Document:

Exhibit 10.28

 

AMEC plc

 

RULES OF THE AMEC 
 SAVINGS RELATED SHARE OPTION SCHEME 2005

 

	
 
    	
Shareholders’ Approval:
    	
18 May 2005
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Directors’ Adoption:
    	
19 May 2005
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Original HM Revenue and
   Customs Approval:
    	
9 June 2005
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Original HMRC Ref:
    	
SRS2978/GRP
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Expiry Date:
    	
18 May 2015
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Amended on:24 October 2013
    	
effective from 17   July 2013
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Amended on:
    	
2 July 2014
    	
 
    

 

 

One Silk Street

London EC2Y 8HQ

 

Telephone (44-20) 7456 2000

Facsimile (44-20) 7456 2222

 

Ref 01/145/S Keith

 

 

Table of Contents

 

	
Contents
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1
    	
Definitions
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
2
    	
Invitations
    	
 
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
3
    	
Application
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
4
    	
Scaling down
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
5
    	
Option Price
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
6
    	
Grant of Options
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
7
    	
Scheme limits
    	
 
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
8
    	
Variations in share capital
    	
 
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
9
    	
Exercise and lapse - general rules
    	
 
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
10
    	
Exercise and lapse - exceptions to the general rules
    	
 
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
11
    	
Exchange of Options
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
12
    	
Exercise of Options
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
13
    	
General
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
14
    	
Changing the Scheme and termination
    	
 
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
15
    	
Governing law
    	
 
    	
17
    

 

i

 

Rules of the AMEC Savings Related Share Option Scheme 2005

 

1                                      Definitions

 

1.1                            Meanings of Words Used

 

In these Rules:

 

“Acquiring Company” is any company which has obtained Control of the Company or has become entitled and bound as mentioned in Rule 10.6 (Section 979 notice) as a result of events specified in Rule 10.5 (Takeovers) or Rule 10.7 (Company reconstructions) or Rule 10.8 (Reorganisation or merger);

 

“Associated Company” has the meaning given to it by paragraph 47(1) of Schedule 3;

 

“Bonus Date” means the date on which the bonus becomes payable under the terms of the relevant Savings Contract;

 

“Business Day” means a day on which the London Stock Exchange (or, if relevant and if the directors determine, any stock exchange nominated by the directors on which the Shares are traded) is open for the transaction of business;

 

“Company” means AMEC plc;

 

“Contribution” means a contribution under a Savings Contract;

 

“Control” has the meaning given to it by Section 995 of the Income Tax Act 2007;

 

“Date of Grant” means the date on which an Option is granted;

 

“Date of Royal Assent” means 17 July 2013, being the date on which the Finance Bill 2013 received Royal Assent;

 

“Directors” means the board of directors of the Company or a duly authorised committee of the Board or any other duly authorised person;

 

“Eligible Employee” means any person who satisfies the conditions set out below. The conditions are that the person:

 

(i)                                   either is an employee (but not a director) of a Participating Company, or is a director of a Participating Company who is required to work for the company for at least 25 hours a week (excluding meal breaks); and

 

(ii)                                has earnings in respect of his office or employment within paragraph (i) above which are general earnings (or would be if there were any) as described in paragraph 6(2)(c) of Schedule 3; and

 

(iii)                             has such qualifying period (if any) of continuous service (not exceeding five years prior to the Date of Grant) as the Directors may from time to time determine.

 

In addition, it means any person who is an executive director or employee of a Participating Company who is nominated by the Directors (or is nominated as a member of a category of such executive directors or employees).

 

“London Stock Exchange” means London Stock Exchange plc or its successor;

 

“Model Code” means the UK Listing Authority Model Code for transactions in securities by directors, certain employees and persons connected with them;

 

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“Option” means a right to acquire Shares granted under the Scheme which is subject to the Rules;

 

“Optionholder” means a person holding an Option including his personal representatives;

 

“Option Price” means the amount payable for each Share on the exercise of an Option calculated as described in Rule 5 (Option price);

 

“Participating Companies” means:

 

(i)                                   the Company; and

 

(ii)                                any Subsidiary unless the Directors determine otherwise in respect of any particular Subsidiary; and

 

(iii)                             any jointly-owned company (within the meaning of paragraph 46 of Schedule 3) designated by the Directors.

 

“Rules” means the rules of the Scheme as changed from time to time;

 

“Scheme” means this scheme known as “The AMEC Savings Related Share Option Scheme 2005” as changed from time to time;

 

“Savings Contract” means a contract under an approved savings arrangement within the meaning of paragraph 24(1) of Schedule 3;

 

“Schedule 3” means Schedule 3 to the Income Tax (Earnings and Pension) Act 2003;

 

“Schedule 3 Plan” means a plan in relation to which the requirements of Parts 2 to 9 of Schedule 3 are being met;

 

“Shares” means subject to rule 1.2, fully paid ordinary shares in the capital of the Company for the time being which comply with the requirements of paragraphs 18 to 22 of Schedule 3;

 

“Specified Age” means 65 (for Options granted before the Date of Royal Assent);

 

“Subsidiary” means a company which is:

 

(i)                                   a subsidiary of the Company within the meaning of Section 1159 of the Companies Act 2006; and

 

(ii)                                under the Control of the Company;

 

“Taxable Year” means the 12 month period in respect of which the Optionholder is obliged to pay US Tax or, if it would result in a longer period for the exercise of an Option, the 12 month period in respect of which the Optionholder’s employing company is obliged to pay tax.

 

“Trustee” means the trustee of any employee trust described in Rule 13.7 (Employee trust).

 

“US Taxpayer” means a person who is subject to taxation under the tax rules of the United States of America.

 

“US Tax” means taxation under the tax rules of the United States of America.

 

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1.2                            Shares

 

If any Shares which are subject to an Option cease to satisfy paragraphs 18 to 22 of Schedule 3 and the Scheme ceases to be a Schedule 3 Plan, then the definition of “Shares” in Rule 1.1 is automatically changed to “fully paid ordinary shares in the capital of the Company”. This will not apply if an Option can be exercised under rule 10.10 (Shares no longer within Schedule 3).

 

2                                      Invitations

 

2.1                            Operation

 

The Directors have discretion to decide whether the Scheme will be operated. When they operate the Scheme they must invite all Eligible Employees to apply for an Option.

 

2.2                            Time when invitations may be made

 

2.2.1                   Invitations may only be made within 42 days starting on any of the following:

 

(i)                                  the day after the announcement of the Company’s results through a regulatory information service for any period;

 

(ii)                               any day on which changes to the legislation or regulations affecting Schedule 3 Plans are announced, effected or made;

 

(iii)                            any day on which a new Savings Contract prospectus is announced or takes effect; or

 

(iv)                           any day on which the Directors determine that exceptional circumstances exist which justify the making of invitations.

 

2.2.2                   If the Directors cannot make the invitations due to restrictions imposed by statute, order, regulation or Government directive, or by any code adopted by the Company based on the Model Code, the Directors may make the invitations within 42 days after the lifting of such restrictions.

