Document:

MASTER REAFFIRMATION AND

AMENDMENT NO. 1 TO LOAN DOCUMENTS

THIS MASTER REAFFIRMATION AND AMENDMENT NO. 1 TO LOAN DOCUMENTS (this "Agreement") is made as of the 28th day of March, 2013, by and among HIGHER ONE, INC., a Delaware corporation (the "Borrower"), the Guarantors, the Lenders, and BANK OF AMERICA, N.A., as Administrative Agent, Swingline Lender and L/C Issuer (the "Agent").  Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Credit Agreement described below.

W I T N E S S E T H:

            WHEREAS, the Borrower, the Guarantors, the Agent and the Lenders are parties to that certain Credit Agreement dated as of October 16, 2012 (as the same may be amended, modified, restated or otherwise supplemented from time to time, the "Credit Agreement");

WHEREAS, pursuant to the Credit Agreement, the Lenders have extended to the Borrower loans and other financial accommodations in an aggregate amount of up to $200,000,000 (the "Credit Facilities");

WHEREAS, as collateral security for all Obligations to the Lenders (including, without limitation, the Obligations arising under the Credit Facilities), the Borrower and each Guarantor has granted to the Agent for the ratable benefit of the Secured Parties a lien on and security interest in all of their respective assets pursuant to, and as more particularly described in, the Collateral Documents;

WHEREAS, in connection with the closing of the transactions contemplated by the Credit Agreement, the Borrower was required to provide certain deposit account and securities account control agreements on a post-closing basis as more particularly described in Section 6.14(c)  of the Credit Agreement (the "Post Closing Obligations"); and

WHEREAS, the Borrower and the Guarantors (collectively, the "Obligors") have requested that the Agent and the Lenders consent to (a) the extension of the time for delivery of the Post Closing Obligations until March 28, 2013, (b) the waiver of the requirement for a Qualifying Control Agreement with respect to the Share Repurchase Accounts (as defined below), and (c) the correction of a typographical error in the Credit Agreement, all as more particularly described below.

NOW, THEREFORE, in consideration of the premises set forth herein (which are incorporated herein as though fully set forth below, by this reference thereto) and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the undersigned agrees as follows:

1.            Acknowledgments, Affirmations and Representations and Warranties.

(a)            The Obligors acknowledge, affirm, represent and warrant that:

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(b)            All of the statements contained herein are true and correct and that each understands that the Lenders and the Agent are relying on the truth and completeness of such statements to enter into this Agreement.

(i)            The Obligors are legally and validly indebted to the Lenders by virtue of the Credit Facilities and the Loan Documents to which they are a party and there is no defense, offset or counterclaim with respect to any of the Obligations of the Obligors under the Loan Documents or independent claim or action against the Lenders or the Agent of any kind or nature with respect to the Obligations existing as of the date hereof or any of the Loan Documents to which they are a party, any action previously taken or not taken by the Lenders or the Agent with respect thereto, or any Lien on Collateral in connection therewith to secure the Obligations.

(ii)            Each of the Obligors has the power and authority to enter into, and has taken all necessary corporate or company action to authorize, this Agreement and the transactions contemplated hereby, and this Agreement has been duly executed and delivered by each Obligor and is a valid and binding obligation of each Obligor, enforceable against each Obligor in accordance with its terms.

(iii)            All representations, warranties and covenants contained in, and schedules and exhibits to, the Credit Agreement, the Guaranty and the other Loan Documents are true and correct in all material respects on and as of the date hereof, except to the extent that such representations and warranties specifically relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and are incorporated herein by reference and are hereby remade and reaffirmed.

(iv)            After giving effect to the amendments set forth herein, no Event of Default (howsoever defined) currently exists under the Credit Agreement, the Guaranty or any of the other Loan Documents and no condition exists which would constitute a default or an event of default (howsoever defined) under the Credit Agreement or any of the other Loan Documents but for the giving of notice or passage of time, or both.

(v)            There has been no event or circumstance since the date of the closing of the Credit Agreement on October 16, 2012 that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect.

