Document:

Exhibit 10.13

 

BENEFICIAL MUTUAL SAVINGS BANK

 

ELECTIVE DEFERRED COMPENSATION PLAN

 

AS AMENDED AND RESTATED

EFFECTIVE AS OF JANUARY 1, 2012

 

 

BENEFICIAL MUTUAL SAVINGS BANK

ELECTIVE DEFERRED COMPENSATION PLAN

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
ARTICLE I   PURPOSE
    	
1
    
	
 
    	
 
    
	
ARTICLE II   DEFINITIONS
    	
2
    
	
 
    	
 
    
	
2.1 401(k) Plan
    	
2
    
	
2.2 Basic Contributions
    	
2
    
	
2.3 Beneficiary
    	
2
    
	
2.4 Board
    	
2
    
	
2.5 Code
    	
2
    
	
2.6 Committee
    	
2
    
	
2.7 Compensation
    	
2
    
	
2.8 Deferred Compensation
    	
2
    
	
2.9 Deferred Compensation Account
    	
2
    
	
2.10 Deferred Compensation Agreement
    	
3
    
	
2.11 Disability Retirement
    	
3
    
	
2.12 Early Retirement
    	
3
    
	
2.13 Effective Date
    	
3
    
	
2.14 Eligible Employee
    	
3
    
	
2.15 Employee
    	
3
    
	
2.16 Employer
    	
3
    
	
2.17 Employer Matching Contributions
    	
3
    
	
2.18 Employer Profit Sharing Contributions
    	
3
    
	
2.19 Entry Date
    	
3
    
	
2.20 Hour of Service
    	
3
    
	
2.21 Late Retirement
    	
3
    
	
2.22 Matching Contribution
    	
4
    
	
2.23 Normal Retirement
    	
4
    
	
2.24 Participant
    	
4
    
	
2.25 Plan Benefit
    	
4
    
	
2.26 Plan Year
    	
4
    
	
2.27 Profit Sharing Contribution
    	
4
    
	
2.28 Salary Reduction Contributions
    	
4
    
	
2.29 Separation from Service
    	
4
    
	
2.30 Specified Employee
    	
4
    
	
2.31 Trust
    	
4
    
	
 
    	
 
    
	
ARTICLE III   ELIGIBILITY AND PARTICIPATION
    	
4
    
	
 
    	
 
    
	
3.1 Eligibility
    	
4
    

 

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3.2 Participation
    	
5
    
	
3.3 Deferred Compensation Agreements
    	
5
    
	
3.4 Performance-Based Compensation
    	
5
    
	
 
    	
 
    
	
ARTICLE IV   DEFERRED COMPENSATION ACCOUNT
    	
5
    
	
 
    	
 
    
	
4.1 Deferred Compensation
    	
5
    
	
4.2 Employer Matching Contributions
    	
5
    
	
4.3 Employer Profit Sharing Contributions
    	
6
    
	
4.4 Vesting
    	
6
    
	
4.5 Participant-Directed Investment Options
    	
6
    
	
4.6 Statement of Account
    	
6
    
	
 
    	
 
    
	
ARTICLE V   PLAN DISTRIBUTIONS
    	
7
    
	
 
    	
 
    
	
5.1 Termination Benefits
    	
7
    
	
5.2 Retirement and Disability Benefits
    	
7
    
	
5.3 Death Benefits
    	
7
    
	
5.4 Unforeseeable Emergency Distributions
    	
7
    
	
5.5 Election of Form of Benefit Payment
    	
8
    
	
5.6 Distribution Elections
    	
8
    
	
5.7 Form of Benefit Payments
    	
9
    
	
5.8 Withholding for Payroll Taxes
    	
9
    
	
5.9 Commencement of Payments
    	
9
    
	
5.10 Payment to Guardian
    	
9
    
	
5.11 Transition Distribution Elections
    	
9
    
	
5.12 Distributions to Specified Employees
    	
10
    
	
5.13 Cashouts
    	
10
    
	
5.14 Separation from Service Prior to 2009
    	
10
    
	
 
    	
 
    
	
ARTICLE VI   ~Heading 1~ BENEFICIARY DESIGNATION
    	
10
    
	
 
    	
 
    
	
6.1 Beneficiary Designation
    	
10
    
	
6.2 Amendments
    	
10
    
	
6.3 No Beneficiary Designation
    	
10
    
	
6.4 Effect of Payment
    	
11
    
	
6.5 Death of Beneficiary
    	
11
    
	
 
    	
 
    
	
ARTICLE VII   ADMINISTRATION
    	
12
    
	
 
    	
 
    
	
7.1 Committee
    	
12
    
	
7.2 Agents
    	
12
    
	
7.3 Binding Effect of Decisions
    	
12
    
	
7.4 Indemnity of Committee
    	
12
    
	
 
    	
 
    
	
ARTICLE VIII   CLAIMS PROCEDURE
    	
13
    
	
 
    	
 
    
	
8.1 Claim
    	
13
    

 

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8.2 Denial of Claim
    	
13
    
	
8.3 Review of Claim
    	
13
    
	
8.4 Final Decision
    	
13
    
	
 
    	
 
    
	
ARTICLE IX   AMENDMENT, MERGER AND TERMINATION OF PLAN
    	
14
    
	
 
    	
 
    
	
9.1 Amendment of Plan
    	
14
    
	
9.2 Merger of Plan
    	
14
    
	
9.3 Termination of Plan
    	
14
    
	
 
    	
 
    
	
ARTICLE X   MISCELLANEOUS
    	
15
    
	
 
    	
 
    
	
10.1 Unfunded Plan
    	
15
    
	
10.2 Unsecured General Creditor
    	
15
    
	
10.3 Nonassignability
    	
15
    
	
10.4 Not a Contract of Employment
    	
15
    
	
10.5 Participant Cooperation
    	
15
    
	
10.6 Terms
    	
15
    
	
10.7 Captions
    	
15
    
	
10.8 Governing Law
    	
16
    
	
10.9 Validity
    	
16
    
	
10.10 Notice
    	
16
    
	
10.11 Successors
    	
16
    
	
10.12 Prohibition on Acceleration of Payments
    	
16
    

 