 

2.3                            Form of invitations

 

The invitation will specify:

 

2.3.1                   the requirements a person must satisfy in order to be eligible to participate;

 

2.3.2                   the Option Price or how it is to be calculated;

 

2.3.3                  whether or not the Shares subject to the Option are subject to any restriction (as defined in paragraph 48(3) of Schedule 3) and set out the details of any such restrictions;(1)

 

2.3.4                  the form of application and the date by which applications must be received. This date must not be less than 14 days after the date of the invitation ;

 

2.3.5                   the length of the Savings Contract (including whether it is possible to choose to defer receiving the bonus at the end of the savings period in order to receive an increased bonus) and the date of start of the savings;

 

(1)         For Options granted on or after the Date of Royal Assent

 

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2.3.6                   the maximum permitted Contribution in each month which must not be more than the maximum specified by Paragraph 25(3) of Schedule 3; and

 

2.3.7                   the minimum permitted Contribution in each month (which must be between £5 and £10).

 

3                                      Application

 

3.1                            Form of Application

 

An application for an Option must include an application for a Savings Contract with a savings carrier nominated by the Directors. The application will be made in writing, or electronically, or in such other form specified by the Directors and will require the Eligible Employee to state:

 

3.1.1                   the Contribution he wishes to make;

 

3.1.2                   that his proposed Contribution, when added to any Contributions he makes under any other Savings Contract, will not exceed the maximum permitted under Paragraph 25(3) of Schedule 3; and

 

3.1.3                   the length of the Savings Contract if relevant.

 

3.2                            Number of Shares

 

Each Eligible Employee’s application will be for an Option over the largest whole number of Shares which he can acquire at the Option Price with the expected repayment under the related Savings Contract.

 

3.3                            Modification of application and proposals

 

If there are applications for Options over more Shares than the maximum specified in the invitation, each application and proposal for a Savings Contract will be deemed to have been modified or withdrawn as described in Rule 4.

 

If an application for a Savings Contract specifies a Contribution which, when added to any other Contributions already being made by the Eligible Employee, exceeds the maximum permitted (whether under Schedule 3, the Savings Contract or any limit specified in the invitation), the Directors are authorised to modify it by reducing the Contribution to the maximum possible amount. Any such modification must be made before the Option is granted and before the application for the Savings Contract is accepted.

 

4                                      Scaling down

 

4.1                            Method

 

If valid applications are received for a total number of Shares in excess of any maximum number specified in the invitation or any limit under Rule 7, the Directors will scale down applications by choosing one or more of the following methods:

 

4.1.1                   reducing the proposed Contributions by the same proportion to an amount not less than the minimum amount permitted under the Savings Contract; or

 

4.1.2                   reducing the proposed Contributions in excess of an amount chosen by the Directors, which must not be less than the minimum amount permitted under the

 

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Savings Contract, by the same proportion to an amount not less than the amount chosen by the Directors; or

 

4.1.3                   treating any elections for the maximum bonus as elections for the standard bonus; or

 

4.1.4                   treating bonuses as wholly excluded from the expected repayment amount.

 

The Directors may use other methods provided the Scheme remains a Schedule 3 Plan.

 

4.2                            Insufficient Shares

 

If, having scaled down as described in Rule 4.1 (Method), the number of Shares available is insufficient to enable Options to be granted to all Eligible Employees making valid applications, the Directors may either select by lot, or decide not to grant any Options.

 

5                                      Option Price

 

5.1                            Setting the price

 

The Directors will set the Option Price which must be:

 

5.1.1                   not manifestly less than 80 per cent of the Market Value of a Share; and

 

5.1.2                   if the Shares are to be subscribed, not less than the nominal value of a Share.

 

5.2                            Market Value

 

“Market Value” on any particular day means:

 

5.2.1                   their price for the immediately preceding Business Day; or

 

5.2.2                   if the Directors decide, the average price for the 3 immediately preceding Business Days; or

 

5.2.3                   such other price as Shares and Assets Valuation at HM Revenue and Customs may agree in advance.

 

The “price” is the mid market closing price taken from the Daily Official List of the London Stock Exchange.

 

Any restriction referred to in rule 2.3.3 will be ignored when determining Market Value.(2)

 

6                                      Grant of Options

 

6.1                            Time of grant

 

Subject to Rule 4.2 (Insufficient Shares), the Directors must grant an Option to each Eligible Employee who has submitted and not withdrawn a valid application. The Option is to acquire, at the Option Price, the number of Shares for which the Eligible Employee has applied (or is deemed to have applied). The grant must be made within 30 days (or 42 days if applications are scaled down) of the first day by reference to which the Option Price was set.

 

(2)         For Options granted on or after the Date of Royal Assent

 

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6.2                            Restrictions on grant

 

6.2.1                   An Option cannot be granted to a person who is not an Eligible Employee at the Date of Grant. Any Option granted to such a person (for example, an Option granted in error) is void.

 

6.2.2                   Options may only be granted under the Scheme between the date of approval of the Scheme by the Company in general meeting and the tenth anniversary of that date.

 

6.3                            Option certificates

 

6.3.1                   The Directors will send to each Optionholder an option certificate as soon as practicable after the Date of Grant. The Directors will set the form of the certificate, but the certificate must be consistent with these Rules.

 

6.3.2                   If any option certificate is lost or damaged the Directors may replace it on such conditions as they wish to set.

 

6.4                            No payment

 

Optionholders are not required to pay for the grant of any Option.

 

6.5                            Disposal restrictions

 

An Optionholder must not transfer, assign or otherwise dispose of an Option or any rights in respect of it. If, in breach of this Rule, an Optionholder transfers, assigns or disposes of an Option or rights, whether voluntarily or involuntarily, then the relevant Option will immediately lapse. This Rule 6.5 does not apply to the transmission of an Option on the death of an Optionholder to his personal representatives.

 

7                                      Scheme limits

 

7.1                            10 per cent in 10 year limit

 

The number of Shares which may be allocated under the Scheme on any day must not exceed 10 per cent of the ordinary share capital of the Company in issue immediately before that day, when added to the total number of Shares which have been allocated in the previous 10 years under the Scheme and any other employee share plan operated by the Company.

 

7.2                            Exclusions

 

Where the right to acquire Shares is released or lapses without being exercised these Shares are ignored when calculating the limits in this Rule.

 

7.3                           Meaning of “allocate”

 

Shares are “allocated” if they have been or may be issued.

 

8                                      Variations in share capital

 

8.1                            Adjustment of Options

 

If there is a variation in the equity share capital of the Company, including a capitalisation or rights issue, sub-division, consolidation or reduction of share capital:

 

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8.1.1                   the number of Shares comprised in each Option; and

 

8.1.2                   the Option Price,

 

may be adjusted in any way (including retrospective adjustments) which the Directors consider appropriate provided:

 

8.1.3                   the adjusted total Option Price must be substantially the same as before the adjustment and must not exceed the expected proceeds of the related Savings Contract at the Bonus Date;

 

8.1.4                   the total market value of the shares must remain substantially the same; and

 

8.1.5                   the Scheme must continue to be a Schedule 3 Plan.

