Document:

Exhibit 10.37

 

THE AMERICAN HOME BANK, NATIONAL ASSOCIATION

2001 STOCK OPTION INCENTIVE PLAN(1)

 

1.                                       Purpose.  American Home Bank, N.A., a national banking
association (“Bank”), has adopted this 2001 Stock Option Incentive Plan (the “Plan”).  The Plan is intended to recognize the
contributions made to Bank by employees (including employees who are members of
the Board of Directors) of Bank or any Affiliate, to provide such persons with
additional incentive to devote themselves to the future success of Bank or an
Affiliate, and to improve the ability of Bank or an Affiliate to attract,
retain and motivate individuals upon whom Bank’s sustained growth and financial
success depend.  Through the Plan, Bank
will provide such persons with an opportunity to acquire or increase their
proprietary interest in Bank, and to align their interest with the interests of
shareholders, through receipt of rights to acquire Bank’s Common Stock, par
value $1.00 per Share (the “Common Stock”), and through the transfer or
issuance of Common Stock or other Awards. 
In addition, the Plan is intended as an additional incentive to
directors of Bank who are not employees of Bank or an Affiliate to serve on the
Board of Directors and to devote themselves to the future success of Bank by providing
them with an opportunity to acquire or increase their proprietary interest in
Bank through the receipt of rights to acquire Common Stock.  Furthermore, the Plan may be used to
encourage consultants and advisors of Bank to further the success of Bank.

 

2.                                       Definitions.  Unless the context clearly indicates
otherwise, the following terms shall have the following meanings:

 

“Affiliate” shall mean a corporation which is
a parent corporation or a subsidiary corporation with respect to Bank within
the meaning of Section 424(e) or (f) of the Code, or any
successor provision.

 

“Award” shall mean a transfer of Common Stock
made pursuant to the terms of the Plan or the grant to a person of performance
units or other rights containing such terms, benefits or restrictions as the
Committee shall specify in the Award Agreement.

 

“Award Agreement” shall mean the agreement
between Bank and a Grantee with respect to an Award made pursuant to the Plan.

 

“Bank” shall mean American Home Bank, N.A., a
national banking association.

 

“Board” shall
mean the Board of Directors of Bank.

 

(1) Effective December 31, 2008, American Home Bank, National
Association was merged with and into First National Bank of Chester County, a
wholly-owned subsidiary of First Chester County Corporation and the options
issued and outstanding under the Plan became options to acquire shares of First
Chester County Corporation.  All
references to the “Bank” herein should be deemed to be references to First Chester
County Corporation (except that in Section 15, the reference to the “Bank”
should be deemed to be a reference to either First Chester County Corporation
or First National Bank of Chester County). 
No further options may be granted under this Plan.

 

 

“Change of Control” shall have the meaning as
set forth in Section 9 of the Plan.

 

“Code” shall mean the Internal Revenue Code
of 1986, as amended, or any successor statute, and the rules and
regulations issued pursuant to that statute or any successor statute.

 

“Committee” shall have the meaning set forth
in Section 3 of the Plan.

 

“Common Stock” shall have the meaning set
forth in Section 1 of the Plan.

 

“Disability” shall mean the inability of an
Optionee or Award holder to perform the essential duties of his or her position
with Bank, as determined in good faith by the Committee.

 

“Employee” shall mean an employee of Bank or
an Affiliate.

 

“Fair Market Value” shall have the meaning
set forth in Subsection 8(b) of the Plan.

 

“Grantee” shall mean a person to whom an
Award has been granted pursuant to the Plan.

 

“ISO” shall mean an Option granted under the
Plan which qualifies and is intended to qualify as an “incentive stock option”
within the meaning of Section 422(b) of the Code.

 

“Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended, or any successor statute, and the rules and
regulations issued pursuant to that statute or any successor statute.

 

“Non-Employee Director” shall mean a member
of the Board who is a “non-employee director”, as that term is defined in
paragraph (b)(3) of Rule 16b-3, and an “outside director”, as that
term is defined in Treasury Regulations Section 1.162-27 promulgated under
the Code.

 

“Non-qualified Stock Option” shall mean an
Option granted under the Plan which is not intended to qualify, or otherwise
does not qualify, as an ISO.

 

“Option” shall mean either an ISO or a
Non-qualified Stock Option granted under the Plan.

 

“Optionee” shall mean a person to whom an
Option has been granted under the Plan, which Option has not been exercised and
has not expired or terminated.

 

“Option Document” shall mean the document
described in Section 8 of the Plan, which sets forth the terms and
conditions of each grant of Options.

 

 

“Option Price” shall mean the price at which
Shares may be purchased upon exercise of an Option, as calculated pursuant to
Subsection 8(b) of the Plan.

 

“Rule 16b-3” shall mean Rule 16b-3
promulgated under the Exchange Act, or any successor rule.