(vi)            The consummation of the transactions contemplated hereby is not prevented or limited by, nor does it conflict with or result in a breach of terms, conditions or provisions of any Obligor's Organization Documents or any evidence of indebtedness, agreement or instrument of whatever nature to which any Obligor is a party or by which it is bound, does not constitute a default under any of the foregoing and does not violate any federal, state or local law, regulation or order or any order of any court or agency which is binding upon any Obligor.

(vii)            No consents, licenses or approvals are required in connection with the execution, delivery and performance by any of the Obligors and the validity against any of the Obligors of this Agreement other than those already obtained.

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(viii)            The Obligors are not in default in the payment or performance of any other obligations or liabilities relating to Indebtedness to any other Person, including, without limitation, any other financial institution, and all payments due to any other creditors of any of the Obligors are current and not past due.

 

2.            Amendments to Credit Agreement and other Loan Documents; Matters Re: Perfection Certificates.

(a)            Any and all references in any Loan Document to the Credit Agreement (howsoever defined) shall mean the Credit Agreement, as amended and modified by this Agreement.

(b)            Section 1.01 of the Credit Agreement, entitled "Defined Terms," is hereby amended to add the following defined terms in the appropriate alphabetical placement:

"Low Balance Account" means a deposit account: (a) which is not (i) a Share Repurchase Account, (ii) any Loan Parties' primary operating or deposit account, or (iii) an account identified on Schedule 5.21(d)(i) or in any Perfection Certificate which was in existence prior to October 16, 2012 (other than the U.S. Bank National Association account with an account number ending in 71798), and (b) with an account balance which when combined with the account balances in all other Low Balance Accounts does not exceed $200,000 in the aggregate at any time.

"Perfection Certificate" means the Perfection Certificate of each Obligor dated as of October 16, 2012, as the same may be supplemented, modified, amended or restated from time to time, and "Perfection Certificates" means, collectively, all of the Perfection Certificates.

"Share Repurchase Accounts" means, collectively, the deposit accounts more particularly described on Schedule 1.01(d) hereto.

"US Bank Deposit Accounts" means the deposit accounts maintained by Higher One Real Estate SP, LLC at U.S. Bank National Association as more particularly described on Schedule 6.14(c) hereto which are presently subject to a security interest in favor of Consortium America XLII, LLC.

(c)            The definition of "Consolidated Funded Indebtedness" set forth in Section 1.01 of the Credit Agreement, entitled "Defined Terms," is hereby amended by deleting the words "Subordinated Liabilities" set forth therein and by substituting therefor the words "Subordinated Debt".

(d)            Section 6.14(c) of the Credit Agreement entitled "Account Control Agreements" is hereby amended and restated in its entirety as follows:

" (c) Account Control Agreements. None of the Loan Parties shall open, maintain or otherwise have any deposit or other accounts (including securities accounts) at any bank or other financial institution, or any other account where money or securities are or may

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be deposited or maintained with any Person, other than  (a) deposit accounts that are maintained at all times with depositary institutions as to which the Administrative Agent shall have received a Qualifying Control Agreement, (b) securities accounts that are maintained at all times with financial institutions as to which the Administrative Agent shall have received a Qualifying Control Agreement, and (c) deposit accounts established solely as payroll and other zero balance accounts and such accounts are held at Bank of America; provided, however, that notwithstanding the forgoing, with respect to any deposit or other securities account of any Loan Party in existence as of October 16, 2012 which is not maintained with the Administrative Agent, any Qualifying Control Agreement otherwise required to be delivered pursuant to the terms hereof may be delivered by the applicable Loan Party on or before March 28, 2013 (unless a longer period is otherwise agreed to in writing by the Administrative Agent); and provided further, however, that notwithstanding the forgoing, so long as no Default or Event of Default shall have occurred and be continuing, the Loan Parties shall not be required to provide Qualifying Control Agreements with respect to any Share Repurchase Account, any Low Balance Account, or any US Bank Deposit Accounts."

(e)            Article VI of the Credit Agreement entitled, "AFFIRMATIVE COVENANTS"  is hereby amended to add a new Section at the end of such Article VI (immediately after Section 6.15) as follows:

" Section 6.16  Use of Share Repurchase Accounts. Holdings (and each other Loan Party, if applicable) shall use the Share Repurchase Accounts solely for the purpose of funding the repurchase of capital stock of Holdings in connection with a Permitted Initial Share Repurchase or a Permitted Subsequent Share Repurchase and for no other purpose for any reason whatsoever.

