
“Grantee” under the Conveyance and, thus, a “Party” under the Conveyance.
	 
	 	2.	 	All disputes arising under or in connection with the Conveyance or this
Supplement, including any disputes relating to any Monthly Statement delivered by
Grantor to Grantee pursuant to Section 4.5 of the Conveyance, shall be handled and
resolved pursuant to and in accordance with the arbitration provisions set forth in
Article XI of that certain Amended and Restated Trust Agreement of the Trust dated [•],
2011 (the “Trust Agreement”) by and among Enduro Resource Partners LLC,
Wilmington Trust Company and the Trustee.
	 
	 	3.	 	The Conveyance and this Supplement have been made pursuant to the terms and conditions of the Trust Agreement. In the event that any
provision of the Conveyance or this Supplement is construed to conflict with any
provision of the Trust Agreement, the provisions of the Conveyance, as supplemented by
this Supplement, shall be deemed controlling to the extent of such conflict.
	 
	 	4.	 	The Conveyance, this Supplement and the Transaction Documents (as defined in
the Trust Agreement) constitute the entire agreement between the Parties
pertaining to the subject matter thereof and hereof, and supersede all prior

 

 

	 	 	 	agreements, understandings, negotiations and discussions, whether oral or written,
of the Parties pertaining to the subject matter thereof and hereof.
	 
	 	5.	 	All notices and other communications which are required or may be given
pursuant to the Conveyance shall be given to the Trust as follows:

Enduro Royalty Trust

c/o The Bank of New York Mellon Trust Company, N.A.

Institutional Trust Services

919 Congress Avenue, Suite 500

Austin, Texas 78701

Attention: Michael J. Ulrich

Facsimile No.: (512) 479-2253.

     The Grantor shall record the Conveyance and this Supplement in the real property records in
each applicable Texas, Louisiana and New Mexico jurisdiction, or in such other records of those
states as required under applicable law, to place third parties on notice of the Conveyance and
this Supplement.

[Signature Page Follows]

2

 

     IN WITNESS WHEREOF, this Supplement has been signed by each of the Parties on the Supplement
Effective Date and duly acknowledged before the undersigned competent witnesses and Notary Public.

	 	 	 	 	 	 	 	 	 	 	 

	WITNESSES:	 	GRANTOR:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Enduro Operating LLC
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	Printed Name:	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Printed Name:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	WITNESSES:	 	GRANTEE:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Enduro Royalty Trust
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	By:	 	The Bank of New York Mellon Trust
Company, N.A., as Trustee
	 	 	 	 	 	 
	Printed Name:	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	Printed Name:	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	WITNESSES:	 	Enduro Texas LLC
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	Printed Name:	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Printed Name:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

[Signature Page — Supplement to Conveyance]

 

	 	 	 

	STATE OF                     

	 	§
	 

	 	§
	COUNTY OF                     

	 	§

     BE IT KNOWN, that on this ___ day of ______, 2011, before me, the undersigned authority,
personally came and appeared ___________________ appearing herein in ___ capacity as
___________________ of Enduro Operating LLC, to me personally known to be the identical person
whose name is subscribed to the foregoing instrument as the said officer of said company, and
declared and acknowledged to me, Notary, that ___________________ executed the same on behalf of
said company with full authority of its ___________________, and that the said instrument is the
free act and deed of the said company and was executed for the uses, purposes and benefits therein
expressed.

      

 

			
	Printed Name:	 	
 

Notary Public for the State of                     

County of                     

My commission expires:                     

	 	 	 

	STATE OF                     

	 	§
	 

	 	§
	COUNTY OF                     

	 	§

     BE IT KNOWN, that on this ___ day of ______, 2011, before me, the undersigned authority,
personally came and appeared ___________________ appearing herein in ___ capacity as
___________________ of The Bank of New York Mellon Trust Company, N.A., to me personally known to
be the identical person whose name is subscribed to the foregoing instrument as the said officer of
said national banking association, and declared and acknowledged to me, Notary, that
___________________ executed the same on behalf of said national banking association with full
authority of its ___________________, and that the said instrument is the free act and deed of the
said national banking association and was executed for the uses, purposes and benefits therein
expressed.

      

 

			
	Printed Name:	 	
 

Notary Public for the State of                     

County of                     

[Acknowledgment Page — Supplement to Conveyance]

 

 

My commission expires:                     

	 	 	 

	STATE OF                     

	 	§
	 

	 	§
	COUNTY OF                     

	 	§

     BE IT KNOWN, that on this ___ day of ______, 2011, before me, the undersigned authority,
personally came and appeared ___________________ appearing herein in ___ capacity as
___________________ of Enduro Texas LLC, to me personally known to be the identical person whose
name is subscribed to the foregoing instrument as the said officer of said company, and declared
and acknowledged to me, Notary, that ___________________ executed the same on behalf of said
company with full authority of its ___________________, and that the said instrument is the free
act and deed of the said company and was executed for the uses, purposes and benefits therein
expressed.

      

 

			
	Printed Name:	 	
 

Notary Public for the State of                     

County of                     

[Acknowledgment Page — Supplement to Conveyance]

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