 

“Section 16 Officers” shall mean any
person who is an “officer” within the meaning of Rule 16a-1(f) promulgated
under the Exchange Act or any successor rule, and who is subject to the
reporting requirements under Section 16 of the Exchange Act with respect
to Bank’s Common Stock.

 

“Securities Act” shall mean the Securities
Act of 1933, as amended, or any successor statute, and the rules and
regulations issued pursuant to that statute or any successor statute.

 

“Shares” shall mean the shares of Common
Stock of Bank which are the subject of Options or granted as Awards under the
Plan.

 

3.                                       Administration
of the Plan.  The Board may
administer the Plan and/or it may, in its discretion, designate a committee
composed of two or more directors to operate and administer the Plan with
respect to all or a designated portion of the participants.  To the extent that the Committee is empowered
to grant Options to Section 16 Officers or persons whose compensation
might have limits on deductibility under Code Section 162(m), each member
of the Committee designated by the Board shall be a Non-Employee Director.  Any such committee designated by the Board,
and the Board itself in its administrative capacity with respect to the Plan,
is referred to as the “Committee.”

 

(a)                                  Meetings.  The Committee shall hold meetings at such
times and places as it may determine and shall keep minutes of its
meetings.  The Committee may take action
only upon the agreement of a majority of the whole Committee.  Any action which the Committee shall take
through a written instrument signed by all of its members shall be as effective
as though it had been taken at a meeting duly called and held.

 

(b)                                 Exculpation.  No member of the Committee shall be
personally liable for monetary damages for any action taken or any failure to
take any action in connection with the administration of the Plan or the
granting of Options or Awards under the Plan, unless (i) the member has
breached or failed to perform the duties of such member’s office under
Subchapter B of Chapter 17 of the Pennsylvania Business Corporation Law, and (ii) the
breach or failure to perform constitutes self-dealing, wilful misconduct or
recklessness; provided, however, that the provisions of this Subsection 3(b) shall
not apply to the responsibility or liability of a member pursuant to any
criminal statute, or to the liability of a member for the payment of taxes
pursuant to local, Pennsylvania or federal law.

 

(c)                                  Indemnification.  Service on the Committee shall constitute
service as a member of the Board.  Each
member of the Committee shall be entitled, without further act on the member’s
part, to indemnity from Bank and to limitation of liability, to

 

 

the fullest extent provided by applicable law and by Bank’s Articles of
Association and/or Bylaws, in connection with or arising out of any action,
suit or proceeding with respect to the administration of the Plan or the
granting of Options or Awards thereunder in which the member may be involved by
reason of the member being or having been a member of the Committee, whether or
not the member continues to be a member of the Committee at the time of the
action, suit or proceeding.

 

(d)                                 Interpretation.  The Committee shall have the power and
authority to (i) interpret the Plan, (ii) adopt, amend and revoke rules and
regulations for its administration that are not inconsistent with the express
terms of the Plan including, without limitation, rules and interpretations
to determine the number of Shares remaining available for issuance under the
Plan, and (iii) waive requirements relating to formalities or other
matters that do not either modify the substance of the rights intended to be
granted by Options and Awards or constitute a material amendment for any
purpose under the Code.  Any such actions
by the Committee shall be final, binding and conclusive on all parties in
interest.

 

(e)                                  Amendment of
Options and Awards.  Subject to the
provisions of the Plan, the Committee shall have the right to amend any Option
Document or Award Agreement issued to an Optionee or Award holder, subject to
the Optionee’s or Award holder’s consent, if such amendment is not favorable to
the Optionee or Award holder or if such amendment has the effect of changing an
ISO to a Non-Qualified Stock Option; provided, however, that the consent of the
Optionee or Award holder shall not be required for any amendment made pursuant
to Subsection 8(e)(i)(C) or Section 9 of the Plan, as applicable.

 

4.                                       Grants
of Options under the Plan.  Grants of
Options under the Plan may be in the form of a Non-qualified Stock Option, an
ISO or a combination thereof, at the discretion of the Committee.

 

5.                                       Eligibility.  All Employees, members of the Board and
consultants and advisors to Bank shall be eligible to receive Options and
Awards hereunder.  Consultants and
advisors shall be eligible only if they render bona fide services to Bank unrelated
to the offer or sale of securities.  The
Committee, in its sole discretion, shall determine whether an individual
qualifies as an Employee. 
Notwithstanding the foregoing, only individuals who qualify as employees
of Bank or an Affiliate under Treasury Regulations Section 1.421-7(h) shall
be eligible to receive an ISO.