 

An annual return relating to the Scheme submitted to HMRC following any such adjustment must include a declaration that the Scheme continues to comply with Schedule 3.

 

8.2                            Nominal value

 

8.2.1                   The Option Price may be adjusted to less than nominal value. However, where Shares are to be subscribed, Rule 8.2.2 must be followed.

 

8.2.2                   Where Shares are to be subscribed, the Option Price may only be adjusted to a price less than nominal value if the Directors resolve to capitalise the reserves of the Company, subject to any necessary conditions. This capitalisation will be of an amount equal to the difference between the adjusted Option Price payable for the Shares to be issued on exercise and the nominal value of such Shares on the date of allotment of the Shares. If, at the time of exercise, the Directors do not resolve to capitalise the reserves of the Company for this purpose then the adjustment under this Rule 8.2 will be deemed not to have taken place.

 

8.3                            Notice

 

The Directors may notify Optionholders of any adjustment made under this Rule 8.

 

9                                      Exercise and lapse - general rules

 

9.1                            Exercise

 

Except where exercise is permitted as described in Rule 10 (Exercise and lapse - exceptions to the general rules), an Option can only be exercised:

 

9.1.1                  during the period of six months after the Bonus Date; and

 

9.1.2                  so long as the Optionholder is a director or employee of a Participating Company.

 

9.2                            Lapse

 

An Option will lapse on the earliest of:

 

9.2.1                   the date the Optionholder ceases to be a director or employee of a Participating Company, unless any of the provisions of Rule 10 (Exercise and lapse - exceptions to the general rules) apply;

 

9.2.2                   the date on which the Optionholder is deemed to give notice under the Savings Contract that he intends to stop paying contributions under his Savings Contract;

 

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9.2.3                   the date on which the Optionholder stops paying contributions under his Savings Contract unless any of the provisions of Rule 10 (Exercise and lapse - exceptions to the general rules) apply;

 

9.2.4                   the expiry of any period specified in Rule 10 (Exercise and lapse - exceptions to the general rules) except Rule 10.4 (Specified Age); or

 

9.2.5                   six months after the Bonus Date unless Rule 10.3 (Death) applies.

 

When this Rule 9.2 applies to an Optionholder who is a US Taxpayer, an Option will lapse on the date specified in this Rule 9.2 or, if earlier, on the expiry of 2.5 calendar months after the end of the Taxable Year in which the Option became exercisable.

 

10                               Exercise and lapse - exceptions to the general rules

 

10.1                     Cessation of employment

 

10.1.1            An Optionholder may exercise his Option within 6 months after he ceases to be a director or an employee of a Participating Company for one of the reasons set out below. The reasons are:

 

(i)                                  injury, disability, redundancy within the meaning of the Employment Rights Act 1996; or

 

(ii)                               retirement; or

 

(iii)                            in the case of Options granted before the Date of Royal Assent, retirement on reaching the Specified Age; or

 

(iv)                           a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006, or

 

(v)                              his office or employment being in an associated company (as defined in paragraph 35(4) of Schedule 3) of the Company which ceases to be an associated company by reason of a change of control (as determined in accordance with sections 450 and 451 of the Corporation Tax Act 2010).

 

10.1.2            If the Optionholder ceases to be a director or employee of a Participating Company more than three years after the Date of Grant for any reason permitted by the Directors he may exercise his option within six months after leaving.

 

10.1.3            For the purposes of this Rule 10.1, an Optionholder is not treated as ceasing to be a director or employee of a Participating Company until he has ceased to be a director or employee of:

 

(i)                                  the Company;

 

(ii)                               an Associated Company; and

 

(iii)                            a company under the control of the Company.

 

10.1.4            This rule applies if an Optionholder:

 

(i)                                  ceases to be a director or employee of a Participating Company but on or immediately after the date of cessation is a director or employee of an Associated Company, and

 

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(ii)                               subsequently ceases to be a director or employee of the Associated Company.

 

When this rule applies, the Optionholder can exercise his Option if the reason for him ceasing to be a director or employee of the Participating Company (not the Associated Company) was one of the reasons set out in Rule 10.1.1 or 10.1.2.

 

10.2                     Employment with an Associated Company

 

If on the Bonus Date an Optionholder is an employee or director of an Associated Company or a company of which the Company has Control, he may exercise his Option within six months of that date.

 

10.3                     Death

 

If an Optionholder dies, his Option may be exercised by his personal representatives within one year after:

 

10.3.1            the date of his death if death occurred before the relevant Bonus Date; or

 

10.3.2            the Bonus Date if the death occurred on or within six months after the relevant Bonus Date.

 

10.4                     Specified Age

 

If an Optionholder continues to be a director or employee of a Participating Company after the date on which he reaches the Specified Age, he may exercise any Option granted before the Date of Royal Assent within 6 months after reaching the Specified Age.

 

10.5                     Takeovers

 

This Rule applies where a person (or a group of persons acting in concert) obtains Control of the Company as a result of making a general offer to acquire shares in the Company which falls within paragraph 37(3) of Schedule 3.

 

When this Rule applies Options may, subject to Rules 10.8 (Reorganisation or merger) and 10.10 (Shares no longer within Schedule 3), be exercised within the 6 month period after the person making the offer has obtained Control of the Company and any condition subject to which the offer is made has been satisfied.

 

The Options will lapse at the end of the 6 month period unless the Directors give written notice to all the Optionholders before the end of the 6 month period that the Options will not lapse.

 

10.6                     Section 979 notice

 

This Rule applies if a person (or a group of persons acting in concert) becomes bound or entitled to acquire Shares by serving a notice under section 979 of the Companies Act 2006 or other local legislation which HM Revenue and Customs agrees is equivalent (a “section 979 notice”). Subject to Rules 10.8 (Reorganisation or merger) and 10.10 (Shares no longer within Schedule 3), Options may be exercised at any time when that person remains so bound or entitled, which is the period of six weeks from the date of the section 979 notice.

 

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10.7                     Company reconstructions

 

This Rule applies if under section 899 of the Companies Act 2006 (or other local legislation which HM Revenue and Customs agrees is equivalent):

 

10.7.1            a court sanctions a compromise or arrangement falling within paragraph 37(4) of Schedule 3; or

 

10.7.2            there is a local procedure which HM Revenue and Customs agrees is equivalent.

 

Options may, subject to Rules 10.8 (Reorganisation or merger) and 10.10 (Shares no longer within Schedule 3), be exercised within the 6 month period after the date of the sanction.

 

10.8                     Reorganisation or merger

 

If this Rule applies, no Options are exercisable. Instead all Options are exchanged during the period set out in paragraph 38(3) of Schedule 3. Rules 11.3 (Exchange) and 11.4 (Grant) apply to the exchange.