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BENEFICIAL MUTUAL SAVINGS BANK

ELECTIVE DEFERRED COMPENSATION PLAN

AS AMENDED AND RESTATED

EFFECTIVE AS OF JANUARY 1, 2012

 

ARTICLE I

 

PURPOSE

 

The purpose of this Elective Deferred Compensation Plan (hereinafter referred to as the “Plan”) is to permit a select group of management or highly compensated employees of Beneficial Mutual Savings Bank and its affiliates as described herein (the “Employer”) to elect to defer compensation and to provide for the distribution of benefits at the time and in the manner described herein. The Plan is designed to allow these employees to maximize their ability to save on a tax-deferred basis and providing such key employees those benefits that would have been available under the Beneficial Mutual Savings Bank Employees’ Savings and Stock Ownership Plan but have been curtailed by application of - -

 

(a) the limitation on elective deferral contributions under the Plan or under Section 402(g) of the Code;

 

(b) the limitation on compensation taken into account under a qualified plan under Section 401(a)(17) of the Code;

 

(c) the limitation on annual additions to qualified retirement plans under Section 415(c) of the Code; and

 

(d) the nondiscrimination testing requirements under Section 401(k) and (m) of the Code.

 

The Plan is intended to constitute a nonqualified deferred retirement plan which, in accordance with ERISA §§ 201(2), 301(a)(3) and 401(a)(1), is “unfunded and maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.” This Plan was amended and restated, effective as of January 1, 2009, to conform to the requirements of Section 409A of the Code and the regulations issued thereunder. This Plan is hereby further amended and restated, effective as of January 1, 2012, to allow for greater flexibility with respect to non-elective contributions made by the Employer on behalf of participating employees.

 

This amended and restated Plan shall apply to amounts deferred (including earnings thereon) by a Participant after December 31, 2004. Amounts deferred by a Participant prior to January 1, 2005, including earnings thereon, shall be governed by the terms of the Plan in effect on December 31, 2004.

 

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ARTICLE II

 

DEFINITIONS

 

For the purposes of this Plan, the following words and phrases shall have the meanings indicated, unless the context clearly indicates otherwise:

 

2.1 401(k) Plan. “401(k) Plan” means the Beneficial Mutual Savings Bank Employees’ Savings and Stock Ownership Plan, as sponsored by Beneficial Mutual Savings Bank, or any successor plan thereto providing a cash or deferred arrangement described in Section 401(k) of the Code in which the Participants in this Plan also participate and which is sponsored by the Employer.

 

2.2 Basic Contributions. “Basic Contributions” shall have the same meaning as the definition of the term in the 401(k) Plan.

 

2.3 Beneficiary. “Beneficiary” means the person, persons, or entity designated by the Participant to receive any amounts payable from the Participant’s Deferred Compensation Account after the Participant’s death.

 

2.4 Board. “Board” means the Board of Trustees of Beneficial Mutual Savings Bank.

 

2.5 Code. “Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

2.6 Committee. “Committee” means those individuals appointed by Beneficial Mutual Savings Bank to administer this Plan.

 

2.7 Compensation. “Compensation” means the total compensation paid by the Employer to a Participant during the Plan Year, including bonuses and amounts not includable in income by reason of a Participant’s agreement to defer Compensation under the terms of this Plan or a Participant’s election under a cash or deferred arrangement under Section 401(k) of the Code or a cafeteria plan described in Section 125 of the Code.

 

2.8 Deferred Compensation. “Deferred Compensation” means the amount of Compensation not yet earned which the Participant and the Employer mutually agree shall be deferred pursuant to a Deferred Compensation Agreement in accordance with the provisions of this Plan.

 

2.9 Deferred Compensation Account. “Deferred Compensation Account” means the individual account maintained in a Rabbi Trust established and maintained by the Employer to which Deferred Compensation, Employer Matching Contributions and Employer Profit Sharing Contributions for each Participant are credited, and to which interest, dividends, and investment gains are added to the account and the amount of any distributions, investment loses, and expenses are deducted from the account.

 

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2.10 Deferred Compensation Agreement. “Deferred Compensation Agreement” means the agreement between the Employer and the Employee to defer Compensation under the terms of the Plan.

 

2.11 Disability Retirement. “Disability Retirement” means that the Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering Employees of the Employer.

 

2.12 Early Retirement. “Early Retirement” means retirement from service with the Employer which becomes effective on the first day of the month immediately following the Plan Year quarter during which the Participant attains age 55.

 

2.13 Effective Date. “Effective Date” of this amended and restated Plan means January 1, 2012. The Effective Date of the original Plan was October 1, 1996.

 

2.14 Eligible Employee. “Eligible Employee” means a highly compensated employee or a select member of management who the Compensation Committee of the Board of Directors of Beneficial Mutual Bancorp, Inc. determines is eligible to participate in the Plan.

 

2.15 Employee. “Employee” means an individual employed as a common law employee of the Employer.

 

2.16 Employer. “Employer” means Beneficial Mutual Savings Bank, having its principal place of business in the Commonwealth of Pennsylvania including all members of the controlled group of corporations or trades or businesses under common control as defined under Code Section 414(b) and (c) respectively, or any successors to the business thereof.

 

2.17 Employer Matching Contributions. “Employer Matching Contribution” means the contributions, if any, that are credited to the Participant’s Deferred Compensation Account in accordance with the matching contribution provisions of the Plan.

 

2.18 Employer Profit Sharing Contributions. “Employer Profit Sharing Contributions” means the contributions, if any, that are credited to the Participant’s Deferred Compensation Account in accordance with the profit sharing contribution provisions of the Plan.

 

2.19 Entry Date. “Entry Date” means the date on which an Employee becomes an Eligible Employee.

 

2.20 Hour of Service. “Hour of Service” shall have the same meaning as the definition of the term in the 401(k) Plan.

 

2.21 Late Retirement. “Late Retirement” means retirement from service with the Employer after the Participant has attained age 65 which becomes effective on the first

 

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day of the month immediately following the Plan Year quarter during which the Participant retires from service with the Employer.