(f)            Article VII of the Credit Agreement entitled, "NEGATIVE COVENANTS" is hereby amended to add a new Section at the end of such Article VII (immediately after Section 7.15) as follows:

"Section 7.16 Share Repurchase Accounts and US Bank Deposit Accounts. At any time:

(a) with regard to the Share Repurchase Accounts, permit the aggregate account balances in all Share Repurchase Accounts to exceed the greater of: (i) $50,000, or (ii) that amount which Holdings is then currently committed to pay to repurchase its capital stock in connection with a Permitted Initial Share Repurchase or a Permitted Subsequent Share Repurchase; provided, however, that: (x) in the event that any monies deposited in or transferred to a Share Repurchase Account are not used for a Permitted Initial Share Repurchase or a Permitted Subsequent Share Repurchase within ten (10) Business Days from the date on which such funds were transferred or deposited into any such Share Repurchase Account, all such unused amounts shall be immediately transferred to a deposit account or a securities account which is subject to a Qualifying Control Agreement (unless such transfer would result in an aggregate account balance among all Share Repurchase Accounts of less than $50,000, in which event the amount required to

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be transferred shall be reduced to an amount which would permit up to $50,000 to be retained in such Share Repurchase Accounts in the aggregate), and (y) upon the occurrence of a Default or an Event of Default which is continuing, in addition to any other rights and remedies of the Agent and Lenders hereunder or under any other Loan Document or at law: no further amounts may be transferred to or deposited into any Share Repurchase Account; the Borrower shall immediately close such Share Repurchase Accounts; and any and all amounts in the Share Repurchase Accounts shall be immediately transferred to a deposit account or a securities account which satisfies the requirements of clause (a) or (b) of Section 6.14(c), as applicable.

(b)  with regard to the US Bank Deposit Accounts (i) permit the balances in either of the US Bank Deposit Accounts as disclosed in the Perfection Certificate of Higher One Real Estate SP, LLC dated as of October 16, 2012 to be increased, or (ii) permit any Loan Party to advance, deposit or otherwise transfer any additional funds into the US Bank Deposit Accounts, provided, however, that upon satisfaction of the obligations owing to Consortium America XLII, LLC which are secured by the US Bank Deposit Accounts, (x) the applicable Loan Parties shall provide to the Administrative Agent a Qualifying Control Agreement with respect to the US Bank Deposit Accounts or (y) all amounts in the US Bank Deposit Accounts shall be immediately transferred to a deposit account or a securities account which satisfies the requirements of clause (a) or (b) of Section 6.14(c), as applicable."

(g)            The Credit Agreement is amended by adding in numerical order as Schedule 1.01(d) thereto, the Schedule attached hereto as Schedule A.

(h)            The Credit Agreement is amended by adding in numerical order as Schedule 6.14(c) thereto, the Schedule attached hereto as Schedule B.

(i)            The Borrower hereby represents and warrants that the following bank accounts identified on the Borrower's Perfection Certificate have been closed: (a) the bank account maintained with Comerica Bank with the last five digits of its account number being 42991, and (b) the bank account maintained with Comerica Bank with the last five digits of its account number being 43296. Section 11 of the Borrower's Perfection Certificate entitled "Bank Accounts" is hereby amended by deleting these two accounts from the list of bank accounts set forth therein.

(j)            Higher One Holdings, Inc., hereby represents and warrants that the following bank accounts identified on Higher One Holdings, Inc.'s Perfection Certificate have been closed: (a) the bank account maintained with Morgan Stanley with the last five digits of its account number being 78NP2, and (b) the bank account maintained with UBS with the last five digits of its account number being 21348. Section 11 of Higher One Holdings, Inc.'s Perfection Certificate entitled "Bank Accounts" is hereby amended by deleting these two accounts from the list of bank accounts set forth therein. In addition, Higher One Holdings, Inc. hereby represents and warrants that the Liquidnet bank account number identified on Higher One Holdings, Inc.'s Perfection Certificate was incorrect and that the correct number for such account includes "W29" at the end of the account number set forth on such Perfection Certificate. The Higher One

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(k)            Holdings, Inc. Perfection Certificate is hereby further amended to include "W29" at the end of the Liquidnet account number.