 

This Rule applies when:

 

10.8.1            an Acquiring Company has obtained Control of the Company or has become entitled and bound as mentioned in Rule 10.6 (Section 979 notice); and

 

10.8.2            the shareholders of the Acquiring Company, immediately after it has obtained such Control, are substantially the same as the shareholders of the Company immediately before then or the obtaining of Control amounts to a merger with the Company; and

 

10.8.3            the Acquiring Company consents to the exchange of Options under this Rule.

 

10.9                     Winding-up

 

If the Company passes a resolution for its voluntary winding-up, Options may be exercised within six months after the date of the resolution. However, the issue of Shares after such exercise has to be authorised by the liquidator or the court (if appropriate), and the Optionholder must apply for this authority and pay his application cost. Any Options not exercised during that period will lapse at the end of the period.

 

10.10              Shares no longer within Schedule 3

 

This rule applies where:

 

10.10.1     Rule 10.5 (Takeovers) applies; or

 

10.10.2     a person obtains Control of the Company as a result of a compromise or arrangement mentioned in Rule 10.7; or

 

10.10.3     a person is bound or entitled to acquire Shares as described in Rule 10.6 (Compulsory acquisition); and

 

as a result, Shares in the Company would no longer meet the requirements of paragraphs 18 to 22 of Schedule 3.

 

If this rule applies, Options may be exercised under those rules within a 20 day period before (and conditionally on) the relevant event taking place. Options may alternatively be

 

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exercised under those rules during a 20 day period after the relevant event and any Options not so exercised will lapse at the end of that period.

 

10.11              Priority

 

11                               If there is any conflict between any of the provisions in Rules 9 (Exercise and lapse - general rules) and 10 (Exercise and lapse - exceptions to the general rules), the provision which results in the shortest exercise period will prevail. Exchange of Options

 

11.1                     Application

 

This Rule 11 applies to all Options (whether or not already exercisable) if the Acquiring Company:

 

11.1.1            obtains Control of the Company as a result of making a general offer to acquire shares in the Company which falls within paragraph 38(2)(a) of Schedule 3; or

 

11.1.2            obtains Control of the Company under a scheme of arrangement sanctioned by the court under Section 899 Companies Act 2006; or

 

11.1.3            becomes entitled or bound to acquire Shares under Section 981 Companies Act 2006 or other local legislation which HM Revenue and Customs agrees is equivalent.

 

11.2                     Agreement to exchange

 

If this Rule 11.2 applies, the Optionholder may, with the agreement of the Acquiring Company, exchange his Options under Rule 11.3 (Exchange) during the period set out in paragraph 38(3) of Schedule 3.

 

11.3                     Exchange

 

Where an Option is to be exchanged the Optionholder will be granted a new option to replace it.

 

Where an Optionholder is granted a new option then:

 

11.3.1            the new option will be in respect of shares, which satisfy the conditions of paragraph 39 of Schedule 3 in any body corporate (falling within paragraph 18(b) or (c) of Schedule 3), determined by the Acquiring Company;

 

11.3.2           the new option will be equivalent to the Option that was exchanged as provided in paragraph 39(4) of Schedule 3 and for the purposes of equivalence, market value will be determined according to a methodology agreed by HMRC;

 

11.3.3           the new option will be treated as having been acquired at the same time as the Option that was exchanged and be exercisable in the same manner and at the same time;

 

11.3.4            the new option will be subject to the Rules as they last had effect in relation to the Option that was exchanged;

 

11.3.5            with effect from the exchange, the Rules will be construed in relation to the new option as if references to Shares were references to the shares over which the new

 

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option is granted and references to the Company were references to the body corporate determined by the Directors under Rule 11.3.1.

 

11.4                     Grant

 

The Acquiring Company must not grant Options under the Scheme other than under Rule 11.3 (Exchange).

 

12                               Exercise of Options

 

12.1                     Limit on exercise

 

An Optionholder may exercise his Option using funds equal to or less than the amount repayable under his Savings Contract, including any bonus or interest. An Optionholder can only use Contributions made before the date of exercise of the Option, and any bonus or interest on them.

 

12.2                     Manner of exercise

 

Options must be exercised by notice in a form specified by the Company and executed by the Optionholder or by his agent and delivered to the Company or its agent. The Optionholder must also send:

 

12.2.1            if the Company so requires, the relevant option certificate; and either

 

12.2.2            payment in full in cleared funds and evidence of the termination of the Savings Contract; or

 

12.2.3            authority to terminate the Savings Contract and use the amount needed to acquire the number of Shares over which the Option is being exercised.

 

The exercise of the Option is effective on the date of receipt by the Company or its agent of the notice, the option certificate (if required) and the relevant payment or authority.

 

12.3                     Part exercise

 

12.3.1            Subject to any other restriction in the Rules, Options may be exercised in respect of all the Shares under the Option or only some of the Shares.

 

12.3.2            If an Option is exercised in part, the unexercised balance will lapse.

 

12.4                     Issue or transfer

 

Subject to Rule 12.6 (Consents):

 

12.4.1            Shares to be issued or transferred out of treasury following the exercise of an Option must be issued within 30 days of the date of exercise; and

 

12.4.2            if Shares are to be transferred following the exercise of an Option, the Directors must procure this transfer within 30 days of the date of exercise.

 

12.5                     Rights

 

12.5.1            Shares issued on exercise of an Option rank equally in all respects with the Shares in issue on the date of allotment. They do not rank for any rights attaching to Shares by reference to a record date preceding the date of allotment.

 

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12.5.2            Where Shares are to be transferred including transferred out of treasury on the exercise of an Option, Optionholders are entitled to all rights attaching to the Shares by reference to a record date after the transfer date. They are not entitled to rights before that date.

 

12.6                     Consents

 

All allotments, issues and transfers of Shares are subject to any necessary consents under any relevant enactments or regulations for the time being in force in the United Kingdom or elsewhere. The Optionholder is responsible for complying with any requirements to obtain or avoid the need for any such consent.

 

12.7                     Articles of Association

 

Any Shares acquired on the exercise of Options are subject to the Articles of Association of the Company from time to time in force.

 

12.8                     Listing

 

If and so long as the Shares are listed on the Official List of the UK Listing Authority or of any other stock exchange where Shares are traded, the Company must apply for listing of any Shares issued pursuant to the Scheme as soon as practicable after their allotment.

 

13                               General

 

13.1                     Notices

 

13.1.1            Any notice or other document which has to be given to an Eligible Employee or Optionholder under or in connection with the Scheme may be:

 

(i)                                  delivered or sent by post to him at his home address according to the records of his employing company; or

 

(ii)                               sent by e-mail or fax to any e-mail address or fax number which, according to the records of his employing company, is used by him;

 

or in either case such other address which the Company considers appropriate.

 

13.1.2            Any notice or other document which has to be given to the Company or other duly appointed agent under or in connection with the Scheme may be delivered or sent by post to it at its respective registered office (or such other place as the Directors or the duly appointed agent may from time to time decide and notify to Optionholders) or sent by e-mail or fax to any e-mail address or fax number notified to the sender.