 

2.22 Matching Contribution. “Matching Contribution” (but not “Employer Matching Contribution”) shall have the same meaning as the definition of the term in the 401(k) Plan.

 

2.23 Normal Retirement. “Normal Retirement” means retirement from service with the Employer which becomes effective on the first day of the month immediately following the Plan Year quarter during which the Participant attains age 65.

 

2.24 Participant. “Participant” means any individual who is participating or has participated in this Plan.

 

2.25 Plan Benefit. “Plan Benefit” means the benefit payable to a Participant as determined in accordance with the provisions of this Plan.

 

2.26 Plan Year. “Plan Year” means the twelve (12) consecutive month period beginning January 1 and ending December 31.

 

2.27 Profit Sharing Contribution. “Profit Sharing Contribution” (but not “Employer Profit Sharing Contribution”) shall have the same meaning as the definition of the term in the 401(k) Plan.

 

2.28 Salary Reduction Contributions. “Salary Reduction Contribution” shall have the same meaning as the definition of the term in the 401(k) Plan.

 

2.29 Separation from Service. “Separation from Service” or “Separates from Service” means the severance of a Participant’s employment as determined in accordance with Section 409A of the Code.

 

2.30 Specified Employee. “Specified Employee” means an Employee who, as of the date of the Employee’s Separation from Service is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) of the Employer, but only if any stock of the Employer is publicly-traded on an established securities market or otherwise.

 

2.31 Trust. “Trust” means the Rabbi Trust established and maintained by the Employer for the purpose of accepting contributions under the Plan and to which interest, dividends, and investment gains are added and from which the amount of any distributions, investment losses, and expenses are deducted.

 

ARTICLE III

 

ELIGIBILITY AND PARTICIPATION

 

3.1 Eligibility. Participation in this Plan is limited to those Employees who are Eligible Employees.

 

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3.2 Participation. Participation in the Plan shall commence on the date that an Eligible Employee executes a Deferred Compensation Agreement in the form and manner described in Section 3.3 or, if later, the date as of which the Employer first determines that an Employer Matching Contribution or an Employer Profit Sharing Contribution shall be credited to the Eligible Employee’s Deferred Compensation Account. In the first Plan Year in which an Employee becomes an Eligible Employee, the Eligible Employee may execute a Deferred Compensation Agreement with respect to Compensation paid for services to be performed in that Plan Year subsequent to execution of that Agreement provided that the Deferred Compensation Agreement is executed within 30 days after the date that the Employee became an Eligible Employee. In all other instances, Deferred Compensation Agreements shall be executed before the beginning of the Plan Year in which the Compensation is payable. Participation in this Plan is not predicated on participation in the 401(k) Plan.

 

3.3 Deferred Compensation Agreements. A Deferred Compensation Agreement shall be effective as of the first day of the payroll period beginning immediately following the first day of the Plan Year or the first day of the payroll period beginning immediately following the Entry Date. A Deferred Compensation Agreement will remain in effect for the initial Plan Year and each Plan Year thereafter. A Deferred Compensation Agreement may not be changed with respect to the Plan Year. Any modification or revocation of a Deferred Compensation Agreement shall only be effective beginning with the Plan Year following the Plan Year in which the modification or revocation is made.

 

3.4 Performance-Based Compensation. In the case of any performance-based compensation, within the meaning of Section 409A of the Code, that is based upon a performance period of at least 12 months, an Eligible Employee may make a separate Deferred Compensation Agreement with respect to such compensation no later than the date that is six months before the end of the performance period, provided that the Eligible Employee performs services continuously from a date no later than the date upon which the performance criteria are established through a date no earlier than the Deferred Compensation Agreement with respect with such compensation. In no event shall a Deferred Compensation Agreement be effective with respect to performance-based compensation if it made after such compensation has become substantially certain to be paid and readily accertainable.

 

ARTICLE IV

 

DEFERRED COMPENSATION ACCOUNT

 

4.1 Deferred Compensation. The amount of Compensation that a Participant elects to defer pursuant to a properly executed Deferred Compensation Agreement shall be made by payroll deduction and credited to the Participant’s Deferred Compensation Account as the non-deferred compensation becomes payable.

 

4.2 Employer Matching Contributions. For each Plan Year, the Employer will contribute an Employer Matching Contribution on behalf of each Participant who is employed by the Employer on the last day of the Plan Year and has completed at least

 

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1,000 Hours of Service during the Plan Year in an amount equal to the excess of (a) the maximum Matching Contribution which could have been allocated to the Participant under the 401(k) Plan, without regard to the level of the Participant’s Salary Reduction Contributions to the 401(k) Plan for the Plan Year, but for the limitations set forth in Sections 401(a)(17), 401(k), 401(m) and 415(c) of the Code, over (b) the maximum Matching Contribution which could have been allocated to the Participant under the 401(k) Plan, without regard to the level of the Participant’s Salary Reduction Contributions to the 401(k) Plan. The amount of such Employer Matching Contribution will be credited to the Participant’s Deferred Compensation Account.

 

4.3 Employer Profit Sharing Contributions. For each Plan Year, the Employer will contribute an Employer Profit Sharing Contribution on behalf of each Participant who is employed by the Employer on the last day of the Plan Year and has completed at least 1,000 Hours of Service during the Plan Year in an amount equal to the excess of (a) the sum of the Basic Contribution and Profit Sharing Contribution which would have been allocated to the Participant under the 401(k) Plan but for the limitations set forth in Sections 401(a)(17) and 415(c) of the Code, over (b) the sum of the Basic Contribution and Profit Sharing Contribution actually allocated to the Participant under the 401(k) Plan for the Plan Year. The amount of such Employer Profit Sharing Contribution will be credited to the Participant’s Deferred Compensation Account.

 

4.4 Vesting. A Participant will always be 100% vested in the account balance of his Deferred Compensation Account. However, all funds placed in the Rabbi Trust by the Employer will still be subject to the claims of the Employer’s creditors. Participants have no beneficial ownership in or preferred claim on their Deferred Compensation Accounts until actual payment. The rights of Participants are those of an unsecured general creditor of the Employer as described in Section 10.2 of this Plan.