 

3.            Reaffirmation of Obligors; Representations of Obligors.  The Obligors, as makers, debtors, assignors, obligors, guarantors, or in other similar capacity in which they incur obligations to the Agent or the Lenders under any of the Loan Documents or otherwise, hereby ratify and reaffirm all of their respective payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which they are a party and, to the extent they granted liens or mortgages on or security interests in any of their properties pursuant to any Collateral Document as security for the Obligations under or with respect to the Credit Agreement and the other Loan Documents, hereby ratify and reaffirm such grant of liens, mortgages and security interests and confirm and agree that with respect to liens and security interests on any right, title and interest of the Obligors in any personal property granted pursuant to a security agreement or otherwise, such liens and security interests hereafter secure all of the Obligations, including without limitation, the Obligations arising under the Revolving Loans, in each case as if each reference in such Collateral Document to the obligations secured thereby are construed to hereafter mean and refer to such Obligations (including, without limitation, the Revolving Loans) under the Credit Agreement and other Loan Documents, as hereby amended. Each Guarantor acknowledges, affirms and agrees that all Obligations of the Borrowers to the Lenders and the Agent have been guaranteed by such Guarantors pursuant to the terms of the Guaranty, including, those Obligations arising under the Revolving Loans. The Obligors acknowledge that each of the Loan Documents to which they are a party remain in full force and effect, continue to apply to the Obligations, including, but not limited to, the Obligations arising under the Revolving Loans, and are hereby ratified and confirmed. The execution of this Agreement shall not operate as a novation, waiver of any right, power or remedy of the Lenders or the Agent nor constitute a waiver of any provision of any of the Loan Documents. The Obligors agree and acknowledge that this Agreement shall be deemed a Loan Document.

 

4.            Conditions to Effectiveness. The effectiveness of this Agreement is subject to the prior satisfaction of the following conditions precedent:

(a)            The representations and warranties of the Obligors contained herein shall be true and correct in all material respects unless qualified by materiality in which case such representations and warranties shall be true and correct.

(b)            There shall exist no Default or Event of Default.

(c)            The Obligors, the Agent and the Required Lenders shall have executed and delivered this Agreement, in form and substance reasonably satisfactory to Agent and the Required Lenders.

(d)            The Obligors shall have delivered to the Agent such other supporting documents and certificates as the Agent, the Lenders or their respective counsel may reasonably request.

For purposes of determining compliance with the conditions specified in this Section 4, the Agent's and any Lender's execution and delivery of this Agreement shall be deemed to

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constitute their approval and acceptance of, or its satisfaction with, each document or other matter required under this Section 4 to be approved by or acceptable or satisfactory to the Agent and/or any such Lender.

5.            Successors and Assigns.  This Agreement shall be binding upon the Obligors and upon their respective heirs, administrators, successors and assigns, and shall inure to the benefit of the Lenders and the Agent and their respective successors and assigns.  The successors and assigns of such Persons shall include, without limitation, their respective receivers, trustees, or debtors-in-possession.

6.            Further Assurances. The Obligors hereby agree from time to time, as and when requested by the Agent or any of the Lenders, to execute and deliver or cause to be executed and delivered all such documents, instruments and agreements and to take or cause to be taken such further or other action as the Agent or any of the Lenders may reasonably deem necessary or desirable in order to carry out the intent and purposes of this Agreement and the Loan Documents.

7.            Fees and Expenses.  The Obligors agree to pay all legal fees and expenses of the Agent and the Lenders incurred in connection with the preparation, negotiation and execution of this Agreement and the other documents executed and/or delivered in connection herewith.

8.            Severability.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement.

9.            Merger.  This Agreement represents the final agreement of the Obligors and the Lenders with respect to the matters contained herein and may not be contradicted by evidence of prior or contemporaneous agreements, or prior or subsequent oral agreements.

10.            Execution in Counterparts; Electronic Execution.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  For avoidance of doubt, the provisions set forth in Section 11.18 of the Credit Agreement regarding electronic execution and signatures shall apply to the execution of this Agreement.