 

13.1.3            Notices sent by post will be deemed to have been given on the earlier of the date of actual receipt and the second day after the date of posting. However, notices sent by or to an Optionholder who is working overseas will be deemed to have been given on the earlier of the date of actual receipt and the seventh day after the date of posting.

 

13.1.4            Notices sent by e-mail or fax, in the absence of evidence of non-delivery, will be deemed to have been received on the day after sending.

 

13

 

13.2                     Documents sent to shareholders

 

The Company may send to Optionholders copies of any documents or notices normally sent to the holders of its Shares.

 

13.3                     Directors’ decisions final and binding

 

The decision of the Directors on the interpretation of the Rules or in any dispute relating to an Option or matter relating to the Scheme is conclusive.

 

13.4                     Costs

 

The Company may require each Participating Company to reimburse the Company for any costs incurred in connection with the grant of Options to, or exercise of Options by, employees of that Participating Company.

 

13.5                     Administration

 

The Directors have the power from time to time to make or vary regulations for the administration and operation of the Scheme.

 

13.6                     Terms of employment

 

13.6.1            For the purposes of this Rule, “Employee” means any Optionholder, any Eligible Employee or any other person.

 

13.6.2            This Rule applies:

 

(i)                                  during an Employee’s employment or employment relationship; and

 

(ii)                               after the termination of an Employee’s employment or employment relationship, whether the termination is lawful or unlawful.

 

13.6.3            Nothing in the Rules or the operation of the Scheme forms part of the contract of employment or employment relationship of an Employee. The rights and obligations arising from the employment relationship between the Employee and the Company are separate from, and are not affected by, the Scheme. Participation in the Scheme does not create any right to, or expectation of, continued employment or a continued employment relationship.

 

13.6.4            The grant of Options on a particular basis in any year does not create any right to or expectation of the grant of Options on the same basis, or at all, in any future year.

 

13.6.5           Without prejudice to Rule 2.1, no Employee is entitled to participate in the Scheme, or be considered for participation in it, at a particular level or at all. Participation in one operation of the Scheme does not imply any right to participate, or to be considered for participation in any later operation of the Scheme.

 

13.6.6           Without prejudice to an Employee’s right to exercise an Option subject to and in accordance with the express terms of the Rules, no Employee has any rights in respect of the making or omission to make any decision, relating to the Option. Any and all decisions or omissions relating to the Option may operate to the disadvantage of the Employee, even if this could be regarded as capricious or unreasonable, or could be regarded as in breach of any implied term between the Employee and his employer, including any implied duty of trust and confidence. Any such implied term is excluded and overridden by this Rule.

 

14

 

13.6.7            No Employee has any right to compensation for any loss in relation to the Scheme, including:

 

(i)                                  any loss or reduction of any rights or expectations under the Scheme in any circumstances or for any reason (including lawful or unlawful termination of employment or the employment relationship);

 

(ii)                               a decision taken in relation to an Option or to the Scheme, or any failure to take a decision;

 

(iii)                            the operation, suspension, termination or amendment of the Scheme.

 

13.6.8            Participation in the Scheme is permitted only on the basis that the Participant accepts all the provisions of the Rules, including in particular this Rule. By participating in the Scheme, an Employee waives all rights under the Scheme, other than the right to exercise an Option subject to and in accordance with the express terms of the Rules, in consideration for, and as a condition of, the grant of an Option under the Scheme.

 

13.6.9            Nothing in this Scheme confers any benefit, right or expectation on a person who is not an Employee. No such third party has any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Scheme. This does not affect any other right or remedy of a third party which may exist.

 

13.6.10     Each of the provisions of this Rule is entirely separate and independent from each of the other provisions. If any provision is found to be invalid then it will be deemed never to have been part of these Rules and to the extent that it is possible to do so, this will not affect the validity or enforceability of any of the remaining provisions.

 

13.7                     Employee trust

 

The Company and any Subsidiary of the Company may provide money to the trustee of any trust or any other person to enable the trust or him to acquire Shares for the purposes of the Scheme, or enter into any guarantee or indemnity for those purposes, to the extent permitted by Section 682 of the Companies Act 2006.

 

13.8                     Data protection

 

By participating in the Scheme the Optionholder consents to the holding and processing of personal data provided by the Optionholder to the Company for all purposes relating to the operation of the Scheme. These include, but are not limited to:

 

13.8.1            administering and maintaining Optionholder records;

 

13.8.2            providing information to trustees of any employee benefit trust, registrars, brokers savings carrier or other third party administrators of the Scheme;

 

13.8.3            providing information to future purchasers of the Company or the business in which the Optionholder works; and

 

13.8.4            transferring information about the Optionholder to a country or territory outside the European Economic Area.

 

15

 

14                               Changing the Scheme and termination

 

14.1                     Directors’ powers

 

Except as described in the rest of this Rule 14, the Directors may at any time change the Scheme in any way.

 

14.2                     Shareholders’ approval

 

14.2.1            Except as described in Rule 14.2.2, the Company in general meeting must approve in advance by ordinary resolution any proposed change to the Rules to the advantage of present or future Optionholders which relates to the following:

 

(i)                                  the persons to whom or for whom Shares may be provided under the Scheme;

 

(ii)                               the limitations on the number of Shares which may be issued under the Scheme;

 

(iii)                            the maximum Contribution which may be made under the Scheme;

 

(iv)                           the determination of the Option Price;

 

(v)                              any rights attaching to the Options and the Shares;

 

(vi)                           the rights of Optionholders in the event of a capitalisation issue, rights issue, sub-division or consolidation of shares or reduction or any other variation of capital of the Company;

 

(vii)                        the terms of this Rule 14.2.1.

 

14.2.2            The Directors need not obtain the approval of the Company in general meeting for any minor changes:

 

(i)                                  to benefit the administration of the Scheme;

 

(ii)                               which are necessary or desirable in order to ensure that the Scheme becomes or remains a Schedule 3 Plan or maintains its tax efficiency;

 

(iii)                            to comply with or take account of the provisions of any proposed or existing legislation;

 

(iv)                           to take account of any changes to the legislation; or

 

(v)                              to obtain or maintain favourable tax, exchange control or regulatory treatment of the Company, any Subsidiary or any present or future Optionholder.

 

14.3                    Schedule 3 restrictions

 

14.3.1            For so long as the Scheme is to remain a Schedule 3 Plan, the Scheme must comply with Schedule 3 after any change to a “key feature”.

 

14.3.2            An annual return relating to the Scheme submitted to HMRC following any such change must include a declaration that the Scheme continues to comply with Schedule 3.

 

14.3.3            A “key feature”” is any Scheme provision necessary to comply with Parts 2 to 7 of Schedule 3.

 

16

 

14.4                     Notice

 

The Directors may give written notice of any changes made to any Optionholder affected.