 

6.                                       Shares
Subject to Plan.  The aggregate
maximum number of Shares for which Awards or Options may be granted pursuant to
the Plan is 260,000(2).  The number of
Shares which may be issued under the Plan shall be subject to adjustment in
accordance with Section 10.  The
Shares shall be issued from authorized and unissued Common Stock or Common
Stock held in or hereafter acquired for the treasury of Bank.  If an Option terminates or expires without
having been fully exercised for any reason or if Shares subject to an Award
have been conveyed back to Bank pursuant to the terms of an Award Agreement,
the Shares for which the Option was not exercised or the Shares

 

(2) No additional shares
may be granted pursuant to the Plan.

 

 

that were
conveyed back to Bank (in either case, as the number of such Shares may have
been adjusted pursuant to Section 10 of the Plan or otherwise) shall again
be available for issuance pursuant to the terms of one or more Options, or one
or more Awards, granted pursuant to the Plan.

 

7.                                       Term
of the Plan.  The Plan is effective
as of August 20, 2001, the date on which it was adopted by the Board.  No ISO may be granted under the Plan after August 19,
2001.

 

8.                                       Option
Documents and Terms.  Each Option
granted under the Plan shall be a Non-qualified Stock Option unless the Option
shall be specifically designated at the time of grant to be an ISO.  If any Option designated an ISO is determined
for any reason not to qualify as an incentive stock option within the meaning
of Section 422 of the Code, such Option shall be treated as a
Non-qualified Stock Option for all purposes under the provisions of the
Plan.  Options granted pursuant to the
Plan shall be evidenced by the Option Documents in such form as the Committee
shall approve from time to time, which Option Documents shall comply with and
be subject to the following terms and conditions and such other terms and
conditions as the Committee shall require from time to time which are not
inconsistent with the terms of the Plan.

 

(a)                                  Number of Option
Shares.  Each Option Document shall
state the number of Shares to which it pertains.  An Optionee may receive more than one Option,
which may include Options which are intended to be ISOs and Options which are
not intended to be ISOs, but only on the terms and subject to the conditions
and restrictions of the Plan. 
Notwithstanding anything herein to the contrary, no Optionee shall be granted
Options during one fiscal year of Bank for more than 35,000 Shares (such number
to be subject to adjustment in accordance with Section 10).

 

(b)                                 Option Price.  Each Option Document shall state the Option
Price, which, for a Non-qualified Stock Option, need not be the Fair Market
Value of the Shares on the date the Option is granted and, for an ISO, shall be
at least 100% of the Fair Market Value of the Shares on the date the Option is
granted, as determined by the Committee in accordance with this Subsection
8(b); provided, however, that if an ISO is granted to an Optionee who then
owns, directly or by attribution under Section 424(d) of the Code,
Shares possessing more than ten percent of the total combined voting power of
all classes of stock of Bank or an Affiliate, then, to the extent required by Section 424(d) of
the Code, the Option Price shall be at least 110% of the Fair Market Value of
the Shares on the date the Option is granted. 
If the Common Stock is traded in a public market, then the Fair Market
Value per Share shall be: (i) if the Common Stock is listed on a national
securities exchange or included in the NASDAQ System, the last reported sale
price thereof on the relevant date, (ii) if the Common Stock is not so
listed or included, the mean between the last reported “bid” and “asked” prices
thereof on the relevant date, as reported on NASDAQ, or (iii) if not so
reported, as reported by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service, as applicable and as the
Committee determines.  If the Common
Stock is not traded in a public market, then the Fair Market Value per Share
shall be determined in good faith by the Committee in accordance with Section 422(c)(1) of
the Code and the rules and principles of valuation set forth in Treasury
Regulations Section 20.2031-2(f)

 

 

relating to the valuation of stocks and bonds not actively traded.  Subject to the foregoing, the Committee shall
have full authority and discretion and may rely on the opinion of a qualified
business valuation consultant.

 

(c)                                  Exercise.  No Option shall be deemed to have been
exercised prior to the receipt by Bank of written notice of such exercise and,
unless arrangements satisfactory to Bank have been made for payment through a
broker in accordance with procedures permitted by rules or regulations of
the Federal Reserve Board, receipt of payment in full of the Option Price for
the Shares to be purchased.  Each such
notice shall specify the number of Shares to be purchased and contain such
other information as the Committee may require.

 

(d)                                 Medium of Payment.  Subject to the terms of the applicable Option
Document, an Optionee shall pay for Shares (i) in cash, (ii) by
certified or cashier’s check payable to the order of Bank, or (iii) by
such other mode of payment as the Committee may approve, including, without
limitation, the Optionee’s note in form approved by the Committee and payment
through a broker in accordance with procedures permitted by rules or
regulations of the Federal Reserve Board.

 

(e)                                  Termination of
Options.