 

4.5 Participant-Directed Investment Options. Each Participant shall have the opportunity to direct the investment of his Deferred Compensation Account among the investment options selected by the Committee in multiples of 1%. Transfers among investment options may be made on a quarterly basis throughout the Plan Year, to be effective as soon as administratively feasible. The right to direct investment options shall in no way be interpreted to give the Participant any greater claim to those funds so directed than that which has been granted to the Participant by the terms of this Plan and, specifically, Section 4.4 above.

 

4.6 Statement of Account. The Committee shall submit to each Participant, within thirty (30) days after the close of each calendar quarter and at such other time as determined by the Committee, a statement setting forth the balance to the credit of the Deferred Compensation Account maintained for a Participant.

 

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ARTICLE V

 

PLAN DISTRIBUTIONS

 

5.1 Termination Benefits. The Employer shall pay a Plan Benefit equal to the amount of the Participant’s Deferred Compensation Account to each Participant who Separates from Service prior to Early Retirement. Except as provided in Section 5.12, the Plan Benefit shall be paid in a lump sum as soon as practicable following the Participant’s Separation from Service, but not later than the last day of the calendar year in which the Participant Separates from Service or, if later, by the 15th day of the third calendar month following the Participant’s Separation from Service. A Participant shall not be permitted, directly or indirectly, to designate the taxable year of the payment.

 

5.2 Retirement and Disability Benefits. The Employer shall pay a Plan Benefit equal to the amount of the Participant’s Deferred Compensation Account to each Participant who Separates from Service on account of Disability, Early, Normal, or Late Retirement in accordance with this Article V.

 

5.3 Death Benefits. Upon the death of a Participant, the Employer shall pay to the Participant’s Beneficiary an amount determined as follows:

 

(a) If the Participant dies after Separation from Service with the Employer, the amount payable shall be equal to the remaining unpaid balance of the Participant’s Deferred Compensation Account. Benefits shall be paid in a lump sum to his Beneficiary, except as otherwise elected by the Participant in accordance with this Article V.

 

(b) If the Participant dies prior to Separation from Service with the Employer, the amount payable shall be the Participant’s Deferred Compensation Account balance at the time death occurs. Prior to his death, a Participant may elect, in accordance with Section 5.6, that death benefits be paid to his Beneficiary in a form described in Section 5.7. If the Participant does not elect a form of payment, benefits shall be paid in a lump sum to his Beneficiary.

 

5.4 Unforeseeable Emergency Distributions. Upon a finding that a Participant has suffered an unforeseeable emergency, the Committee may, in its sole discretion, allow a distribution from the Participant’s Deferred Compensation Account prior to the time specified for payment of benefits under the Plan. An “unforeseeable emergency” is a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, Beneficiary or dependent (as defined in Section 152 of the Code without regard to Section 152(b)(1), (b)(2) and (d)(1)(B)); loss of the Participant’s property due to casualty (including the need to rebuild a home following damage not otherwise covered by insurance); or other similar or unforeseeable circumstances arising as a result of events beyond the control of the Participant. A distribution on account of an unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the

 

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Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under the Plan. A distribution because of an unforeseeable emergency must be limited to the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any federal, state, local or foreign income taxes or penalties reasonably anticipated to result from the distribution). Following an emergency distribution, a Participant’s Deferred Compensation Agreement will be canceled and no further Compensation may be deferred for the remainder of the Plan Year.

 

5.5 Election of Form of Benefit Payment. With respect to a Participant who retires at Early, Normal or Late Retirement, Plan Benefits shall be paid in one of the forms provided in Paragraph 5.7 as elected by the Participant in accordance with Sections 5.6 or 5.11. A Participant who fails to elect the form of benefit payment shall be deemed to have elected a Plan Benefit in the form of a lump-sum payment. The Participant’s form of benefit election shall be irrevocable, unless the Participant changes his election in accordance with Section 5.6. With respect to a Participant who Separates from Service prior to Early, Normal or Late Retirement, Plan Benefits shall be paid in a lump sum.

 

5.6 Distribution Elections. Except as provided in Section 5.11, a Participant shall elect the form and time of distribution of his Plan Benefit not later than the date by which the Participant makes his initial election to defer Compensation under the Plan or, if later, the 30th day after the date as of which the Employer first determines that an Employer Matching Contribution or an Employer Profit Sharing Contribution shall be credited to the Participant’s Deferred Compensation Account. A Participant shall be entitled to elect the form of payment of his Plan Benefit that is payable upon the Participant’s Separation from Service after Early, Normal or Late Retirement. A Participant may elect that his Plan Benefit be paid in a form listed in Section 5.7. A Participant shall also be entitled to elect the form of payment to his Beneficiary in the event of the Participant’s death. If the Participant does not elect a form of payment, benefits shall be paid in a lump sum. A Participant may elect to change his distribution election provided that such election change satisfies (a) through (c) below:

 

(a) The election change may not take effect until at least 12 months after the date on which such election is made.

 

(b) In the case of an election related to a payment that is not on account of Disability or death, the payment with respect to such election is made must be deferred for period of not less than five years from the date such payment would otherwise have been paid (or in the case of installment payments, five years from the date the first installment is scheduled to be paid).

 

(c) Any election related to a payment at a specified time or pursuant to a fixed schedule may not be made less than 12 months prior to the date the payment is scheduled to be paid (or in the case of installment payments, 12 months prior to the date of the first installment scheduled to be paid).

 

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5.7 Form of Benefit Payments.

 

(a) Monthly installments, either (i) over the Participant’s or Beneficiary’s life expectancy, whichever is applicable, or (ii) over a period certain equal to the number of years specified by the Participant. Payments that are made over a life expectancy period shall be calculated in the same manner that is prescribed by Treasury Regulations Section 1.401(a)(9)-l through 1.401(a)(9)-9 for determining minimum required distributions and by using the Single Life Table set forth in Section 1.401(a)(9)-9 of the Regulations. Payments that are made over a periodic certain shall be calculated each Plan Year by multiplying the value of the Participant’s Deferred Compensation Account as of the end of the prior Plan Year by a fraction, the numerator of which is one and the denominator of which is the number of years that remain in the period certain elected by the Participant.