 

14.5                     Termination of the Scheme

 

The Scheme will terminate on 18 May 2015, but the Directors may terminate the Scheme at any time before that date. However, Options granted before such termination will continue to be valid and exercisable as described in these Rules.

 

15                               Governing law

 

English law governs the Scheme and all Options and their construction. The English Courts have non-exclusive jurisdiction in respect of disputes arising under or in connection with the Scheme or any Option.

 

17Exhibit 10.2 DOCX

EXHIBIT 10.2

BANK OF MARIN
SALARY CONTINUATION AGREEMENT

This SALARY CONTINUATION AGREEMENT (this “Agreement”) is adopted this __18th__ day of _____October__________, 2013__, by and between Bank of Marin, a state-chartered commercial bank located in Novato, California (the “Bank”), and Tani Girton (the “Executive”).    

The purpose of this Agreement is to provide specified benefits to the Executive, a member of a select group of management or highly compensated employees who contribute materially to the continued growth, development and future business success of the Bank.  This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended from time to time.  

Article 1
Definitions

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

		
	1.1
	“Account Value” means the amount shown on Schedule A under the heading Account Value.  The parties expressly acknowledge that the Account Value may be different than the liability that should be accrued by the Bank, under Generally Accepted Accounting Principles (“GAAP”), for the Bank’s obligation to the Executive under this Agreement.  The Account Value on any date other than the end of a Plan Year shall be determined by adding the prorated increase attributable for the current Plan Year to the Account Value for the previous Plan Year.  

 
		
	1.2
	“Beneficiary” means each designated person or entity, or the estate of the deceased Executive, entitled to any benefits upon the death of the Executive pursuant to Article 4.

		
	1.3
	“Beneficiary Designation Form” means the form established from time to time by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate one or more Beneficiaries.

		
	1.4
	“Board” means the Board of Directors of the Bank as from time to time constituted.

		
	1.5
	“Change in Control” means a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as such change is defined in Code Section 409A and regulations thereunder.  

		
	1.6
	“Code” means the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder, including such regulations and guidance as may be promulgated after the Effective Date.

		
	1.7
	“Domestic Relations Order” means any judgment, decree, or order (including approval of a property settlement agreement) which (i) relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of the Participant, (ii) is made pursuant to a state domestic relations law (including a community property law) and (iii) meets the requirements of Code Section 414(p)(1)(B).

		
	1.8
	“Disability” means the Executive: (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 or directors of the Bank.  Medical determination of Disability may be made by either the Social Security Administration or by the provider of disability insurance covering employees or directors of the Bank provided that the definition of “disability” applied under such insurance program complies with the requirements of the preceding sentence.  Upon the request of the Plan Administrator, the Executive must submit proof to the Plan Administrator of the Social Security Administration’s or the provider’s determination.

		
	1.9
	“Early Termination” means the Executive’s Separation from Service before attainment of Normal Retirement Age except when such Separation from Service occurs within twenty-four (24) months following a Change in Control or due to death or Termination for Cause. 

		
	1.10
	 “Effective Date” means October 1, 2013. 

		
	1.11
	“Normal Retirement Age” means the Executive’s age sixty-five (65).

		
	1.12
	“Plan Administrator” means the Board or such committee or person as the Board shall appoint.

		
	1.13
	“Plan Year” means each twelve (12) month period commencing on January 1 and ending on December 31 of each year.  The initial Plan Year shall commence on the Effective Date of this Agreement and end on the following December 31.

		
	1.14
	“Schedule A” means the schedule attached to this Agreement and made a part hereof.  Schedule A shall be updated upon a change in any of the benefits under Articles 2 or 3.

		
	1.15
	“Separation from Service” means termination of the Executive’s employment with the Bank for reasons other than death or Disability.  Whether a Separation from Service has occurred is determined in accordance with the requirements of Code Section 409A based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Executive has been providing services to the Bank less than thirty-six (36) months).

		
	1.16
	“Specified Employee” means an employee who at the time of Separation from Service is a key employee of the Bank, if any stock of the Bank, or any includable parent company or subsidiary under Code Section 409A, is publicly traded on an established securities market or otherwise.  For purposes of this Agreement, an employee is a key employee if the employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding section 416(i)(5)) at any time during the twelve (12) month period ending on December 31 (the “identification period”).  If the employee is a key employee during an identification period, the employee is treated as a key employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of April following the close of the identification period.

		
	1.17
	“Termination for Cause” means Separation from Service for:

		
	(a)
	Gross negligence or gross neglect of duties to the Bank;

		
	(b)
	Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Bank; or 

		
	(c)
	Fraud, disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in connection with the Executive’s employment and resulting in a material adverse effect on the Bank.

Article 2
Distributions During Lifetime

		
	2.1
	Normal Retirement Benefit.  Upon Separation from Service after attaining Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Article. 

    
		
	2.1.1
	Amount of Benefit.  The annual benefit under this Section 2.1 is Seventy Seven Thousand Dollars ($77,000).  

		
	2.1.2
	Distribution of Benefit.  The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Separation from Service.  The annual benefit shall be distributed to the Executive for eleven (11) years. 

		
	2.2
	Early Termination Benefit.  If Early Termination occurs, the Bank shall distribute to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Article.

		
	2.2.1  
	Amount of Benefit.  The annual benefit under this Section 2.2 is the amount set forth on Schedule A as of the end of the Plan Year preceding Separation from Service. 

		
	2.2.2
	Distribution of Benefit.  The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age.  The annual benefit shall be distributed to the Executive for eleven (11) years. 

		
	2.3
	Disability Benefit.  If the Executive experiences a Disability prior to Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Article.

		
	2.3.1
	Amount of Benefit.  The annual benefit under this Section 2.3 is the amount set forth on Schedule A as of the end of the Plan Year preceding Disability.  

 
		
	2.3.2
	Distribution of Benefit.  The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age.  The annual benefit shall be distributed to the Executive for eleven (11) years.

		
	2.4
	Change in Control Benefit.  If a Change in Control occurs followed within twenty-four (24) months by Separation from Service prior to Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.4 in lieu of any other benefit under this Article. 

  
		
	2.4.1
	Amount of Benefit.  The benefit under this Section 2.4 is the amount set forth on Schedule A 

as of the end of the Plan Year preceding Separation from Service. 

		
	2.4.2
	Distribution of Benefit.  The Bank shall distribute the benefit to the Executive in a lump sum within sixty (60) days following Separation from Service.

		
	2.4.3 
	Parachute Payments.  Notwithstanding any provision of this Agreement to the contrary, and to the extent allowed by Code Section 409A, if any benefit payment under this Section 2.4 would be treated as an “excess parachute payment” under Code Section 280G, the Bank shall reduce such benefit payment to the extent necessary to avoid treating such benefit payment as an excess parachute payment.

		
	2.5
	Restriction on Commencement of Distributions.  Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee, the provisions of this Section 2.5 shall govern all distributions hereunder.  If benefit distributions which would otherwise be made to the Executive due to Separation from Service are limited because the Executive is a Specified Employee, then such distributions shall not be made during the first six (6) months following Separation from Service.  Rather, any distribution which would otherwise be paid to the Executive during such period shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following Separation from Service.  All subsequent distributions shall be paid in the manner specified. 

