Document:

MEMORANDUM OF UNDERSTANDING

 

By and Between

 

EVB

 

Tappahannock, Virginia

 

EASTERN VIRGINIA BANKSHARES, INC.

 

Tappahannock, Virginia

 

STATE CORPORATION COMMISSION

 

BUREAU OF FINANCIAL INSTITUTIONS

 

Richmond, Virginia

 

And

 

FEDERAL RESERVE BANK OF RICHMOND

 

Richmond, Virginia

 

 

WHEREAS, Eastern Virginia Bankshares, Inc.,
Tappahannock, Virginia, (Corporation) a registered bank holding company that owns and controls EVB,
Tappahannock, Virginia, (Bank), the State Corporation Commission Bureau of Financial Institutions (Bureau) and the Federal
Reserve Bank of Richmond (Reserve Bank) have mutually agreed to enter into this Memorandum of Understanding (MOU) and

 

WHEREAS, on September 5, 2013, the boards
of directors of the Bank and Corporation (Boards), at a duly constituted meeting, adopted a resolution authorizing and directing
William Rand Cook to enter into this MOU on behalf of the Bank and Corporation, and consenting to compliance with each and every
provision of this MOU by the Bank, Corporation, and its institution affiliated parties, as defined in section 3(u) of the Federal
Deposit Insurance Act, as amended (FDI Act) (12 U.S.C. §1813(u)).

 

NOW, THEREFORE, Bank, Corporation, Bureau
and Reserve Bank agree as follows:

 

 

    	 

    	 

    

 

Allowance for Loan and Lease Losses (ALLL)

 

1.The Boards shall review and revise the ALLL methodology
consistent with relevant supervisory guidance, particularly the requirements outlined in SR Letter 12-3, “Interagency Guidance
on Allowance Estimation Practices for Junior Lien Loans and Lines of Credit” (SR 12-3) as well as the findings regarding
the ALLL set forth in the Report of Examination issued by the Bureau as of December 31, 2012.

 

(a)Within 60 days of this
MOU, the Boards shall submit the revised ALLL methodology to the Bureau and the Reserve Bank.

 

(b)Within
45 days after the end of each calendar quarter following the date of this MOU the Boards and management shall submit to the Bureau
and Reserve Bank a copy of the internally calculated ALLL worksheet.

 

Source of Strength

 

2.The board of directors of Corporation shall take appropriate
steps to fully utilize Corporation’s financial and managerial resources, pursuant to section 225.4(a) of Regulation Y of
the Board of Governors of the Federal Reserve System (Board of Governors) (12 C.F.R. § 225.4(a)), to serve as a source of
strength to the Bank, including, but not limited to, taking steps to ensure that the Bank complies with all provisions of
this MOU.

 

Dividends and Interest Payments

 

3.(a)Corporation shall not declare or pay any dividends
of any kind, to include trust preferred security payments, without the prior written approval of the Bureau and Reserve Bank.

 

(b)All requests for prior approval shall be received
by the Bureau and Reserve Bank at least 30 days prior to the proposed dividend declaration date. All requests shall contain, at
a minimum, current and projected information on the Corporation’s capital, earnings, and cash flow; the Bank’s capital,
asset quality, earnings, and allowance for loan and lease losses; and identification of the sources of funds for the proposed payment.

 

    	 

    	 

    

 

 

Debt and Stock Redemption

 

4.(a)Corporation shall not, directly or indirectly,
incur, increase, or guarantee any debt without the prior written approval of the Bureau and Reserve Bank. All requests for prior
written approval shall contain, but not be limited to, a statement regarding the purpose of the debt, the terms of the debt, and
the planned source(s) for debt repayment, and an analysis of the cash flow resources available to meet such debt repayment.