 

(b) A lump-sum payment.

 

5.8 Withholding for Payroll Taxes. The Employer shall withhold from Plan Benefits any income or employment taxes required to be withheld from a Participant’s wages.

 

5.9 Commencement of Payments. Except as elected by a Participant in accordance with Sections 5.6 or 5.11 or as provided by Section 5.12, payment of benefits shall commence as soon as practicable after the occurrence of the distributable event for which a Participant or Beneficiary becomes eligible to receive a Plan Benefit, but not later than the last day of the Plan Year in which such event occurs or, if later, by the 15th day of the third calendar month following the occurrence of such event. A Participant or a Beneficiary shall not be permitted, directly or indirectly, to designate the taxable year in which payments shall commence.

 

5.10 Payment to Guardian. If a Plan Benefit is payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of property, the Committee may direct payment of such Plan Benefit to the guardian, legal representative or person having the care and custody of such minor or incompetent person. The Committee may require proof of incompetency, minority, incapacity or guardianship as it may deem appropriate prior to distribution of the Plan Benefit. Such distribution shall completely discharge the Committee and the Employer from all liability with respect to such Plan Benefit.

 

5.11 Transition Distribution Elections. Notwithstanding anything in the Plan to the contrary, a Participant may make a distribution election on or before December 31, 2008, with respect to both the time and form of payment of Plan Benefits that are payable upon the Participant’s Early, Normal or Late Retirement or upon death. With respect to any such election, the election may only apply to an amount that would not otherwise be payable in 2008 and may not cause an amount to be paid in 2008 that would not otherwise be payable in 2008. Such election may specify the form of

 

9

 

benefit payment in accordance with Section 5.7 as well as the timing of when such benefit payments shall commence.

 

5.12 Distributions to Specified Employees. In the case of a Participant who is a Specified Employee on the date of his Separation from Service, no distribution shall be made to the Participant before the date which is six months after the date of such Separation from Service, except in the case of the Participant’s death or Disability.

 

5.13 Cashouts. Notwithstanding anything in the Plan to the contrary and notwithstanding the Participant’s distribution election, a mandatory lump sum payment shall be made to the Participant or to his Beneficiary (in the case of the death of the Participant) if the value of the Participant’s Plan Benefit is not greater than the applicable dollar amount under Section 402(g)(1)(B) of the Code. A mandatory lump sum payment shall result in the termination and liquidation of the entirety of the Participant’s interest under the Plan, including all agreements, methods, programs or other arrangements with respect to which the deferrals of compensation are treated as having been deferred under a single non-qualified deferred compensation plan under Section 1.409A-1(c)(2) of the Income Tax Regulations. Such lump sum payment shall be made as soon as practicable after the occurrence of the distributable event for which a Participant or Beneficiary becomes eligible to receive a Plan Benefit, but not later than the last day of the Plan Year in which such event occurs or, if later, by the 15th day of the third calendar month following the occurrence of the event. A Participant or Beneficiary shall not be permitted, directly or indirectly, to designate the taxable year in which such payment shall be made.

 

5.14 Separation from Service Prior to 2009. If a Participant separated from service prior to 2009 and has not commenced benefits by December 31, 2008, payment of benefits shall be made in a lump sum not later than December 31, 2009.

 

ARTICLE VI

 

BENEFICIARY DESIGNATION

 

6.1 Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person or persons as his Beneficiary or Beneficiaries (both primary and contingent) to whom payment under this Plan shall be paid in the event of death prior to complete distribution of the Participant’s Plan Benefit. Each beneficiary designation shall be in a written form prescribed by the Committee and will be effective only when filed with the Committee during the Participant’s lifetime.

 

6.2 Amendments. Any Beneficiary designation may be changed by a Participant without the consent of any designated Beneficiary by the filing of a new Beneficiary Designation with the Committee. The filing of a new Beneficiary Designation form will cancel all Beneficiary Designations previously filed.

 

6.3 No Beneficiary Designation. If any Participant fails to designate a Beneficiary in the manner provided above, or if the Beneficiary designated by a deceased Participant predeceases the Participant, the Committee, shall direct the Employer to distribute such

 

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Participant’s Plan Benefit (or the balance thereof) in the following order of priority:

 

(a) to the Participant’s surviving spouse, if any; or

 

(b) if the Participant shall have no surviving spouse, then to the Participant’s surviving children in equal shares; or

 

(c) if the Participant shall have no surviving spouse or children, then to the Participant’s estate; or

 

(d) in the absence of an estate, in accordance with the intestate statute of the Participant’s domicile.

 

6.4 Effect of Payment. Payment to the Beneficiary or as provided in Section 6.3 above, shall completely discharge Employer’s obligations under this Plan.

 

6.5 Death of Beneficiary. Following commencement of payment of Plan Benefit to the Beneficiary, if the Beneficiary dies before receiving a complete distribution of the Plan Benefit, the Committee shall direct the Employer to distribute the balance of such Plan Benefit in a lump sum;

 

(a) as designated by the Beneficiary in a written form prescribed by the Committee which is effective only when filed with the Committee during the Beneficiary’s lifetime; or

 

(b) if the Beneficiary shall not have made such designation, then to the Beneficiary’s estate.

 

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ARTICLE VII

 

ADMINISTRATION

 

7.1 Committee. This Plan shall be administered by the Committee. Members of the Committee may be Participants under the Plan.

 

7.2 Agents. The Committee may appoint an individual to be the Committee’s agent with respect to the day-to-day administration of the Plan. In addition, the Committee may, from time to time, employ other agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Employer.

 

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

 

7.4 Indemnity of Committee. The Employer shall indemnify and hold harmless each of the members of the Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to this Plan, except in the case of gross negligence or willful misconduct by such members of the Committee.