		
	2.6
	Distributions Upon Taxation of Amounts Deferred. If, pursuant to Code Section 409A, the Federal Insurance Contributions Act or other state, local or foreign tax, the Executive becomes subject to tax on the amounts deferred hereunder, then the Bank may make a limited distribution to the Executive in a manner that conforms to the requirements of Code section 409A.  Any such distribution will decrease the Executive’s benefits distributable under this Agreement.

		
	2.7
	Change in Form or Timing of Distributions.  For distribution of benefits under this Article 2, the Executive and the Bank may, subject to the terms of Section 8.1, amend this Agreement to delay the timing or change the form of distributions.  Any such amendment:

 
		
	(a)
	may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A;

		
	(b)
	must, for benefits distributable under Sections 2.2 and 2.3, be made at least twelve (12) months prior to the first scheduled distribution;

		
	(c)
	must, for benefits distributable under Sections 2.1, 2.2 and 2.4, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

		
	(d)
	must take effect not less than twelve (12) months after the amendment is made.

		
	2.8
	Domestic Relations Orders.  The Bank shall fulfill any Domestic Relations Order which the Executive presents to the Plan Administrator.  The maximum amount which may be paid out pursuant to this Section 2.8 is the Account Value balance as of the day a Domestic Relations Order is presented.  At the time the Bank fulfills a Domestic Relations Order, the Account Value balance shall be reduced by the amount paid to fulfill the Domestic Relations Order, and the benefits to be paid under Sections 2.1, 2.2, 2.3 or 2.4 or Article 3 hereof shall reflect such reduced amount.

Article 3
Distribution at Death

		
	3.1
	Death During Active Service.  If the Executive dies prior to Separation from Service, the Bank shall distribute to the Beneficiary the benefit described in this Section 3.1.  This benefit shall be distributed in lieu of any benefit under Article 2.

		
	3.1.1
	Amount of Benefit.  The benefit under this Section 3.1 is the amount set forth on Schedule A as of the end of the Plan Year preceding the Executive’s death.

		
	3.1.2
	Distribution of Benefit.  The Bank shall distribute the benefit to the Beneficiary in a lump sum on the first day of the fourth month following the Executive’s death.  The Beneficiary shall be required to provide the Executive’s death certificate to the Bank.

		
	3.2
	Death During Distribution of a Benefit.  If the Executive dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Bank shall distribute to the Beneficiary the remaining Account Value in a lump sum on the first day of the fourth month following the Executive’s death.  The Beneficiary shall be required to provide the Executive’s death certificate to the Bank.

		
	3.3
	Death Before Benefit Distributions Commence.  If the Executive is entitled to benefit distributions under this Agreement but dies prior to the date that commencement of said benefit distributions are scheduled to be made under this Agreement, the Bank shall distribute to the Beneficiary the Account Value in a lump sum on the first day of the fourth month following the Executive’s death.  The Beneficiary shall be required to provide the Executive’s death certificate to the Bank.

Article 4
Beneficiaries

		
	4.1
	In General.  The Executive shall have the right, at any time, to designate a Beneficiary to receive any benefit distributions under this Agreement upon the death of the Executive.  The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designated under any other plan of the Bank in which the Executive participates.  

		
	4.2
	Designation.  The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its designated agent.  If the Executive names someone other than the Executive’s spouse as a Beneficiary, the Plan Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Plan Administrator, executed by the Executive’s spouse and returned to the Plan Administrator.  The Executive's beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved.  The Executive shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures.  Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled.  The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator prior to the Executive’s death.

		
	4.3
	Acknowledgment.  No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.

		
	4.4
	No Beneficiary Designation.  If the Executive dies without a valid beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s spouse shall be the designated 

Beneficiary.  If the Executive has no surviving spouse, any benefit shall be paid to the Executive's estate.
 
		
	4.5
	Facility of Distribution.  If the Plan Administrator determines in its discretion that a benefit is to be distributed to a minor, to a person declared incompetent or to a person incapable of handling the disposition of that person’s property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person.  The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit.  Any distribution of a benefit shall be a distribution for the account of the Executive and the Beneficiary, as the case may be, and shall completely discharge any liability under this Agreement for such distribution amount.

Article 5
General Limitations

		
	5.1
	Termination for Cause.  Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if the Executive’s employment with the Bank is terminated by the Bank or an applicable regulator due to a Termination for Cause.

 
		
	5.2
	Suicide or Misstatement.  No benefit shall be distributed if the Executive commits suicide within two (2) years after the Effective Date, or if an insurance company which issued a life insurance policy covering the Executive and owned by the Bank ultimately denies coverage (i) for material misstatements of fact made by the Executive on an application for such life insurance, or (ii) for any other reason.

		
	5.3
	Removal/Golden Parachute.  Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act.  Notwithstanding anything herein to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise, shall be subject to compliance with 12 U.S.C. 1828 and FDIC Regulation 12 CFR Part 359, Golden Parachute Indemnification Payments and any other regulations or guidance promulgated thereunder.

Article 6
Administration of Agreement

		
	6.1
	Plan Administrator Duties.  The Plan Administrator shall administer this Agreement according to its express terms and shall also have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administra-tion of this Agreement and (ii) decide or resolve any and all ques-tions, including interpretations of this Agreement, as may arise in connection with this Agreement to the extent the exercise of such discretion and authority does not conflict with Code Section 409A.

		
	6.2
	Agents.  In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as the Plan Administrator sees fit, including acting through a duly appointed representative, and may from time to time consult with counsel who may be counsel to the Bank.

		
	6.3
	Binding Effect of Decisions.  Any decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation or application of this Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Agreement.  

		
	6.4
	Indemnity of Plan Administrator.  The Bank shall indemnify and hold harmless the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator.

		
	6.5
	Bank Information.  To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan Administrator on all matters relating to the date and circum-stances of the Executive’s death, Disability or Separation from Service, and such other pertinent information as the Plan Administrator may reasonably require.

		
	6.6
	Annual Statement. The Plan Administrator shall provide to the Executive, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under this Agreement.

Article 7
Claims And Review Procedures

		
	7.1
	Claims Procedure.  An Executive or Beneficiary (“claimant”) who has not received benefits under this Agreement that he or she believes should be distributed shall make a claim for such benefits as follows:

		
	7.1.1
	Initiation - Written Claim.  The claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits.  If such a claim relates to the contents of a notice received by the claimant, the claim must be made within sixty (60) days after such notice was received by the claimant.  All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred.  The claim must state with particularity the determination desired by the claimant.