 

(b)Corporation shall not, directly or indirectly, purchase
or redeem any shares of its stock without the prior written approval of the Bureau and Reserve Bank. All requests should conform
to the Board of Governors’ Supervisory Letter titled Applying Supervisory Guidance and Regulations on the Payment of Dividends,
Stock Redemptions, and Stock Repurchases at Bank Holding Companies, dated February 24, 2009 (SR 09-4).

 

(c)All requests for prior approval shall be received
by the Bureau and Reserve Bank at least 30 days prior to the proposed debt or stock transaction.

 

Progress Reports

 

5.Within 45 days after the end of each calendar quarter
following the date of this MOU, the Boards shall submit to the Bureau and Reserve Bank written progress reports detailing the form
and manner of all actions taken to secure compliance with the provisions of this MOU and the results thereof.

 

Miscellaneous 

 

6.Each provision of this MOU shall remain in effect
until modified or terminated in writing by the Bureau and Reserve Bank.

 

7.The provisions of this MOU shall be binding upon the
Bank and Corporation and its institution-affiliated parties, in their capacities as such, and their successors and assigns.

 

    	 

    	 

    

 

 

Communications

 

8.All communications regarding the MOU shall be sent
via Secure E-mail (RICH.SRC.actionsubmission@rich.frb.org) or Mail to:

 

	Ms. Joan T. Garton	 
	Vice President	 
	Federal Reserve Bank of Richmond	Address for Federal Express:
	P.O. Box 27622	701 East Byrd Street
	Richmond, Virginia 23261	Richmond, Virginia 23219
	 	 
	Charles R. Dickerson	 
	Assistant Deputy Commissioner	 
	State Corporation Commission	 
	Bureau of Financial Institutions	 
	Post Office Box 640	 
	Richmond, Virginia 23218	 

 

IN WITNESS WHEREOF, the parties have caused
this MOU to be executed as of the 5th day of September, 2013.

 

	/s/ William Rand Cook	/s/ Joan T. Garton
	William Rand Cook	Joan T. Garton
	Chairman	Vice President
	Eastern Virginia Bankshares, Inc.	Federal Reserve Bank of Richmond
	EVB	 
	 	 
	 	 
	 	/s/ Charles R. Dickerson
	 	R. Dickerson
	 	Assistant Deputy Commissioner
	 	State Corporation Commission
	 	Bureau of Financial InstitutionsEX-10.1

 Exhibit 10.1 

VOTING AGREEMENT 

Each of the undersigned directors of Tower Financial Corporation (“TFC”) hereby agrees in his or her individual capacity as a
shareholder to vote his or her shares of TFC Common Stock that are registered in his or her personal name (and agrees to use his or her reasonable efforts to cause all additional shares of TFC Common Stock owned jointly by him or her with any other
person or by his or her spouse or over which he or she has voting influence or control to be voted) in favor of the Agreement and Plan of Merger by and between Old National Bancorp and TFC, dated September 9, 2013 (the “Agreement”).
In addition, each of the undersigned directors hereby agrees not to make any transfers of shares of TFC with the purpose of avoiding his or her agreements set forth in the preceding sentence and agrees to cause any transferee of such shares to abide
by the terms of this Voting Agreement. Each of the undersigned is entering into this Voting Agreement solely in his or her capacity as an individual shareholder and, notwithstanding anything to the contrary in this Voting Agreement, nothing in this
Voting Agreement is intended or shall be construed to require any of the undersigned, in his or her capacity as a director of TFC, to act or fail to act in accordance with his or her fiduciary duties in such director capacity. Furthermore, none of
the undersigned makes any agreement or understanding herein in his or her capacity as a director of TFC. Notwithstanding any contrary provision herein, this Voting Agreement shall be effective from the date hereof and shall terminate and be of no
further force and effect upon the earliest of (a) the consummation of the Merger (as defined in the Agreement); (b) the termination of the Agreement in accordance with its terms; or (c) the taking of such action whereby a majority of
TFC’s Board of Directors, in accordance with the terms and conditions of Section 5.06 of the Agreement, withdraws its favorable recommendation of the Agreement to its shareholders. This Voting Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall together constitute one and the same instrument. 
 Dated this
9th day of September, 2013. 
  

