Document:

EXHIBIT 4.1

 

Exhibit 4.1

FIRST AMENDMENT TO RIGHTS AGREEMENT

     This FIRST AMENDMENT TO RIGHTS AGREEMENT, dated as of May 11, 2005 (this “Amendment”), is
entered into by and between CUNO Incorporated, a Delaware corporation (the “Company”), and
Equiserve Trust Company N.A., successor in interest to ChaseMellon Shareholder Services L.L.C., as
rights agent.

RECITALS:

     WHEREAS, the Company and the Rights Agent entered into a Rights Agreement, dated as of August
19, 1996 (the “Rights Agreement”);

     WHEREAS, Section 27 of the Rights Agreement provides that, in certain circumstances, the
Company may supplement or amend the Rights Agreement in any respect, without the approval of any
holders of Rights, by action of the Company’s board of directors and the Rights Agent shall execute
such supplement or amendment;

     WHEREAS, the Company intends to enter into an Agreement and Plan of Merger (the “Merger
Agreement”), dated as of the date hereof, by and among the Company, 3M Co., a Delaware corporation
(“3M”) and Carrera Acquisition Co., a Delaware corporation and wholly owned subsidiary of 3M
(“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company;

     WHEREAS, the Merger Agreement contemplates that the Company and the Board of Directors, as the
case may be, has (a) taken all necessary actions so that the execution and delivery of the Merger
Agreement and the consummation of the transactions contemplated thereby will not result in a
Distribution Date or result in 3M being an Acquiring Person, and (b) will amend the Rights
Agreement to (i) render it inapplicable to the Merger Agreement and the transactions contemplated
thereby and (ii) provide that the Final Expiration Date shall occur immediately prior to the
Closing of the Merger;

     WHEREAS, the Board of Directors has also determined to acknowledge that the Company has
appointed Equiserve Trust Company N.A. (the “Rights Agent”) to replace ChaseMellon Shareholder
Services L.L.C. as rights agent under the Rights Agreement as of March 20, 2000.

     WHEREAS, the Board of Directors has determined that it is in the best interests of the Company
and its shareholders to modify the terms of the Rights Agreement to exempt the Merger, the Merger
Agreement and all of the transactions contemplated thereby from the application of the Rights
Agreement, and in connection therewith the Company is entering into this Amendment and directing
the Rights Agent to enter into this Amendment;

     NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereby agree as follows:

 

 

     1. Effect of Amendment. Except as expressly provided herein, the Rights Agreement
shall be and remain in full force and effect.

     2. Capitalized Terms. All capitalized, undefined terms used in this Amendment shall
have the meanings assigned thereto in the Rights Agreement.

     3. Amendments to Section 1.

     (a) The definition of “Acquiring Person” in Section 1(a) of the Rights Agreement is hereby
modified and amended by adding the following proviso at the end of the second sentence thereof:

; provided that neither 3M, nor any direct or indirect wholly owned
subsidiary of 3M, shall be deemed to be an Acquiring Person solely by
virtue of the approval, execution or delivery of the Merger Agreement, or
the consummation of the transactions contemplated thereby.

     (b) The definition of “Shares Acquisition Date” in Section 1(q) of the Rights Agreement is
hereby amended to read in its entirety as follows:

“Shares Acquisition Date” shall mean the first date of public announcement (which,
for purposes of this definition, shall include, without limitation, a report filed
pursuant to the Exchange Act but shall exclude any public announcement relating to
the transactions contemplated by the Merger Agreement) by the Corporation or an
Acquiring Person that an Acquiring Person has become such; provided, that, if such
person is determined not to have become an Acquiring Person pursuant to Section
1(a)(Y) hereof, then no Shares Acquisition Date shall be deemed to have occurred.

     (c) The definitions contained in Section 1 of the Rights Agreement shall be supplemented by
adding the following definitions in alphabetical order:

“3M” shall mean 3M Co., a Delaware corporation.

“Merger Agreement” shall mean the Agreement and Plan of Merger, by and among the
Company, 3M and Merger Sub, pursuant to which Merger Sub will merge with and into
the Company.