 

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ARTICLE VIII

 

CLAIMS PROCEDURE

 

8.1 Claim. Any person claiming a Plan Benefit shall present the request in writing to the Committee which shall respond in writing as soon as practicable.

 

8.2 Denial of Claim. If the claim is denied, the written notice of denial shall be made within ninety (90) days of the date of receipt of such claim or request by the Committee and shall state:

 

(a) The reason for denial, with specific reference to the Plan provisions on which the denial is based.

 

(b) A description of any additional material or information required and an explanation of why it is necessary.

 

(c) An explanation of the Plan’s claim review procedure.

 

8.3 Review of Claim. Any person whose claim or request is denied or who has not received a response within ninety (90) days may request review by notice given in writing to the Committee within sixty (60) days of receiving a response or one hundred fifty (150) days from the date the claim was received by the Committee. The claim or request shall be reviewed by the Committee who may, but shall not be required to, grant the claimant a hearing. On review, the claimant may have representation, examine pertinent documents, and submit issues and comments in writing.

 

8.4 Final Decision. The decision on review shall normally be made within sixty (60) days after the Committee’s receipt of a request for review. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time for the extension shall be limited to one hundred twenty (120) days after the Committee’s receipt of a request for review. The decision shall be in writing and shall state the reasons and relevant Plan provisions. All decisions on review shall be final and bind all parties concerned.

 

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ARTICLE IX

 

AMENDMENT, MERGER AND TERMINATION OF PLAN

 

9.1 Amendment of Plan. The Board may at any time amend the Plan in whole or in part, provided, however, that no amendment shall be effective to decrease or restrict any Deferred Compensation Account maintained pursuant to any existing Deferred Compensation Agreement under the Plan.

 

9.2 Merger of Plan. The Board may at any time merge the Plan and its related Trust into another non-qualified plan maintained by the Employer or any member of a controlled group of corporations or trades or businesses under common control as defined in Code Section 414(b) or (c), respectively.

 

9.3 Termination of Plan. The Board may at any time terminate the Plan if in its judgment, the tax, accounting, or other effects of the continuance of the Plan, or potential payments thereunder would not be in the best interests of the Employer, provided that the termination and liquidation of the Plan occur in accordance with the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix)(A), (B), (C) or (D), as applicable, in which case the value of each Participant’s Deferred Compensation Account shall be paid to him or her (or his or her Beneficiary, if applicable) in a single lump sum.

 

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ARTICLE X

 

MISCELLANEOUS

 

10.1 Unfunded Plan. This Plan is intended to be an unfunded plan that is maintained primarily to provide deferred compensation benefits for a select group of management employees or highly compensated employees. This Plan is not intended to create an investment contract, but to provide tax deferral opportunities and retirement benefits to Eligible Employees who have elected to participate in the Plan.

 

10.2 Unsecured General Creditor. Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of Employer to pay money in the future. Under the provisions of this Plan, Participants’ rights will be those of unsecured general creditors of the Employer.

 

10.3 Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or separation for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or an other person’s bankruptcy or insolvency.

 

10.4 Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Employer and the Participant, and the Participant (or the Participant’s Beneficiary) shall have no rights against the Employer except as may otherwise be specifically provided herein. Moreover, nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Employer or to interfere with the right of the Employer to discipline or discharge the Participant at any time.

 

10.5 Participant Cooperation. A Participant will cooperate with the Employer by furnishing any and all information requested by the Employer in order to facilitate the payment of benefits hereunder and such other action as may be requested by the Employer.

 

10.6 Terms. Whenever any words are used herein in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and wherever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.

 

10.7 Captions. The captions of articles, sections and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.

 

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10.8 Governing Law. The provisions of this Plan shall be construed and interpreted according to the laws of the Commonwealth of Pennsylvania.

 

10.9 Validity. In case any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein.

 

10.10 Notice. Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to any member of the Committee or the President of the Employer. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of three (3) days following the date shown on the postmark or on the receipt for registration or certification.

 

10.11 Successors. The provisions of this Plan shall bind and inure to the benefit of the Employer and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of the Employer, and successors of any such corporation or other business entity.

 

10.12 Prohibition on Acceleration of Payments. Except as provided by Section 409A of the Code and the regulations thereunder, the Plan shall not permit the acceleration of the time or schedule of any payment or amount scheduled to be paid pursuant to the terms fo the Plan, and no accelerated payment may be made whether or not provided for under the terms of the Plan.

 

IN WITNESS WHEREOF, and pursuant to resolution of the Board of Trustees of the undersigned corporation, such corporation has caused this amended and restated Plan to be executed by its duly authorized officers, effective as of January 1, 2012, on this 20th day of December, 2012.

 

	
ATTEST: 
    	
BENEFICIAL MUTUAL SAVINGS BANK
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ William J. Kline, Jr.
    	
 
    	
By: 
    	
/s/ Thomas D. Cestare
    
				

 

16Exhibit 10.1

 

MIDSTATES PETROLEUM COMPANY, INC.

2012 LONG TERM INCENTIVE PLAN

 

RESTRICTED STOCK AGREEMENT

(TIME VESTING)

 

This Agreement is made and entered into as of the Date of Grant set forth in the Notice of Grant of Restricted Stock (“Notice of Grant”) by and between Midstates Petroleum Company, Inc., a Delaware corporation (the “Company”), and you;

 

WHEREAS, the Company in order to induce you to enter into and to continue and dedicate service to the Company and to materially contribute to the success of the Company agrees to grant you this restricted stock award;

 

WHEREAS, the Company adopted the Midstates Petroleum Company, Inc. 2012 Long Term Incentive Plan as it may be amended from time to time (the “Plan”) under which the Company is authorized to grant restricted stock awards to certain employees and service providers of the Company;

 

WHEREAS, a copy of the Plan has been furnished to you and shall be deemed a part of this restricted stock award agreement (“Agreement”) as if fully set forth herein and the terms capitalized but not defined herein shall have the meanings set forth in the Plan; and

 

WHEREAS, you desire to accept the restricted stock award made pursuant to this Agreement.