					
	 /s/ Scott A. Glaze
	 		 	 /s/ Robert N. Taylor

	Scott A. Glaze	 		 	Robert N. Taylor
			
	 /s/ Ronald W. Turpin
	 		 	 /s/ Keith E. Busse

	Ronald W. Turpin	 		 	Keith E. Busse
			
	 /s/ Michael D. Cahill
	 		 	 /s/ Kim T. Stacey

	Michael D. Cahill	 		 	Kim T. Stacey
			
	 /s/ Irene A. Walters
	 		 	 /s/ Kathryn D. Callen

	Irene A. Walters	 		 	Kathryn D. Callen
			
	 /s/ Jerome F. Henry, Jr.
	 		 	 /s/ Debra A. Niezer

	Jerome F. Henry, Jr.	 		 	Debra A. NiezerEX-10.7

 EXHIBIT 10.7 
 Simplicity Bank 
 Annual Incentive Plan 

Simplicity Bank (the “Company”) provides annual cash incentive opportunities for eligible employees through the use of a
performance-based incentive compensation plan (the “Plan”). The annual incentive awards (“Annual Awards”) will provide a payment based upon attainment of specified goals that align the interests of employees with the interests of
the Company. 
 PARTICIPATION & ELIGIBILITY 
 Each employee of the Company selected by the Compensation Committee of the Board of Directors of the Company (the “Committee”) is eligible to participate in the Plan. Such employee is referred
to as a “Participant.” Each Participant will be selected by the Committee prior to each Plan Year, and will receive a copy of the Plan document. Being selected to participate in the Plan for one Plan Year does not guarantee selection for
participation in the Plan for any subsequent Plan Year. 
 Notwithstanding the foregoing, the Committee has the discretion to
permit an individual who becomes a new employee of the Company prior to March 31 of the Plan Year to immediately participate in the Plan, provided, however, that such individual will only be eligible to receive a pro-rated Annual Award based on
actual salary earned during the partial Plan Year. Such new employee will receive a copy of the Plan document in connection with his or her participation in the Plan. Employees hired after March 31 in a given Plan Year must wait until the next
Plan Year to be eligible to participate in the Plan. 
 Additional eligibility requirements are the following: 

 

	 	—	 	 A Participant must be an active employee as of the award payout date to earn and receive an Annual Award. 

 

	 	—	 	 A Participant is not eligible for an incentive plan payout if on active written counseling within 90 days prior to the date of the Annual Award
payment, even if the payment is subject to a deferral. 

  

	 	—	 	 Participants must receive a minimum performance rating of “meets expectations” for the Plan Year (the “Individual Performance
Trigger”), in order to earn an Annual Award. 

  

	 	—	 	 A Participant will not earn an Annual Award if the Participant’s conduct during the Plan Year or before the Annual Award is paid is considered
by the Company to be a violation of applicable laws or regulations or in violation of the Company’s professional or ethical standards. 

  

	 	—	 	 Commissioned employees are excluded from participating in the Plan. 

  
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 TERM 
 This Plan shall be effective for each Plan Year, unless terminated by the Board of Directors upon recommendation from the Committee. 
 PLAN YEAR & PERFORMANCE PERIOD 
 The Plan operates on a fiscal
year basis (July 1 to June 30), which is the same as the performance period for determining Annual Awards (the “Annual Performance Period”). Annual Awards earned during the Annual Performance Period will be payable after Company
financial statements have been audited and Annual Awards have been reviewed by the Committee. The Company will attempt to complete this process no later than 2.5 months following the completion of the Plan Year. 