		
	7.1.2
	Timing of Plan Administrator Response.  The Plan Administrator shall respond to such claimant within ninety (90) days after receiving the claim.  If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the claimant in writing, prior to the end of the initial ninety (90) day period, that an additional period is required.  The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

		
	7.1.3
	Notice of Decision.  If the Plan Administrator denies part or all of the claim, the Plan Administrator shall notify the claimant in writing of such denial.  The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant.  The notification shall set forth:

		
	(a)
	The specific reasons for the denial;

		
	(b)
	A reference to the specific provisions of this Agreement on which the denial is based;

		
	(c)
	A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;

		
	(d)
	An explanation of this Agreement’s review procedures and the time limits applicable to such procedures; and

		
	(e)
	A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

		
	7.2
	Review Procedure.  If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial as follows:

		
	7.2.1
	Initiation - Written Request.  To initiate the review, the claimant, within sixty (60) days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

		
	7.2.2
	Additional Submissions - Information Access.  The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim.  The Plan Administrator shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.

		
	7.2.3
	Considerations on Review.  In considering the review, the Plan Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

		
	7.2.4
	Timing of Plan Administrator Response.  The Plan Administrator shall respond in writing to such claimant within sixty (60) days after receiving the request for review.  If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60) day period, that an additional period is required.  The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

		
	7.2.5
	Notice of Decision.  The Plan Administrator shall notify the claimant in writing of its decision on review.  The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant.  The notification shall set forth:

		
	(a)
	The specific reasons for the denial;

		
	(b)
	A reference to the specific provisions of this Agreement on which the denial is based;

		
	(c)
	A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits; and

		
	(d)
	A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).  

Article 8
Amendments and Termination

		
	8.1
	Amendments.  This Agreement may be amended only by a written agreement signed by the Bank and the Executive.  However, the Bank may unilaterally amend this Agreement to conform with written directives to the Bank from its auditors or banking regulators or to comply with legislative changes or tax law, including without limitation Code Section 409A.

		
	8.2
	Plan Termination Generally.  This Agreement may be terminated only by a written agreement signed by the Bank and the Executive.  The benefit shall be the Account Value as of the date this Agreement is terminated.  Except as provided in Section 8.3, the termination of this Agreement shall not cause a distribution of benefits under this Agreement.  Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 2 or Article 3.

		
	8.3
	Plan Terminations Under Code Section 409A.  Notwithstanding anything to the contrary in Section 8.2, if the Bank terminates this Agreement in the following circumstances:

(a)    Within thirty (30) days before or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of this Agreement and further provided that all the Bank's arrangements which are substantially similar to this Agreement are terminated so the Executive and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of such termination; 
		
	(b)
	Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under this Agreement are included in the Executive's gross income in the latest of (i) the calendar year in which this Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

		
	(c)
	Upon the Bank’s termination of this and all other arrangements that would be aggregated with this Agreement pursuant to Treasury Regulations Section 1.409A-1(c) if the Executive participated in such arrangements (“Similar Arrangements”), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and (iii) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Agreement; 

the Bank may distribute the Account Value, determined as of the date of the termination of this Agreement, to the Executive in a lump sum subject to the above terms.

Article 9
Miscellaneous

		
	9.1
	Binding Effect.  This Agreement shall bind the Executive and the Bank and their beneficiaries, survivors, executors, administrators and transferees.

		
	9.2
	No Guarantee of Employment.  Although this Agreement is intended to provide Executive with an additional incentive to remain in the employ of the Bank, this Agreement shall not be deemed to constitute a contract of employment between Executive and the Bank nor shall any provision of this Agreement restrict or expand the right of the Bank to terminate Executive’s employment.  This Agreement shall have no impact or effect upon any separate written employment agreement which Executive may have with the Bank, it being the parties’ intention and agreement that unless this Agreement is specifically referenced in said employment agreement (or any modification thereto), this Agreement (and the Bank’s obligations hereunder) shall stand separate and apart and shall have no effect on or be affected by, the terms and provisions of said employment agreement.

		
	9.3
	Non-Transferability.  Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

		
	9.4
	Tax Withholding and Reporting.  The Bank shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Code Section 409A from the benefits provided under this Agreement.  The Executive acknowledges that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authorities.  The Bank shall satisfy all applicable reporting requirements, including those under Code Section 409A.

		
	9.5
	Applicable Law.  This Agreement and all rights hereunder shall be governed by the laws of the State of California, except to the extent preempted by the laws of the United States of America.

		
	9.6
	Unfunded Arrangement.  The Executive and the Beneficiary are general unsecured creditors of the Bank for the distribution of benefits under this Agreement.  The benefits represent the mere promise by the Bank to distribute such benefits.  The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors.  Any insurance on the Executive's life or other informal funding asset is a general asset of the Bank to which the Executive and Beneficiary have no preferred or secured claim.

		
	9.7
	Reorganization.  The Bank shall not merge or consolidate into or with another bank, or reorganize, or sell substantially all of its assets to another bank, firm or person unless and until such succeeding or continuing bank, firm or person agrees to assume and discharge the obligations of the Bank under this Agreement.  Upon the occurrence of such an event, the term “Bank” as used in this Agreement shall be deemed to refer to the successor or survivor bank, firm, person or other entity.

		
	9.8
	Entire Agreement.  This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof.  No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

		
	9.9
	Interpretation.  Wherever the fulfillment of the intent and purpose of this Agreement requires and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

		
	9.10
	Alternative Action.  In the event it shall become impossible for the Bank or the Plan Administrator to perform any act required by this Agreement due to regulatory or other constraints, the Bank or Plan Administrator may perform such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Bank, provided that such alternative act does not violate Code Section 409A.

		
	9.11
	Headings.  Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any provision herein.

		
	9.12
	Validity.  If any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been included herein.

		
	9.13
	Notice.  Any notice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the address below: 

	
	
	Bank of Marin

	504 Redwood Blvd Suite 100

	Novato, CA 94947

Such 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.

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

		
	9.14
	Deduction Limitation on Benefit Payments.  If the Bank reasonably anticipates that the Bank’s deduction with respect to any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Bank to ensure that the entire amount of any distribution from this Agreement is deductible, the Bank may delay payment of any amount that would otherwise be distributed under this Agreement.  The delayed amounts shall be distributed to the Executive (or the Beneficiary in the event of the Executive's death) at the earliest date the Bank reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).

		
	9.15
	Compliance with Code Section 409A.  It is the intent of the parties to comply with the all applicable Code sections, including, but not limited to, Code Section 409A.  Furthermore, for the purpose of this Agreement, Code Section 409A shall be read to specifically include any related or relevant IRS Notices or clarifications.  While it is understood that a general Code Section 409A savings clause will not be effective, the parties intend that any ambiguities regarding any terms or payouts contained herein shall be interpreted in a manner consistent with Code Section 409A.  Further, this Agreement shall be administered in a manner consistent with Code Section 409A.

IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement.

	
			
	EXECUTIVE
	 
	BANK

	 
	 
	 

	 
	 
	 

	 
	 
	 

	By: /s/ Tani Girton
	 
	By: /s/ Veronika Johnson

	Tani Girton
	 
	Title: Comp and Benefits Officer

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