“Merger Sub” shall mean Carrera Acquisition Co., a Delaware corporation and wholly
owned subsidiary of 3M.

 

 

     4. Amendment to Section 7(a). Section 7(a) is hereby amended to read in its entirety
as follows:

(a) Subject to Section 7(e) hereof, the registered holder of any Right Certificate
may exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the principal office or
offices of the Rights Agent designated for such purpose, together with payment of
the aggregate Purchase Price for the total number of one one-hundredth of a
Preferred Share (or other securities, as the case may be) as to which such
surrendered Rights are exercised, at or prior to the earliest of (i) the close of
business on August 19, 2006, (ii) immediately prior to the Closing of the Merger
(as defined in the Merger Agreement) (the earlier of (i) and (ii), the “Final
Expiration Date”), or (iii) the time at which the Rights are redeemed as provided
in Section 23 hereof (the “Redemption Date”) or (iv) the time at which the Rights
are exchanged pursuant to Section 24 hereof.

     5. New Section 35. Section 35 is hereby added to the Rights Agreement to read in its
entirety as follows:

Section 35. Merger Agreement.

Notwithstanding anything contained in this Agreement to the contrary, neither the
approval, execution, delivery or public announcement of the Merger Agreement nor
the consummation of the transactions contemplated thereby or the performance by the
Company of its obligations thereunder is or shall be deemed to be an event
described in Section 11(a)(ii) or Section 13, nor will such performance or
consummation result in the occurrence of a Shares Acquisition Date, a Distribution
Date or any other separation of the Rights from the underlying Common Shares, nor
entitle or permit the holders of the Rights to exercise the Rights or otherwise
affect the rights of the holders of Rights, including giving the holders of the
Rights the right to acquire securities of any party to the Merger Agreement.

     6. Change of Rights Agent. The following references to “ChaseMellon Shareholder
Services L.L.C.” are hereby amended to read “Equiserve Trust Company N.A.”: the cover and
introductory paragraph to the Rights Agreement, Sections 3(c) and 26 to the Rights Agreement,
Section 1 to Exhibit A, the first paragraph of Exhibit B, and the signature lines to the Rights
Agreement and Exhibit B.

     7. Effective Date. This Amendment is effective as of May 11, 2005, immediately prior
to the execution and delivery of the Merger Agreement.

 

 

     8. Governing Law. This Amendment shall be governed by, construed and enforced in
accordance with the laws of the State of Delaware without reference to the conflicts or choice of
law principles thereof.

     9. Counterparts; Facsimile Signatures. This Amendment may be executed in any number
of counterparts (including facsimile signature) each of which shall be an original with the same
effect as if the signatures thereto and hereto were upon the same instrument.

     10. Headings. The headings in this Amendment are included for convenience of
reference only and shall be ignored in the construction or interpretation hereof.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, all as
of the day and year first above written.

	 	 	 	 	 
	 	 	CUNO INCORPORATED
	 
	 	 	 	 
	

	 	By:	 	/s/ Frederick C. Flynn, Jr.
	

	 	 	 	 
	

	 	Name:	 	Frederick C. Flynn, Jr.
	

	 	 	 	 
	

	 	Title:	 	Senior Vice President —
Finance and Administration, Chief Financial Officer, and Assistant
Secretary
	

	 	 	 	 
	 
	 	 	 	 
	 	 	EQUISERVE TRUST COMPANY N.A.
	 
	 	 	 	 
	

	 	By:	 	/s/ John Piskadlo
	

	 	 	 	 
	

	 	Name:	 	John Piskadlo
	

	 	 	 	 
	

	 	Title:	 	Senior Account Managerexv10w1

 

EXHIBIT 10.1

INTERMOUNTAIN COMMUNITY BANCORP

AMENDED AND RESTATED
DIRECTOR STOCK PLAN

	1.  	Purpose of the Plan. The purpose of this Amended and Restated Director Stock Plan (“Plan”)
is to provide additional incentives to Directors of Intermountain Community Bancorp, an Idaho
corporation (“Bancorp”) and any of its existing or future Subsidiaries, thereby helping to
attract and retain the best available personnel for positions as directors of Bancorp and
otherwise promoting the success of the business activities of Bancorp. Bancorp intends that
Options issued under this Plan will constitute nonqualified stock options.
	 