For purposes of the Plan, the “Payment Period” be defined as the later of: (i) the 2.5 month period following the last day
of the Plan Year or (ii) the period from the last day of the Plan Year until the fifth business day following the date on which the Company’s financial statements have been audited and the Annual Awards have been reviewed by the Committee,
provided however that in no event shall the Payment Period exceed the short-term deferral period as determined under Income Tax Regulation 1.409A-1(b)(4). Unless otherwise provided below, all Annual Awards will be payable to Participants in a lump
sum during the Payment Period immediately following the Plan Year. 
 Mandatory Deferral: A Participant in the Plan who is
designated as a “Named Executive Officer” by the Committee (“NEO Participant”) will be required to defer 30% of his or her Annual Award earned during the Plan Year (the “Deferred Amount”) over a two-year deferral
performance period (the “Deferral Performance Period”). Deferred Amounts are subject to additional performance requirements during the Deferral Performance Period. 
 For NEO Participants, 70% of the Annual Awards earned over the Annual Performance Period will be paid during the Payment Period immediately following the end of the Plan Year. The Deferred Amount will be
paid in two installments, with the first installment to be made during the Payment Period immediately following the Company’s first fiscal year following the Plan Year (the “First Payment Date”) and the second installment payment to
be made during the Payment Period immediately following the Company’s second fiscal year following the Plan Year (the “Second Payment Date”), subject to meeting certain performance requirements as measured over such periods.

 PLAN DESIGN 

The Plan design incorporates a tiered approach with Annual Awards that are linked to the achievement of pre-defined company, department
and individual performance goals. The pre-defined company goals are reviewed and approved by the Committee prior to each Plan Year. The incentive ranges (as a percent of salary) are designed to provide market competitive payouts for the achievement
of target and maximum performance goals. 

  
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 PERFORMANCE OBJECTIVES 
 The Plan will provide Annual Awards to Participants based on overall Company, department and/or individual performance goals, as established by the Committee for each Participant. 

 

	 	—	 	 Company Performance Goals—The Company wide goals are determined by using performance history, peer data, market data and management’s
judgment of what reasonable levels can be reached, based on previous experience and projected market conditions. Once the target performance is established, the threshold, target and maximum performance and payout levels will also be determined. The
specific Company performance criteria for Participants will be approved by the Committee, with input by management. 

  

	 	—	 	 Department and/or Individual Performance—Certain Participants may earn a portion of their Annual Awards based on a combination of department
and/or individual performance criteria. The number of performance criteria included, the specific type of performance criteria to use, and the weighting of each criterion for the overall incentive award will vary based on the position and role of
each Participant as determined by management. 

 ANNUAL PERFORMANCE GOALS 

Under the Plan, performance-based opportunities may be based on levels of, maintenance of or changes in (or ratios based on) any of the
following (as determined by the Committee, in its discretion): non-performing asset levels; the classified assets/capital ratio; regulatory ratings; net income; loans; deposits; earnings before extraordinary, nonrecurring and/or unusual items; net
operating income; operating earnings per share; consolidated total revenue; market share; earnings before taxes; stock price; return on equity, tangible equity, or assets; total shareholders’ return; levels of expenses; overhead ratios;
efficiency ratios; loan quality (including classified assets); net charge offs, including ratios of charge-total loans or other measures; customer satisfaction scores; economic value added; and/ or any such other measures of soundness, profitability
and/or growth as the Committee deems to be appropriate. 
 AWARD OPPORTUNITIES & CALCULATION 

Annual Award opportunity levels, expressed as a percent of base salary, will be set for each Participant for each Plan Year. The dollar
value of the Annual Award will be calculated as a proportion of threshold, target and maximum performance levels. 
  

	 	—	 	 Threshold Performance—The minimum level of performance needed to begin to be eligible to earn and receive an Annual Award.

  

	 	—	 	 Target Performance—The expected level of performance based upon both historical performance and management’s best judgment of expected
performance during the performance period. 

  

	 	—	 	 Maximum Performance—The level of performance, which based upon historical performance and management’s judgment, would be exceptional or
significantly beyond the expected. 