 

NOW, THEREFORE, in consideration of and mutual covenants set forth herein and for other valuable consideration hereinafter set forth, the parties agree as follows:

 

1.  The Grant. Subject to the conditions set forth below, the Company hereby grants you effective as of the Date of Grant set forth in the Notice of Grant, as a matter of separate inducement but not in lieu of any salary or other compensation for your services for the Company, an award (the “Award”) consisting of the aggregate number of Restricted Shares set forth in the Notice of Grant in accordance with the terms and conditions set forth herein and in the Plan.

 

2.   Escrow of Restricted Shares. The Company shall evidence the Restricted Shares in the manner that it deems appropriate. The Company may issue in your name a certificate or certificates representing the Restricted Shares and retain that certificate or those certificates until the restrictions on such Restricted Shares expire as contemplated in Section 5 of this Agreement and described in the Notice of Grant or the Restricted Shares are forfeited as described in Sections 4 and 6 of this Agreement. If the Company certificates the Restricted Shares, you shall execute one or more stock powers in blank for those certificates and deliver those stock powers to the Company. The Company shall hold the Restricted Shares and the related stock powers pursuant to the terms of this Agreement, if applicable, until such time as (a) a certificate or certificates for the Restricted Shares are delivered to you, (b) the Restricted Shares are otherwise transferred to you free of restrictions, or (c) the Restricted Shares are

 

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canceled and forfeited pursuant to this Agreement.

 

3.   Ownership of Restricted Shares. From and after the time the Restricted Shares are issued in your name, you will be entitled to all the rights of absolute ownership of the Restricted Shares, including the right to vote those shares and to receive dividends thereon if, as, and when declared by the Board, subject, however, to the terms, conditions and restrictions set forth in this Agreement; provided, however, that each dividend payment will be made no later than 30 days following the date the dividends are paid to the holders of Stock generally.

 

4.   Restrictions; Forfeiture. The Restricted Shares are restricted in that they may not be sold, transferred or otherwise alienated or hypothecated until these restrictions are removed or expire as contemplated in Section 5 of this Agreement and as described in the Notice of Grant. The Restricted Shares are also restricted in the sense that they may be forfeited to the Company (the “Forfeiture Restrictions”). You hereby agree that if the Restricted Shares are forfeited, as provided in Section 6, the Company or its designee shall have the right to deliver the Restricted Shares to the Company’s transfer agent for, at the Company’s election, cancellation or transfer to the Company.

 

5.   Expiration of Restrictions and Risk of Forfeiture. The restrictions on the Restricted Shares granted pursuant to this Agreement will expire and the Restricted Shares will become transferable, except to the extent provided in Section 13 of this Agreement and nonforfeitable as set forth in the Notice of Grant, provided that you remain in the employ of, or a service provider to, the Company or its Subsidiaries until the applicable dates set forth therein.

 

6.  Termination of Services.

 

(a) Termination Generally. Subject to subsection (b), (c) and (d), if your service relationship with the Company or any of its Subsidiaries is terminated for any reason, then those Restricted Shares for which the restrictions have not lapsed as of the date of termination shall become null and void and those Restricted Shares shall be forfeited to the Company as of the date of termination. You will be repaid the amount (in the form of consideration determined by the Committee, including the forgiveness of indebtedness) paid, if any, with respect to the Restricted Shares forfeited pursuant to this Section 6; provided, however, the Committee, in its sole discretion, may elect not to repay all or a portion of such amounts in which case the Restricted Shares purchased with such amounts will not become null and void and will not be forfeited. The Restricted Shares for which the restrictions have lapsed as of the date of such termination shall not be forfeited to the Company.

 

(b) Effect of Employment Agreement. Notwithstanding any provision herein to the contrary, in the event of any inconsistency between this Section 6 and any employment agreement entered into by and between you and the Company, the terms of the employment agreement shall control.

 

(c) Death or Disability. If your service relationship with the Company is terminated by reason of death or disability (as determined by the Committee), all of your Restricted Shares will vest on your date of termination.

 

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(d) Change in Control. If, in the one-year period following a Change in Control, your service is terminated by the Company without Cause, all of your Restricted Shares will vest on your date of termination. “Change in Control” shall have the meaning set forth in the LTIP. For purposes of this subsection, “Cause” means the employee’s (l) willful and continued failure to substantially perform his duties for the Company (other than any such failure resulting from incapacity due to physical or mental illness), (2) willful engagement in conduct which is materially and demonstrably injurious to the Company, monetarily or otherwise, or (3) indictment of a felony or a misdemeanor involving moral turpitude. For purposes of this definition, no act, or failure to act, on the employee’s part shall be deemed “willful” unless done, or omitted to be done, by the employee not in good faith and without reasonable belief that such act, or failure to act, was in the best interest of Company.

 

7.  Leave of Absence. With respect to the Award, the Committee may, in its sole discretion, determine that if you are on leave of absence for any reason you will be considered to still be in the employ of, or providing services for, the Company, provided that rights to the Restricted Shares during a leave of absence will be limited to the extent to which those rights were earned or vested when the leave of absence began.

 

8.  Delivery of Stock. Promptly following the expiration of the restrictions on the Restricted Shares as contemplated in Section 5 of this Agreement, the Company shall cause to be issued and delivered to you or your designee a certificate or other evidence of the number of Restricted Shares as to which restrictions have lapsed, free of any restrictive legend relating to the lapsed restrictions, upon receipt by the Company of any tax withholding as may be requested pursuant to Section 9. The value of such Restricted Shares shall not bear any interest owing to the passage of time.