 

(i)                                     No Option shall be
exercisable after the first to occur of the following:

 

(A)                              Expiration of the Option
term specified in the Option Document, which, in the case of an ISO, shall not
occur after (1) ten years from the date of grant, or (2) five years
from the date of grant if the Optionee on the date of grant owns, directly or
by attribution under Section 424(d) of the Code, shares possessing
more than ten percent of the total combined voting power of all classes of
stock of Bank or of an Affiliate;

 

(B)                                Except to the extent
otherwise provided in an Optionee’s Option Document, a finding by the
Committee, after full consideration of the facts presented on behalf of both
Bank and the Optionee, that the Optionee has been engaged in disloyalty to Bank
or an Affiliate, including, without limitation, fraud, embezzlement, theft,
commission of a felony or proven dishonesty in the course of employment or
service, or has disclosed trade secrets or confidential information of Bank or
an Affiliate.  In such event, in addition
to immediate termination of the Option, the Optionee shall automatically
forfeit all Shares for which Bank has not yet delivered the share certificates
upon refund by Bank of the Option Price. 
Notwithstanding anything herein to the contrary, Bank may withhold
delivery of share certificates pending the resolution of any inquiry that could
lead to a finding resulting in a forfeiture;

 

(C)                                The date, if any, set
by the Committee as an accelerated expiration date in the event of the liquidation
or dissolution of Bank;

 

 

(D)                               The occurrence of such
other event or events as may be set forth in the Plan or the Option Document as
causing an accelerated expiration of the Option; or

 

(E)                                 Except as otherwise
set forth in the Option Document and subject to the foregoing provisions of
this Subsection 8(e), immediately upon termination of the Optionee’s employment
or service with Bank or its Affiliates for any reason other than Disability or
death or six months after such termination due to Optionee’s Disability or
death.  With respect to this Subsection
8(e)(i)(E), the only Options that may be exercised during the six-month period
are Options which were exercisable on the last date of such employment or
service and not Options which, if the Optionee were still employed or rendering
service during such six-month period, would become exercisable, unless the
Option Document specifically provides to the contrary or the Committee
otherwise approves.  The terms of an executive
severance agreement or other agreement between Bank and an Optionee, approved
by the Committee or the Board, whether entered into prior or subsequent to the
grant of an Option, which provide for Option exercise dates later than those
set forth in Subsection 8(e)(i) shall be deemed to be Option terms
approved by the Committee and consented to by the Optionee.

 

(ii)                                  Notwithstanding the
foregoing, the Committee may extend the period during which all or any portion
of an Option may be exercised, provided that any change pursuant to this Subsection
8(e)(ii) which would cause an ISO to become a Non-qualified Stock Option
may be made only with the consent of the Optionee.

 

(iii)                               Notwithstanding anything
to the contrary contained in the Plan or an Option Document, an ISO shall be
treated as a Non-qualified Stock Option to the extent such ISO is exercised at
any time after the expiration of the time period permitted under the Code for
the exercise of an ISO.

 

(f)                                    Transfers.  Except as otherwise provided in this
Subsection 8(f), no Option granted under the Plan may be transferred, except by
will or by the laws of descent and distribution, and, during the lifetime of
the person to whom an Option is granted, such Option may be exercised only by
the Optionee.  Notwithstanding the
foregoing, an Option, other than an ISO, shall be transferable pursuant to a “domestic
relations order” as defined in the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder, and also shall be
transferable, without payment of consideration, to (i) immediate family
members of the holder (i.e.,
spouse or former spouse, parents, issue, including adopted and “step” issue, or
siblings), (ii) trusts for the benefit of immediate family members, (iii) partnerships
whose only partners are such family members, and (iv) to any transferee
permitted by a rule adopted by the Committee or approved by the Committee
in an individual case.  Any transferee
will be subject to all of the conditions set forth in the Option prior to its
transfer.

 

(g)                                 Limitation on ISO
Grants.  To the extent that the
aggregate Fair Market Value of the Shares of Common Stock (determined at the
time the ISO is granted) with respect to which ISOs under all incentive stock
option plans of Bank or its Affiliates are exercisable for the first time by
the Optionee during any calendar year exceeds

 

 

$100,000, such ISOs shall, to the extent of such excess, be treated as
Non-qualified Stock Options.

 

(h)                                 Other Provisions.  Subject to the provisions of the Plan, the
Option Document shall contain such other provisions, including, without
limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to the Plan,
additional restrictions upon the exercise of the Option or additional
limitations upon the term of the Option, as the Committee deems advisable.

 

9.                                       Change
of Control.  In the event of a Change
of Control, the Committee may take whatever actions it deems necessary or
desirable with respect to any of the Options outstanding or Award Shares not
yet fully vested or paid for, all of which need not be treated identically,
including, without limitation, accelerating (a) the expiration or
termination date in the respective Option Documents to a date no earlier than
30 days after notice of such acceleration is given to the Optionees, or (b) the
exercisability of the Option. 
Notwithstanding the foregoing, in the event of a Change of Control,
Options granted pursuant to the Plan will become automatically exercisable in
full.