  
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 The Company’s performance will be based on the Company’s success as measured by
criteria determined by the Committee, with input from the CEO. The department and/or individual performance will be based on the department and/or Participant’s individual success as measured against the predetermined goals. The percentage of
payout for overall Company performance and for department and/or individual performance will be allocated based on the specific weighting of the goals, the Participant’s annual incentive award tier, and the actual performance compared to the
pre-determined Threshold, Target and Maximum performance levels. 
 The Annual Award payouts will be calculated using a ratable
approach, where award payouts are calculated as a proportion of threshold, target and maximum award opportunities. If actual performance falls between a performance level, the payout will also fall between the pre-defined performance level on a
pro-rated basis. Annual Award calculations will be based on a percentage of the Participant’s base salary earned during the Annual Performance Period. 
 ALLOWANCE FOR DISCRETION
 Except as prohibited below with respect to the
“Plan Triggers,” the Plan allows for final payouts of Annual Awards to be discretionarily adjusted by the Committee based on factors not specifically measured (e.g., the quality of the job being performed, performance sacrifices in other
areas). 
 PLAN TRIGGERS 
 No portion of the Annual Award earned as a result of the satisfaction of Company performance goals shall be paid to any Participant unless the Company satisfies a specific measure of net income as
established by the Committee to fund the Plan during the Annual Performance Period. The specific measure of net income trigger shall be established prior to each Plan Year. If the Company’s net income trigger is not satisfied, the Participant
may be eligible to receive a portion of the department and/or individual Annual Award at the discretion of the Committee, with input from the CEO, provided the Participant satisfies the Individual Performance Trigger. 

MANDATORY DEFERRAL—FEATURES & PROVISIONS 
 Each NEO Participant will be required to defer 30% of any Annual Award earned during Annual Performance Period (i.e., the Deferred Amount). The payment of Deferred Amount is subject to additional service
and performance requirements over the subsequent Deferral Performance Periods, which run from the last day of the Plan Year through the First Anniversary Date and the First Anniversary Date through the Second Anniversary Date. 

 

	 	—	 	 Amount Deferred: After June 30th at the end of the Plan Year, the Company will declare and pay 70% of the Annual Award earned by the NEO
Participant based on the achievement of goals during the Annual Performance Period. The remaining 30% earned during the Annual Performance Period (i.e., the Deferred Amount) will be deferred into a Deferral Account and will not be payable until the
NEO Participants meets the service and performance conditions documented in each Participant’s Deferral Account Statement. 

  

	 	—	 	 Deferral Account: The Deferral Account is solely a device for tracking the Deferred Amount to be paid in the future contingent on meeting
certain service and performance requirements. No interest or earnings will be paid on the Deferred Amount. 

  
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	 	—	 	 Deferral Account Statement: Within thirty (30) days after the NEO Participant is paid 70% of his or her Annual Award, the Company shall
provide to the NEO Participant a Deferral Account Statement setting forth his or her Deferred Amount, along with any performance, service, or any other conditions for receipt of payment of the Deferred Amount. 

Deferred Amounts will be payable based on the following factors and conditions: 

 

	 	—	 	 On the First Payment Date, 50% of the Deferred Amount will be payable at the discretion of the Committee, taking into account factors it deems
relevant (if applicable). On the Second Payment Date, the remaining 50% of the Deferred Amount will be payable at the discretion of the Committee, taking into account factors it deems relevant (if applicable). These amounts could be paid in full,
partially paid, or withheld altogether. The Deferral Performance Period is intended to ensure sustainability of the Company’s overall performance beyond the Annual Performance Period associated with the Annual Award.

  

	 	—	 	 A NEO Participant must be an active employee as of the First Payment Date and the Second Payment Date to receive such award. However, NEO
Participant’s termination of employment due to Disability (as defined under Section 409A of the Internal Revenue Code (“Code”)) or death or voluntary resignation on or after attaining age 65 during the Deferral Performance
Periods shall not relieve the Company’s obligations to pay the Deferred Amount to the NEO Participant at the time and in the manner described in the paragraph immediately above. 