11.            Section Headings.  The section headings herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof.

12.            Governing Law.  This Agreement shall be governed by and construed with the law of the State of New York.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

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IN WITNESS WHEREOF, this Agreement has been duly executed by each of the undersigned as of the day and year first set forth above.

 

HIGHER ONE, INC., as a Borrower

By:   /s/ Mark Volchek                                                                                  

Name: Mark Volchek                                                                                  

Title: CEO                                                                                  

HIGHER ONE HOLDINGS, INC., as a Guarantor

By:   /s/ Mark Volchek                                                                                  

Name: Mark Volchek                                                                                  

Title: CEO                                                                                  

HIGHER ONE REAL ESTATE, INC., as a Guarantor

By:   /s/ Mark Volchek                                                                                  

Name: Mark Volchek                                                                                  

Title: CEO                                                                                  

HIGHER ONE REAL ESTATE SP, LLC, as a Guarantor

By:   /s/ Mark Volchek                                                                                  

Name: Mark Volchek                                                                                  

Title: CEO                                                                                  

HIGHER ONE MACHINES, INC., as a Guarantor

By:   /s/ Mark Volchek                                                                                  

Name: Mark Volchek                                                                                  

Title:   Treasurer                                                                                  

 

[Signature Page (1) to Master Reaffirmation and Amendment No. 1 to Loan Documents]

                                                                                  

 

BANK OF AMERICA, N.A., as

 Administrative Agent

By:   /s/ Angela Larkin                                                                                  

Name: Angela Larkin                                                                                  

Title: Assistant Vice President                                                                                  

 

 

 

[Signature Page (2) to Master Reaffirmation and Amendment No. 1 to Loan Documents]

BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swingline Lender

By: /s/ Christopher T. Phelan                                                                      

Name:  Christopher T. Phelan                                                                                  

Title:  Senior Vice President                                                                                  

 

 

[Signature Page (3) to Master Reaffirmation and Amendment No. 1 to Loan Documents]

  

 

RBS CITIZENS, N.A., as a Lender

By:   /s/ Marianne Stowell                                                                                  

Name:   Marianne Stowell                                                                                  

Title:   VP                                                                                  

 

[Signature Page (4) to Master Reaffirmation and Amendment No. 1 to Loan Documents]

  

 

BANK OF MONTREAL – CHICAGO BRANCH, as a Lender

By:   /s/ Scott M. Ferris                                                                                  

Name: Scott M. Ferris                                                                                  

Title:                          Managing Director  

 

 

 

 

[Signature Page (5) to Master Reaffirmation and Amendment No. 1 to Loan Documents]

 

WEBSTER BANK, N.A., as a Lender

By: /s/ Michele L. Lynch                                                                                  

Name: Michele L. Lynch                                                                                  

Title: Vice President                                                                                  

 

 

[Signature Page (6) to Master Reaffirmation and Amendment No. 1 to Loan Documents]

  

 

WELLS FARGO BANK, N.A., as a Lender

By:   /s/ Barbara A. Keegan                                                                                  

Name: Barbara A. Keegan                                                                                  

Title: Senior Vice President                                                                                  

 

 

[Signature Page (7) to Master Reaffirmation and Amendment No. 1 to Loan Documents]

  

 

FIFTH THIRD BANK, as a Lender

By: /s/ Michelle Dawidziak                                                                                  

Name: Michelle Dawidziak                                                                                  

Title: Assistant Vice President                                                                                  

 

 

 

 

[Signature Page (8) to Master Reaffirmation and Amendment No. 1 to Loan Documents]

 

SOVEREIGN BANK, N.A., as a Lender

By: /s/ Michael Silverman                                                                                  

Name: Michael Silverman                                                                                  

Title: Senior Vice President                                                                                  

 

 

 

 

[Signature Page (9) to Master Reaffirmation and Amendment No. 1 to Loan Documents]

 

GOLDMAN SACHS BANK USA, as a Lender

By: /s/ Michelle Latzoni                                                                                  

Name:   Michelle Latzoni                                                                                  

Title: Authorized Signatory                                                                                  

 

 

 

 

[Signature Page (10) to Master Reaffirmation and Amendment No. 1 to Loan Documents]

 

BARCLAYS BANK PLC, as a Lender

By: /s/ Gregory Fishbein                                                                                  

Name: Gregory Fishbein                                                                                  

Title: Assistant Vice President                                                                                  

 