 

A “Change of Control” shall be deemed to have
occurred upon the earliest to occur of any of the following events, each of
which shall be determined independently of the others:

 

(i)                                     any Person (as
defined below) becomes a “beneficial owner,” as such term is used in Rule 13d-3
promulgated under the Exchange Act, of fifty percent or more (as determined by
the Committee) of Bank’s stock entitled to vote in the election of
directors.  For purposes of the Plan, the
term “Person” is used as such term is used in Sections 13(d) and 14(d) of
the Exchange Act; provided, however, that, unless the Committee determines to
the contrary, the term shall not include Bank, any trustee or other fiduciary
holding securities under an employee benefit plan of Bank, or any corporation
owned, directly or indirectly, by the shareholders of Bank in substantially the
same proportions as their ownership of stock of Bank;

 

(ii)                                  individuals who are
Continuing Directors cease to constitute a majority of the members of the Board
(“Continuing Directors” for this purpose being the members of the Board on the
date of adoption of the Plan, provided that any person becoming a member of the
Board subsequent to such date whose election or nomination for election was
supported by two-thirds of the directors who then comprised the Continuing
Directors shall be considered to be a Continuing Director);

 

(iii)                               shareholders of Bank
adopt a plan of complete or substantial liquidation or an agreement
providing for the distribution of all or substantially all of its assets;

 

(iv)                              Bank is party to a
merger, consolidation, other form of business combination or a sale of all or
substantially all of its assets, unless the business of Bank is continued
following any such transaction by a resulting entity (which may be, but need
not be, Bank) and the shareholders of Bank immediately prior to such
transaction (the

 

 

“Prior Shareholders”) hold, directly or indirectly, at least two-thirds
of the voting power of the resulting entity (there being excluded from the
voting power held by the Prior Shareholders, but not from the total voting
power of the resulting entity, any voting power received by Affiliates of a
party to the transaction (other than Bank) in their capacities as shareholders
of Bank);

 

(v)                                 there is a Change of
Control of Bank of a nature that would be required to be reported in response
to item 1(a) of Current Report on Form 8-K or item 6(e) of
Schedule 14A of Regulation 14A or any similar item, schedule or form under the
Exchange Act, as in effect at the time of the change, whether or not Bank is
then subject to such reporting requirement;

 

(vi)                              the Bank is a subject of
a “Rule 13e-3 transaction” as that term is defined in Exchange Act Rule 13e-3;
or

 

(vii)                           there has occurred a “change
of control,” as such term (or any term of like import) is defined in any of the
following documents which is in effect with respect to Bank at the time in
question:  any note, evidence of
indebtedness or agreement to lend funds to Bank, any option, incentive or
employee benefit plan of Bank or any employment, severance, termination or
similar agreement with any person who is then an employee of Bank.

 

10.                                 Adjustments
on Changes in Capitalization.

 

(a)                                  In the event that the
outstanding Shares are changed by reason of a reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up, combination
or exchange of Shares and the like (not including the issuance of Common Stock
on the conversion of other securities of Bank which are convertible into Common
Stock) or dividends payable in Shares, an equitable adjustment may be made by
the Committee as it deems appropriate in the aggregate number of Shares
available under the Plan and in the number of Shares and price per Share
subject to outstanding Options.  Unless
the Committee makes other provisions for the equitable settlement of
outstanding Options, if Bank shall be reorganized, consolidated, or merged with
another corporation, or if all or substantially all of the assets of Bank shall
be sold or exchanged, an Optionee shall at the time of issuance of the stock
under such corporate event be entitled to receive, upon the exercise of his or
her Option, the same number and kind of Shares of stock or the same amount of
property, cash or securities as the Optionee would have been entitled to
receive upon the occurrence of any such corporate event as if the Optionee had
been, immediately prior to such event, the holder of the number of Shares
covered by his or her Option.

 

(b)                                 Any adjustment under
this Section 10 in the number of Shares subject to Options shall apply
proportionately to only the unexercised portion of any Option granted
hereunder.  If a fraction of a Share
would result from any such adjustment, the fraction shall be eliminated, unless
the Committee otherwise determines.

 

 

(c)                                  The Committee shall
have authority to determine the adjustments to be made under this Section 10,
and any such determination by the Committee shall be final, binding and
conclusive.

 

11.                                 Terms
and Conditions of Awards.  Awards
granted pursuant to the Plan shall be evidenced by written Award Agreements in
such form as the Committee shall approve from time to time, which Award
Agreements shall comply with and be subject to the following terms and
conditions and such other terms and conditions which the Committee shall
require from time to time which are not inconsistent with the terms of the
Plan.

 

(a)                                  Number of Shares.  Each Award Agreement shall state the number
of Shares or other units or rights to which it pertains.

 

(b)                                 Purchase Price.  Each Award Agreement shall specify the
purchase price, if any, which applies to the Award.  If the Board specifies a purchase price, the
Grantee shall be required to make payment on or before the payment date
specified in the Award Agreement.  A Grantee
shall make payment (i) in cash, (ii) by certified check payable to
the order of Bank, or (iii) by such other mode of payment as the Committee
may approve.