	2.  	Definitions. As used in this Plan, the following definitions apply:

	 	a.  	“Bancorp” has the meaning set forth in paragraph 1 of this Plan.
	 
	 	b.  	“Board” means the Board of Directors of Bancorp.
	 
	 	c.  	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	d.  	“Common Stock” means Bancorp’s common stock, currently with no par value.
	 
	 	e.  	“Committee” has the meaning set forth in subparagraph 4.a of this Plan.
	 
	 	f.  	“Continuous Status as a Director” means the absence of any interruption or
termination of service as a Director.
	 
	 	g.  	“Date of Grant” of an Option or a Restricted Stock Award means the date on
which the Committee makes the determination granting such Option or Restricted Stock
Award, or such later date as the Committee may designate. The Date of Grant shall be
specified in the Option agreement or the Restricted Stock Purchase Agreement, as the
case may be.
	 
	 	h.  	“Director” means any person serving as a member of the Board of Bancorp, or a
Subsidiary of Bancorp that is currently in existence or is hereafter organized or is
acquired by Bancorp.
	 
	 	i.  	“Exercise Price” has the meaning set forth in subparagraph 4.b(2) of this Plan.
	 
	 	j.  	“Fair Market Value” shall mean, when referring to the Common Stock, the fair
market value of such stock, as determined by the Board in good faith. The
determination of the Board shall be conclusive and binding on all persons.
	 
	 	k.  	“Grantee” means a Director who receives a Restricted Stock Award.
	 
	 	l.  	“Option” means a stock option granted under this Plan, which constitutes a
nonqualified stock option.
	 
	 	m.  	“Optionee” means a Director who receives an Option.
	 
	 	n.  	“Plan” has the meaning set forth in paragraph 1 of this Plan.
	 
	 	o.  	“Parent” means any corporation owning at least eighty percent (80%) of the
total voting power of the issued and outstanding stock of Bancorp, and eighty percent
(80%) of the total value of the issued and outstanding stock of Bancorp.
	 
	 	p.  	“Purchase Price” means the amount, determined as provided in paragraph 7.b of
this Plan, that a Grantee is required to pay to acquire shares of Common Stock pursuant
to a Restricted Stock Award.
	 
	 	q.  	“Restricted Stock Award” means an offer by Bancorp to issue to a Director
shares of Common Stock that are subject to restrictions, as provided in this Plan.

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	 	r.  	“Restricted Stock Purchase Agreement” has the meaning set forth in subparagraph
7.a of this Plan.
	 
	 	s.  	“Subsidiary” means any corporation of which not less than fifty percent (50%)
of the voting shares are held by Bancorp or a Subsidiary, whether or not such
corporation now exists or is hereafter organized or acquired by Bancorp or a
Subsidiary.

	3.  	Stock Subject to Options

	 	a.  	Number of Shares Reserved. The sum of all shares of Common Stock that
are (i) subject to or issued under Options granted under this Plan and (ii) issued
pursuant to Restricted Stock Awards under this Plan shall not exceed 219,615 shares,
subject to adjustment as provided in subparagraph 6.j of this Plan, of the Common Stock
of Bancorp. During the term of this Plan, Bancorp will at all times reserve and keep
available a sufficient number of shares of its Common Stock to satisfy the requirements
of this Plan.
	 
	 	b.  	Expired Options and Unvested Restricted Stock. If any outstanding
Option expires or becomes unexercisable for any reason without having been exercised in
full, or shares of Common Stock subject to a Restricted Stock Purchase Agreement are
forfeited or repurchased by the Bancorp pursuant to such agreement, then the shares of
Common Stock allocable to the unexercised Option or Restricted Stock Award, or that are
forfeited or repurchased by Bancorp pursuant to such Restricted Stock Purchase
Agreement or Option agreement, will again become available for other Options and/or
Restricted Stock Awards hereunder.