 

 

 

[Signature Page (11) to Master Reaffirmation and Amendment No. 1 to Loan Documents]

  

 

FIRST NIAGARA BANK, N.A., as a Lender

By: /s/ Dante Fazzina                                                                                  

Name:   Dante Fazzina                                                                                  

Title: Vice President                                                                                  

 

 

 

 

 

[Signature Page (12) to Master Reaffirmation and Amendment No. 1 to Loan Documents]10.1 2013 EIP - Amended

EXHIBIT 10.1

2013 Executive Annual Incentive Plan (EIP)
Objectives 

The purpose of ViewPoint Financial Group, Inc. (“ViewPoint” or the “Bank”) Executive Annual Incentive Plan (EIP) is to motivate and reward senior executives for their contributions to the performance and success of the Bank.  ViewPoint's incentive plan focuses on the financial measures that are critical to the company's growth and profitability.  This document summarizes the elements and features of the Plan.  
The objectives for ViewPoint's Incentive Plan are as follows:
		
	•
	Recognize and reward achievement of Bank's annual business goals.

		
	•
	Motivate and reward superior performance.

		
	•
	Attract and retain talent needed to grow the Bank.

		
	•
	Be competitive with market.

		
	•
	Encourage teamwork and collaboration among the Bank's leadership and across business groups.

		
	•
	Increase engagement and commitment to the Bank

		
	•
	Ensure appropriate risk balance in plan design and governance policies.

Plan Year

The annual incentive plan follows the Bank's fiscal year, January 1st to December 31st.  

Eligibility/Participation

Eligibility - Senior executive officers are eligible to participate. To participate in the plan, the employee should meet the following requirements:  
		
	•
	Employees hired after January 1st of the plan year will receive a pro-rata award based on the number of weeks employed during the plan year. 

		
	•
	Participants must be employed at the time of incentive distribution to receive an incentive award except death, disability and retirement.

Participation - Every year the participants will be proposed by CEO and approved by the Compensation Committee.  For 2013, the participants include CEO and EVPs.

Incentive Award Opportunity

Each participant will have a target award (expressed as a percentage of base earnings) and range that defines their incentive opportunity. Actual awards will be allocated based on specific performance goals defined for each participant and will range from 0% to 170% of target incentives.  The table below summarizes target incentives for the 2013 plan year.  

	
					
	2013 Annual Incentive Targets

	Role
	Below Threshold
	Threshold
(50%)
	Target
(100%)
	Maximum
(170%)

	CEO
	0%
	25%
	50%
	85%

	EVPs
	0%
	20%
	40%
	68%

Performance Gate/Trigger

To activate the annual incentive plan, 85% of budgeted Net Income must be achieved.

Performance Measures
The Incentive Plan will reward Bank performance as measured by Net Interest Margin, Efficiency Ratio, ROA and NPA/Avg. Assets.  
Performance will be measured on a relative basis against an Industry Index defined as the SNL Small Cap U.S. Banks Index excluding non-exchange traded banks (e.g. OTCBB, Pink Sheet). The index component companies will be determined at the end of performance period (e.g. 12/31/2013).  
In addition to the Bank performance goals relative to industry, a portion of the incentive will reflect an assessment of strategic accomplishments/progress toward the strategic plan, particularly as it relates to three core initiatives:  Increasing Household Penetration, Shifting the Bank's Asset Mix and Deposit Growth.  These core initiatives will also serve as key measures for the management incentive goals. 
The table below presents the FY 2013 goals.

	
							
	Performance Measures
	 
	Performance Goals
	 
	Weight

	 
	Threshold
	Target
	Stretch
	 

	Net Interest Margin
	 
	35th Percentile
	50th Percentile
	75th Percentile
	 
	20%

	Efficiency Ratio
	 
	 
	20%

	ROA
	 
	 
	20%

	NPA / Avg. Assets
	 
	 
	20%

	Strategic Achievement and Progress
	 
	Assessment of strategic achievement and progress  against three core initiatives:  household penetration, deposit growth, shifting asset mix
	 
	20%

	Total
	 
	 
	 
	100%

Payouts

Performance will be assessed at the end of the fiscal year.  80% of the awards will be calculated formulaically.  20% will be based on a qualitative assessment of progress against the strategic initiatives.  Due to the financial data availability, the index financials will be measured based on trailing twelve months as of September 30, 2013 while ViewPoint's financials will be measured as of FYE 2013.  Actual payouts for each performance goal will be pro-rated between threshold and maximum levels to reward incremental improvement.