 

(c)                                  Grant.  In the case of an Award which provides for a
grant of Shares without any payment by the Grantee, the grant shall take place
on the date specified in the Award Agreement. 
In the case of an Award which provides for a payment, the grant shall
take place on the date the initial payment is delivered to Bank, unless the
Committee or the Award Agreement otherwise specifies.  Notwithstanding the foregoing, as a
precondition to a grant, Bank may require an acknowledgment by the Grantee as
required with respect to Options under Subsection 8(c).

 

(d)                                 Conditions.  The Committee may specify in an Award
Agreement any conditions under which the Grantee of that Award shall be
required to convey to Bank the Shares covered by the Award.  Upon the occurrence of any such specified
condition, the Grantee shall forthwith surrender and deliver to Bank the certificates
evidencing such Shares as well as completely executed instruments of
conveyance.  The Committee, in its
discretion, may provide that certificates for Shares transferred pursuant to an
Award be held in escrow by Bank or its designee until such time as every
condition has lapsed and that the Grantee be required, as a condition of the
Award, to deliver to such escrow agent or Bank officer stock transfer powers
covering the Award Shares duly endorsed by the Grantee.  Unless otherwise provided in the Award
Agreement or determined by the Committee, dividends and other distributions
made on Shares held in escrow shall be deposited in escrow, to be distributed
to the party becoming entitled to the Shares on which the distribution was
made.  Stock certificates evidencing
Shares subject to conditions shall bear a legend to the effect that the Shares
evidenced thereby are subject to repurchase by, or conveyance to, Bank in
accordance with the terms applicable to such Shares under an Award made
pursuant to the Plan, and that the Shares may not be sold or otherwise
transferred.

 

 

(e)                                  Lapse of
Conditions.  Upon termination or
lapse of all forfeiture conditions, Bank shall cause certificates without the
legend referring to Bank’s repurchase or acquisition right (but with any other
legends that may be appropriate) evidencing the Shares covered by the Award to
be issued to the Grantee upon the Grantee’s surrender to Bank of the legended
certificates held by the Grantee.

 

(f)                                    Rights as
Shareholder.  Upon payment of the purchase
price, if any, for Shares covered by an Award and compliance with the
acknowledgment requirement of Subsection 11(c), the Grantee shall have all of
the rights of a shareholder with respect to the Shares covered thereby,
including the right to vote the Shares and (subject to the provisions of
Subsection 11(d)) receive all dividends and other distributions paid or made
with respect thereto, except to the extent otherwise provided by the Committee
or in the Award Agreement.

 

12.                                 Amendment
of the Plan.  The Board may amend the
Plan from time to time in such manner as it may deem advisable.  Nevertheless, the Board may not change the
class of persons eligible to receive an ISO or increase the maximum number of
Shares as to which Options may be granted under the Plan, or to any individual
under the Plan in any year, without obtaining approval, within twelve months
before or after such action, by the shareholders in the manner required by
state law.  No amendment to the Plan
shall adversely affect any outstanding Option or Award, however, without the
consent of the Optionee or Grantee, as the case may be.

 

13.                                 No
Commitment to Retain.  The grant of
an Option or Award pursuant to the Plan shall not be construed to imply or to
constitute evidence of any agreement, express or implied, on the part of Bank
or any Affiliate to retain the Optionee or Grantee as an employee, director,
consultant or advisor of Bank or any Affiliate, or in any other capacity.

 

14.                                 Withholding
of Taxes.  In connection with any
event relating to an Option or Award, Bank shall have the right to (a) require
the recipient to remit or otherwise make available to Bank an amount sufficient
to satisfy any federal, state and/or local withholding tax requirements prior
to the delivery or transfer of any certificates for such Shares, or (b) take
whatever other action it deems necessary to protect its interests with respect
to tax liabilities, including, without limitation, withholding any Shares,
funds or other property otherwise due to the Optionee or Grantee.  The Bank’s obligations under the Plan shall
be conditioned on the Optionee’s or Grantee’s compliance, to Bank’s
satisfaction, with any withholding requirement.

 

15.                                 Forfeiture
of Rights.  Notwithstanding anything
to the contrary contained in the Plan or any Option Document or Award
Agreement, if directed to do so by Bank’s primary federal regulator in the
event that Bank’s capital falls below certain minimum requirements, Bank will
notify all Optionees and Award holders that they must exercise all of their
rights under such documents within 30 days after receipt of such notice (or
such longer or shorter period as such regulator may prescribe) or forfeit such
rights after the expiration of such period. 
To the extent not timely exercised prior to the expiration of such
period, all such rights shall become void.