 

	 	—	 	 Notwithstanding anything in this Plan to the contrary, in the event of a “Change in Control” (as defined below), the NEO
Participant’s Deferred Amount shall be payable in a lump sum to the NEO Participant within thirty (30) days following the effective date of the Change in Control. “Change in Control” means (i) a change in ownership of the
Company or Simplicity Bancorp, Inc. (“Simplicity Bancorp”) under paragraph (a) below, or (ii) a change in effective control of the Company or Simplicity Bancorp under paragraph (b) below, or (iii) a change in the
ownership of a substantial portion of the assets of the Company or Simplicity Bancorp under paragraph (c) below: 

  

	 	(a)	 Change in ownership of the Company or Simplicity Bancorp. A change in ownership of the Company or Simplicity Bancorp shall occur on the date that
any one person or more than one person acting as a group acquires ownership of stock of that corporation that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the
stock of such corporation; or 

  

	 	(b)	 Change in the effective control of the Company or Simplicity Bancorp. A change in the effective control of the Company or Simplicity Bancorp shall
occur on the date that either (i) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of
the Company or Simplicity Bancorp possessing 30% or more of the total voting power of the stock of the Company or Simplicity Bancorp; or (ii) a majority of members of the Company’s or Simplicity Bancorp’s Board of

  
 5 

	 	 
Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s Board of Directors prior to the
date of the appointment or election, provided that this sub-section (ii) is inapplicable where a majority shareholder of the Company or Simplicity Bancorp is another corporation; or 

 

	 	(c)	 Change in the ownership of a substantial portion of the Company’s or Simplicity Bancorp’s assets. A change in the ownership of a
substantial portion of the Company’s or Simplicity Bancorp’s assets shall occur on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) assets from the Company or Simplicity Bancorp that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately
prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such
assets. There is no Change in Control event under this paragraph (iii) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer; or 

 

	 	(d)	 For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Income Tax Regulation
1.409A-3(i)(5), except to the extent modified herein. 

 PROVISION FOR AWARD ADJUSTMENT 

This clause applies to NEO Participants. The Committee reserves the right to make an adjustment to a Participant’s Annual Award
(including any Deferred Amount) under the following (but not exclusive) circumstances: 
  

	 	—	 	 Materially inaccurate financial information was used in determining or setting such Annual Award. The claw-back period will be a rolling three year
look back. 

  

	 	—	 	 A Participant’s activities within the Plan Year and for one year after the Plan Year posed material risk to the organization.

 The Committee shall determine the amount of any such award paid as a result of the inaccurate information
(the “Overpayment Amount”) or the amount of loss and shall send the NEO Participant a notice of recovery, which will specify the Overpayment Amount or loss and the terms for repayment. The NEO Participant shall be required to repay such
amount that is requested to be recovered hereunder within five business days following the date on which he or she receives a notice of recovery from the Company. 

  
 6 

 TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL 

A Participant must be an active employee on the date the incentive is paid to earn and receive an Annual Award. However, there are
exceptions for terminations as a result of death, Disability or retirement. 
  

	 	—	 	 A Participant whose performance otherwise qualifies him or her for an Annual Award and whose employment is terminated due to Disability can receive
a pro-rata award for the Plan Year based on his or her date of termination, even if the Participant is not employed as of the award payout date. 

  

	 	—	 	 A Participant whose performance otherwise qualifies him or her for an Annual Award, attains age 65 (or greater) and voluntarily retires will receive
payment for a pro-rata portion of the Annual Award based on his or her retirement date. 

  

	 	—	 	 A Participant whose performance otherwise qualifies him or her for an Annual Award is eligible to receive a pro-rata portion of his or her Annual
Award in the event of a Change in Control. Such award will be calculated as of the effective date of the Change in Control, and the Company-performance targets associated with the Annual Award shall be considered achieved at the “Target
Performance” threshold. 