Performance of each specific goal (.e.g. Net Interest Margin, Efficiency Ratio, ROA and NPA / Avg. Assets) is calculated independently to determine the payout for the goal.  The sum of the awards for each performance measure determines the total incentive award.  Payouts will be made in cash as soon as possible after the closing of Company financials each year and the Committee review and approve the results.  

Payouts will be made in cash at the completion of the annual performance period (January - December).  Participants must be employed at the time of award in order to receive payment.  
Incentive compensation will be tracked and paid annually approximately 75 days following the conclusion of the company's fiscal year.  In no event will a payment be paid later than March 15 of the following year.  

Each participant's payout is calculated on Base Earnings.  Base earnings reflect the base salary actually earned during the course of the plan year. The actual incentive calculation is then based on each participant's performance goals as outlined above.  

Committee Discretion

The Compensation Committee reserves the right to apply positive or negative discretion to the plan as needed to reflect business environment, market conditions that may affect the Bank's performance and incentive plan funding as well as overall risk and regulatory issues.  
The Committee also reserves the right to amend, modify and adjust payouts as necessary.

Illustration of Sample Performance Scorecard

Below is an illustration of how the plan might work.  We assume net income exceeded 85 percent of budget to “turn the plan on”.  Our illustration uses a sample base salary of $270,000 and an incentive target of 40% ($108,000).  Threshold payout opportunity equals 50% of target while stretch payout opportunity equals 170% of target.   

	
						
	Performance Goals
	Performance and Payout

	Performance Measures
	Weight
	$
	Actual Performance
	Payout Allocation (0% - 170%)
	Payout ($)

	Net Interest Margin
	20%
	$21,600
	50th percentile (target)
	100%
	$21,600

	Efficiency Ratio
	20%
	$21,600
	35th percentile (threshold)
	50%
	$10,800

	ROA
	20%
	$21,600
	80th percentile
(stretch)
	170%
	$36,720

	NPA / Avg. Assets
	20%
	$21,600
	57th percentile
(between target and stretch)
	120%
	$25,920

	Strategic Achievement and Progress
	20%
	$21,600
	Met Progress Expectations
	100%
	$21,600

	Total
	100%
	$108,000
	 
	$116,640

This participant's payout of $116,640 is 108% of target.  

Terms and Conditions  

Participation
Senior executives are eligible to participate in the Plan.  New employees will receive a prorated award.    
Effective Date
This Program is effective January 1, 2013 to reflect plan year January 1st to December 31st, 2013.  The Plan will be reviewed annually by the Bank's Compensation Committee and Executive Management to ensure proper alignment with the Bank's business objectives.  ViewPoint retains the rights as described below to amend, modify or discontinue the Plan at any time during the specified period. The Incentive Plan will remain in effect until December 31, 2013.  
Program Administration
The Program is authorized by the Board of Directors and administered by the Compensation Committee. The Compensation Committee has the sole authority to interpret the Plan and to make or nullify any rules and procedures, as necessary, for proper administration. Any determination by the Compensation Committee will be final and binding on all participants. 
Program Changes or Discontinuance
ViewPoint has developed the Plan on the basis of existing business, market and economic conditions; current services; and staff assignments. If substantial changes occur that affect these conditions, services, assignments, or forecasts, ViewPoint may add to, amend, modify or discontinue any of the terms or conditions of the Plan at any 