 

 

16.                                 Governing
Law.  The validity, construction,
interpretation and effect of the Plan shall be governed exclusively by and
determined in accordance with the law of the Commonwealth of Pennsylvania,
except to the extent preempted by federal law, which under such circumstances
shall govern.Exhibit 10.9

 

	
   

  	
   

  
	
  Notice
  of Grant of Award and Award Agreement

  	
  SureWest
  Communications

  ID:  68-0365195

  8150 Industrial Avenue, Building A

  Roseville, CA 95678

  
	
   

  	
   

  

 

	
  Name:
  [Insert recipient’s name]

  	
  Award
  Number: [Insert Award Number]

  
	
  Address:
  [Insert recipients address]

  	
  Plan:
  2000

  
	
  City,
  State Zip:

  	
  ID:
  [Insert recipient’s ID number]

  
	
   

  	
   

  

 

Effective [Insert Date], you have been granted an
award of [Insert number of shares awarded]
shares of SureWest Communications (the Company) common stock.  These shares are restricted until the vest
date(s) shown below.

 

The current total
value of the award is $[Insert dollar value
of award]

 

The award will
vest in increments on the date(s) shown.

 

	
  Shares

  	
   

  	
  Full Vest Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

By your signature
and the Company’s signature below, you and the Company agree that this award is
granted under and governed by the terms and conditions of the Company’s Award
Plan as amended and the Award Agreement, all of which are attached and made a
part of this document.

 

 

 

	
   

  	
   

  	
   

  
	
  SureWest Communications

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  

 

 

SUREWEST
COMMUNICATIONS

2000
EQUITY INCENTIVE PLAN

 

RESTRICTED
STOCK AGREEMENT

 

	
  Payment for

  	
   

  
	
  Shares

  	
  No payment is required for the Shares you receive.

  
	
   

  	
   

  
	
  Vesting

  	
  The Shares vest in installments as shown in the
  Notice of Restricted Stock Award. In addition, the Shares vest in full if any
  of the following three events or conditions or circumstances occur:

  
	
   

  	
   

  
	
   

  	
  1.     Your service as an Employee or Consultant
  terminates because of death or long-term disability. (For all purposes under
  this Agreement, “long term disability” shall be determined in accordance with
  the 2000 Equity Incentive Plan and Section 409A and applicable
  regulations of the Internal Revenue Code), or

  
	
   

  	
   

  
	
   

  	
  2.     The Company is subject to a “Change in
  Control” (as defined in the Plan and under Section 409A and applicable
  regulations of the Internal Revenue Code) while you are an Employee or
  Consultant of the Company, and there is a Change of Control agreement which
  vests your rights hereunder, and all conditions and contingencies relating to
  the vesting have occurred, or

  
	
   

  	
   

  
	
   

  	
  3.     You voluntarily retire and all the
  following terms and conditions apply:

  
	
   

  	
   

  
	
   

  	
  a.     You are eligible to retire, as defined in
  SureWest’s retirement plan or its equivalent as of the date you retire, and

  
	
   

  	
   

  
	
   

  	
  b.     You freely and voluntarily retire without
  coercion or, at the request of the Company, as the Company shall determine in
  its own discretion, and

  
	
   

  	
   

  
	
   

  	
  c.     The Company, in its sole discretion,
  determines that on the date of your retirement (1) your performance is
  satisfactory, (2) you are not in violation of any provision of the
  Company’s Code of Ethics, (3) that but for your election to retire, the
  Company would continue your employment until the unvested shares vested in
  accordance with the vesting schedule, and (4) the Company determines, in
  its sole discretion, that the Company’s financial condition would not be
  adversely impaired, impacted or affected by vesting the remaining unvested
  shares.

  
	
   

  	
   

  
	
   

  	
  In the event of vesting resulting from separation
  from service, no distributions of vested stock shall be permitted until six
  months after your date of separation, if you are a specified employee as
  defined by Section 409A and applicable regulations of the Internal
  Revenue Code (or any other such date as may be applicable under said Code
  provision), and no distributions shall be made later than two and one half
  months after the first of the year following your date of separation if you
  are not a specified employee as defined by said Code provision.

  
	
   

  	
   

  
	
   

  	
  The vesting terms under this agreement can be
  accelerated partially or in whole by the Compensation Committee at its sole
  discretion, but accelerated vesting shall not permit any distribution except
  in compliance with Section 409A and applicable regulations under the
  Internal Revenue Code.

  
	
   

  	
   

  
	
  Shares Restricted

  	
  Unvested Shares will be considered “Restricted
  Shares.” You may not sell, transfer, pledge or otherwise dispose of any
  Restricted Shares, except as provided in the next sentence. With the consent
  of the Compensation Committee of the Company’s Board of Directors, you may
  transfer Restricted

  

 

 

	
   

  	
  Shares to your spouse, children or grandchildren or
  to a trust established by you for the benefit of yourself or your spouse,
  children or grandchildren. A transferee of Restricted Shares must agree in
  writing on a form prescribed by the Company to be bound by all provisions of
  this Agreement.