 

9.  Payment of Taxes. The Company may require you to pay to the Company (or the Company’s Subsidiary if you are an employee of a Subsidiary of the Company), an amount the Company deems necessary to satisfy its (or its Subsidiary’s) current or future obligation to withhold federal, state or local income or other taxes that you incur as a result of the Award. With respect to any required tax withholding, you may (a) direct the Company to withhold from the shares of Stock to be issued to you under this Agreement the number of shares necessary to satisfy the Company’s obligation to withhold taxes; which determination will be based on the shares’ Fair Market Value at the time such determination is made; (b) deliver to the Company shares of Stock sufficient to satisfy the Company’s tax withholding obligations, based on the shares’ Fair Market Value at the time such determination is made; or (c) deliver cash to the Company sufficient to satisfy its tax withholding obligations. If you desire to elect to use the stock withholding option described in subparagraph (a), you must make the election at the time and in the manner the Company prescribes. The Company, in its discretion, may deny your request to satisfy its tax withholding obligations using a method described under subparagraph (a) or (b). In the event the Company determines that the aggregate Fair Market Value of the shares of Stock withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then you must pay to the Company, in cash, the amount of that deficiency immediately upon the Company’s request. The Company may condition the delivery of shares of Stock upon the satisfaction of any withholding obligations.

 

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10.  Compliance with Securities Law. Notwithstanding any provision of this Agreement to the contrary, the issuance of Stock (including Restricted Shares) will be subject to compliance with all applicable requirements of federal, state, or foreign law with respect to such securities and with the requirements of any stock exchange or market system upon which the Stock may then be listed. No Stock will be issued hereunder if such issuance would constitute a violation of any applicable federal, state, or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, Stock will not be issued hereunder unless (a) a registration statement under the Securities Act of 1933, as amended (the “Act”), is at the time of issuance in effect with respect to the shares issued or (b) in the opinion of legal counsel to the Company, the shares issued may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares subject to the Award will relieve the Company of any liability in respect of the failure to issue such shares as to which such requisite authority has not been obtained. As a condition to any issuance hereunder, the Company may require you to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company. From time to time, the Board and appropriate officers of the Company are authorized to take the actions necessary and appropriate to file required documents with governmental authorities, stock exchanges, and other appropriate Persons to make shares of Stock available for issuance.

 

11.  Lock-Up Period. You hereby agree that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Act, you will not sell or otherwise transfer any Stock acquired hereunder or other securities of the Company during the 180-day period (or such other period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Act. Such restriction will apply only to the first registration statement of the Company to become effective under the Act that includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

 

12.  Stockholders Agreement. The Committee may, in its sole discretion, condition the delivery of Stock subject to this Award upon your entering into a stockholders’ agreement in such form as approved from time to time by the Board.

 

13.  Legends. The Company may at any time place legends referencing any restrictions imposed on the shares pursuant to Sections 4, 11, 12, 13, or 14 of this Agreement on all certificates representing shares issued with respect to this Award.

 

14.  Right of the Company and Subsidiaries to Terminate Services. Nothing in this

 

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Agreement confers upon you the right to continue in the employ of or performing services for the Company or any Subsidiary, or interfere in any way with the rights of the Company or any Subsidiary to terminate your employment or service relationship at any time.

 

15.  Furnish Information. You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.

 

16.  Remedies. The Company shall be entitled to recover from you reasonable attorneys’ fees incurred in connection with the successful enforcement of the terms and provisions of this Agreement whether by an action to enforce specific performance or for damages for its breach or otherwise.

 

17.  No Liability for Good Faith Determinations. The Company and the members of the Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Restricted Shares granted hereunder.

 

18.  Execution of Receipts and Releases. Any payment of cash or any issuance or transfer of shares of Stock or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a release and receipt therefor in such form as it shall determine.

 

19.  No Guarantee of Interests. The Board and the Company do not guarantee the Stock of the Company from loss or depreciation.

 

20.  Company Records. Records of the Company or its Subsidiaries regarding your period of service, termination of service and the reason(s) therefor, leaves of absence, re- employment, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

 

21.  Notice. All notices required or permitted under this Agreement must be in writing and personally delivered or sent by mail and shall be deemed to be delivered on the date on which it is actually received by the person to whom it is properly addressed or if earlier the date it is sent via certified United States mail.

 

22.  Waiver of Notice. Any person entitled to notice hereunder may waive such notice in writing.

 

23.  Information Confidential. As partial consideration for the granting of the Award hereunder, you hereby agree to keep confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to the terms and conditions of this Agreement; provided, however, that such information may be disclosed as required by law and may be given in confidence to your spouse and tax and financial advisors. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor weighing against the advisability of

 

5

 

granting any such future award to you.

 

24.  Successors. This Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

 

25.  Severability. If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.

 

26.  Company Action. Any action required of the Company shall be by resolution of the Board or by a person or entity authorized to act by resolution of the Board.

 

27.  Headings. The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

 

28.  Governing Law. All questions arising with respect to the provisions of this Agreement shall be determined by application of the laws of Texas, without giving any effect to any conflict of law provisions thereof, except to the extent Texas state law is preempted by federal law. The obligation of the Company to sell and deliver Stock hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Stock.

 

29.  Consent to Texas Jurisdiction and Venue. You hereby consent and agree that state courts located in Travis County, Texas and the United States District Court for the Western District of Texas each shall have personal jurisdiction and proper venue with respect to any dispute between you and the Company arising in connection with the Option or this Agreement. In any dispute with the Company, you will not raise, and you hereby expressly waive, any objection or defense to any such jurisdiction as an inconvenient forum.

 

30.  Amendment. This Agreement may be amended the Board or by the Committee at any time (a) if the Board or the Committee determines, in its sole discretion, that amendment is necessary or advisable in light of any addition to or change in any federal or state, tax or securities law or other law or regulation, which change occurs after the Date of Grant and by its terms applies to the Award; or (b) other than in the circumstances described in clause (a) or provided in the Plan, with your consent.

 

31.  The Plan. This Agreement is subject to all the terms, conditions, limitations and restrictions contained in the Plan, as may be amended from time to time.

 

32.  Sections 83 and 409A of the Code. The parties intend for the issuance of the Restricted Shares to be a transfer of property within the meaning of Section 83 of the Code rather than a deferral of compensation pursuant to Section 409A of the Code. Accordingly, this Agreement and the issuance of the Restricted Shares shall be construed and interpreted in accordance with such intent and any action required by either of the parties pursuant to this Agreement will be provided in such a manner that the Restricted Shares shall not become subject to the provisions of Section 409A of the Code, including any IRS guidance

 

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promulgated with respect to Section 409A.

 

[Remainder of page intentionally left blank]

 

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