time.  The Compensation Committee may, at its sole discretion, waive, change or amend any of the Plan as it deems appropriate.  
Incentive Award Payments
Awards will be paid in cash before the end of the first quarter following the Plan year.   Awards will be paid out as a percentage of a participant's base earnings for the Plan year. Incentive awards will be considered taxable income to participants in the year paid and will be subject to withholding for required income and other applicable taxes. 
Any rights accruing to a participant or his/her beneficiary under the Plan shall be solely those of an unsecured general creditor of ViewPoint. Nothing contained in the Plan, and no action taken pursuant to the provisions hereof, will create or be construed to create a trust of any kind, or a pledge, or a fiduciary relationship between ViewPoint or the Committee and the participant or any other person. Nothing herein will be construed to require ViewPoint or the CEO to maintain any fund or to segregate any amount for a participant's benefit.
In the event that an individual, who is due an incentive payout under the plan, terminates their employment with the Bank after the plan year and prior to the date the incentive is paid, that individual's incentive will be included in the pool and allocated to other participants of the plan.  
Program Funding
The Plan is funded and accrued based on Bank performance results for a given year.  Achieving higher levels of performance will increase the Plan payouts to participants.  Similarly, achieving less than target performance will reduce the Plan payouts.  If the Bank does not achieve its threshold bank performance goal or the trigger performance requirement, the Plan will not be paid. 
New Hires, Reduced Work Schedules, Promotions, and Transfers
Participants who are not employed by ViewPoint at the beginning of the Plan year will receive a pro rata incentive award based on their length of employment during a given year.  
Part time employees are eligible to participate.  Their award percentage will reflect their base earnings based on actual hours worked.  A participant whose work schedule changes during the year will be eligible for prorated treatment that reflects his/her time in the different schedules.
If a participant changes his/her role or is promoted during the Plan year, he/she will be eligible for the new role's target incentive award opportunity on a pro rata basis (i.e. the award will be prorated based on the number of weeks employed in the respective positions.)
In the event of an approved leave of absence, the award opportunity level for the year will be adjusted to reflect the time in active status.  For example, a participant on leave status for 13 weeks during a Plan year will have his or her calculated award reduced by one-fourth (13 weeks/52 weeks) to reflect the period of leave.
Termination of Employment
If a Plan participant is terminated by the Bank, no incentive award will be paid.  To encourage employees to remain in the employment of ViewPoint, a participant must be an active employee of the Bank on the date the incentive is paid to receive an award.  (See exceptions for death, disability and retirement below.)  
Disability, Death or Retirement
If a participant is disabled by an accident or illness, and is disabled long enough to be placed on long-term disability, his/her bonus award for the Plan period shall be pro-rated for the time served.
In the event of death, ViewPoint will pay to the participant's estate the pro-rated award that would have been earned by the participant for the time served.
Individuals who retire will receive the pro-rated payment for the time served.  

Ethics and Interpretation
If there is any ambiguity as to the meaning of any terms or provisions of this plan or any questions as to the correct interpretation of any information contained therein, the Bank's interpretation expressed by the Compensation Committee will be final and binding.
The altering, inflating, and/or inappropriate manipulation of performance/financial results or any other infraction of recognized ethical business standards, will subject the employee to disciplinary action up to and including termination of employment.  In addition, any incentive compensation as provided by this plan to which the employee would otherwise be entitled will be revoked.
Participants who have willfully engaged in any activity, injurious to the Bank, will upon termination of employment, death, or retirement, forfeit any incentive award earned during the award period in which the termination occurred.
Clawback (Subject to change based upon the requirements of governing law or regulation)
If for any reason ViewPoint has to restate its financial statements (as determined by the members of the Board of Directors who are considered “independent” for purposes of the listing standards of the NASDAQ), the Committee will take, in its sole discretion, such action as it deems necessary to take adjustments to the incentive awards earned during the current year and up to three years before the restatement. The Committee may require reimbursement of a bonus or incentive compensation awarded to current and past officers or cancel unvested restricted stock or other stock or stock-based awards previously granted to such officers in the amount by which such compensation exceeded any lower payment that would have been made based on the restated financial results.
Miscellaneous
The Plan will not be deemed to give any participant the right to be retained in the employ of ViewPoint, nor will the Plan interfere with the right of ViewPoint to discharge any participant at any time.
In the absence of an authorized, written employment contract, the relationship between employees and ViewPoint  is one of at-will employment. The Plan does not alter the relationship.
This incentive plan and the transactions and payments hereunder shall, in all respect, be governed by, and construed and enforced in accordance with the laws of the state of Texas.
Each provision in this Plan is severable, and if any provision is held to be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions shall not, in any way, be affected or impaired thereby.

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