  
	
   

  	
   

  
	
  Forfeiture

  	
  Except as otherwise provided for or set forth below
  or elsewhere in this document, if your service as an Employee of or
  Consultant to the Company terminates for any reason (except as provided in
  this Restricted Stock Agreement), then your Shares will be forfeited to the
  extent that they have not vested before the termination date and do not vest
  as a result of the termination. This means that the Restricted Shares will
  immediately revert to the Company. You receive no payment for Restricted
  Shares that are forfeited.

  
	
   

  	
   

  
	
   

  	
  The Company determines in its sole discretion when
  your service terminates for this purpose.

  
	
   

  	
   

  
	
  Stock Certificates

  	
  Your Restricted Shares will be issued and held for
  you by the Company. After Shares have vested, a stock certificate for those
  shares will be released to you not later than two and one half months after
  the end of the tax year in which the shares have become vested, except in the
  event of a release or distribution on separation from service for a specified
  employee as defined by the Section 409A of the Internal Revenue Code and
  applicable regulations, which shall occur subject to all limitations and
  restrictions applicable or made necessary to maintain compliance with
  Section 409A and applicable regulations of the Internal Revenue Code.

  
	
   

  	
   

  
	
  Voting and

  	
   

  
	
  Dividend Rights

  	
  You have the same voting, dividend and other rights
  as the Company’s other shareholders.

  
	
   

  	
   

  
	
  Withholding Taxes

  	
  No stock certificates will be released to you unless
  you have made acceptable arrangements to pay any withholding taxes that may
  be due as a result of this award or the vesting of the Shares. As determined
  by the Committee, these arrangements may include withholding Shares of
  Company stock that otherwise would be released to you when they vest. As determined
  by the Committee, these arrangements may also include surrendering Shares of
  Company stock that have been owned by you for no less than six months prior
  to the date delivered to the Company if such shares were acquired upon the
  exercise of an option or upon the vesting of restricted stock or restricted
  stock units. The fair market value of the Shares you surrender, determined as
  of the date when taxes otherwise would have been withheld in cash, will be
  applied as a credit against the withholding taxes.

  
	
   

  	
   

  
	
  Restrictions on

  	
   

  
	
  Resale

  	
  By signing this Agreement, you agree not to sell any
  Shares at a time when applicable laws or Company policies prohibit a sale.
  This restriction will apply as long as you are an Employee of or Consultant
  to the Company, or for any other waiting or other
  period following separation from service as may be required by
  Section 16 of the Securities Exchange Act of 1934 or regulations
  promulgated thereunder.

  
	
   

  	
   

  
	
  No Retention Rights

  	
  Your award or this Agreement do
  not give you the right to be employed or retained by the Company or a
  subsidiary of the Company in any capacity.

  
	
   

  	
   

  
	
  Adjustments

  	
  As more fully described in the Plan, in the event of
  a stock split, a stock dividend or a similar change in Company stock, the
  number of Restricted Shares that remain subject to forfeiture will be
  adjusted accordingly.

  

 

 

	
  Applicable Law

  	
  This Agreement will be interpreted and enforced
  under the laws of the State of California (without regard to choice-of-law
  provisions).

  
	
   

  	
   

  
	
  The Plan and

  	
   

  
	
  Other Agreements

  	
  The text of the SureWest Communications 2000 Equity
  Incentive Plan is incorporated in this Agreement by reference, and shall
  prevail over any inconsistent provisions herein.

  
	
   

  	
   

  
	
  Deference to Plan

  	
   

  
	
  Administrator

  	
  The Administrator of the 2000 Equity Incentive Plan
  has discretionary authority with respect to the construction and
  interpretation of this Award. In any dispute between or among the Committee,
  Board, Company, Plan Administrator, you, any Participant, Beneficiary, or
  Alternate Payee, the court, arbitrator or other decision-maker with authority
  to resolve the dispute shall defer to the Plan Administrators construction or
  interpretation of this Award. The decision-maker shall similarly defer to any
  finding of fact by the Plan Administrator or other determination with respect
  to yours, any Participant’s Beneficiary’s or Alternate Payee’s entitlements
  hereunder.

  

 

This Agreement and the Plan constitute the entire understanding between
you and the Company regarding this award. 
Any prior agreements, commitments or negotiations concerning this award
are superseded.  This Agreement may be
amended only by another written agreement, signed by both parties.

 

BY
SIGNING THE COVER SHEET OF THIS AGREEMENT,

YOU AGREE TO ALL OF THE TERMS AND CONDITIONS

DESCRIBED
ABOVE AND IN THE PLAN.  IN THE EVENT OF

A
CONFLICT BETWEEN THE TERMS OF THIS AGREEMENT

AND THE
PLAN, THE PLAN SHALL GOVERN.

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