  

	 	—	 	 In the event of death, the Company will pay to the Participant’s beneficiary the pro-rata portion of the Annual Award that had been earned by
the Participant in the Plan Year based on the Participant’s date of death. The beneficiary will be the person or entity named on the Participant’s life insurance beneficiary form, unless otherwise designated in writing by the Participant.

 In the event of the Participant’s termination of employment for the reasons set forth above, the
pro-rata portion of the Participant’s Annual Award shall be payable to the Participant (or Participant’s beneficiary) during the Payment Period immediately following the Plan Year in which the Participant’s date of termination occurs.

 In the event of a Change in Control, the pro-rata portion of the Participant’s Annual Award (calculated from the
beginning of the Plan Year until the effective date of the Change in Control) shall be payable to the Participant in a lump sum within thirty (30) days following the effective date of the Change in Control. 

Notwithstanding any other documents or communications to the contrary, employment with the Company is terminable at will, meaning that
either the Participant or the Company may terminate employment at any time, for any reason, with or without cause and with or without prior notice. 
 DISPUTES 
 If there is any dispute about the application of the Plan or any
claim or controversy arising out of or relating to the employee-employer relationship, the dispute or claim will be resolved by binding arbitration using the most current rules for resolution of employment disputes published by the American
Arbitration Association (AAA). The arbitration would take place in the state in which the Participant was employed, and would be resolved by an arbitrator that is mutually selected or is designated by the AAA. The arbitrator fees will be paid by the
Company. Either party is free to use 

  
 7 

 
legal counsel, although that would be at the expense of each party. The arbitrator has the right to impose a remedy that he or she believes is appropriate for the situation, which could include
an award of attorneys’ fees and costs to the prevailing party. The statute of limitations that would apply to any claim in arbitration is the same as would apply under federal or state law. In addition, the prevailing party may go to court to
enforce the arbitrator’s award of decision. 
 MISCELLANEOUS 
 The Company shall withhold any taxes that are required to be withheld from the awards provided under the Plan. 
 A Participant’s benefits under this Plan cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner. 

Separation from Service: Notwithstanding anything in the Plan to the contrary, a Participant shall not be deemed to have a termination of
employment unless and until the Participant has a “separation from service within the meaning of Section 409A of the Code. For purposes of this Plan, a “separation from service” shall have occurred if the Company and Participant
reasonably anticipate that either no further services will be performed by Participant after the date of the termination (whether as an employee or as an independent contractor) or the level of further services performed is less than 50% of the
average level of bona fide services in the thirty-six (36) months immediately preceding the termination. For all purposes hereunder, the definition of separation from service shall be interpreted consistent with Income Tax Regulation
1.409A-1(h)(ii). 
 Specified Employee: Notwithstanding anything in the Plan to the contrary, in the event a Participant is a
“specified employee” (as defined under Section 409A of the Code), then, solely, to the extent required to avoid penalties under Section 409A of the Code, the Participant’s Annual Award (including the Deferred Amount) payable
under the Plan shall be delayed until the first day of the seventh month following his or her separation from service. 
 The
Plan and all rights hereunder shall be governed by the laws of the State of California, except to the extent preempted by federal law. 
 If any provision of this Plan is determined to be void or otherwise unenforceable, such determination shall not affect the validity of the remainder of this Plan. Waiver by either party of any breach of
this Plan shall not operate or be construed as a waiver of any subsequent breach, or of the condition itself. 
 This Plan
constitutes the entire Plan between the Company and the Participant as to the subject matter hereof. No rights are granted to the Participant by virtue of this Plan other than those specifically set forth herein. 

This Plan replaces and supersedes any prior agreements between you and the Company. The Plan may be amended or suspended at any time upon
communication at the discretion of the Board of Directors. Employment with the Company is terminable at will. 

  
 8

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