	4.  	Administration of the Plan.

	 	a.  	The Committee. The Board will administer this Plan directly, acting as
a Committee of the whole, or if the Board elects, by a separate Committee appointed by
the Board for that purpose and consisting of at least three Board members. All
references in the Plan to the “Committee” refers to this separate Committee, if any is
established, or if none is then in existence, refers to the Board as a whole. Once
appointed, any Committee will continue to serve until otherwise directed by the Board.
From time to time, the Board may increase the size of the Committee and appoint
additional members, remove members (with or without cause), appoint new members in
substitution, and fill vacancies however caused. The Committee will select one of its
members as chairman, and will hold meetings at such times and places as the chairman or
a majority of the Committee may determine. At all times, the Board will have the power
to remove all members of the Committee and thereafter to directly administer this Plan
as a Committee of the whole.

	 	(1)  	Members of the Committee who are eligible for Options or
Restricted Stock Awards, or who have been granted Options or Restricted Stock
Awards, will be counted for all purposes in determining the existence of a
quorum at any meeting of the Committee and will be eligible to vote on all
matters before the Committee respecting the granting of Options or Restricted
Stock Awards and respecting other matters relating to the administration of
this Plan.
	 
	 	(2)  	At least annually, the Committee shall present a written report
to the Board indicating the Directors to whom Options or Restricted Stock
Awards have been granted since the date of the last such report, and in each
case the Date of Grant, the number of shares subject to such Options or granted
under such Restricted Stock Awards, and the per-share Exercise Price or
Purchase Price, as the case may be.

	 	b.  	Powers of the Committee. All actions of the Committee shall be either
(i) by a majority vote of the members of the full Committee at a meeting of the
Committee, or (ii) by unanimous written consent of all members of the full Committee
without a meeting. All decisions, determinations and interpretations of the Committee
will be final and binding on all persons, including, without limitation, all Optionees,
any other holders or persons interested in any Options, Grantees and persons holding
shares of Common Stock subject to a Restricted Stock Purchase Agreement, unless
otherwise expressly determined by a vote of the majority of the entire Board. No
member of the Committee or of the Board will be liable for any action or determination
made in good faith with respect to the Plan, any Option or any Restricted Stock Award.
Subject to all provisions and limitations of the Plan, the Committee will have the
authority and discretion:

2

 

	 	(1)  	to determine the Directors to whom Options and Restricted Stock
Awards are to be granted, the Dates of Grant, and the number of shares to be
subject to each Option or Restricted Stock Award;
	 
	 	(2)  	to determine the price at which shares of Common Stock are to
be issued under an Option, subject to subparagraph 6.b of this Plan (“Exercise
Price”), or under a Restricted Stock Award;
	 
	 	(3)  	to determine all other terms and conditions of each Option and
Restricted Stock Award granted under this Plan (including, without limitation,
specification of the dates upon which Options become exercisable, the dates at
which Common Stock become nonforfeitable under a Restricted Stock Purchase
Agreement and whether the right to exercise an Option or the nonforfeiture of
shares of Common Stock pursuant to a Restricted Stock Purchase Agreement are
conditioned on performance standards, periods of service or otherwise), which
terms and conditions can vary among Options and Restricted Stock Awards, as the
case may be;
	 
	 	(4)  	to modify or amend the terms of any Option or Restricted Stock
Award previously granted, or, in the case of Options, to grant substitute
Options, subject to subparagraphs 6.l and 6.m of this Plan;
	 
	 	(5)  	to authorize any person or persons to execute and deliver
Option agreements and Restricted Stock Purchase Agreements, or to take any
other actions deemed by the Committee to be necessary or appropriate to effect
the grant of Options or Restricted Stock Awards by the Committee; and
	 
	 	(6)  	to interpret this Plan and to make all other determinations and
take all other actions that the Committee deems necessary or appropriate to
administer this Plan in accordance with its terms and conditions.

	5.  	Eligibility. Options and Restricted Stock Awards under this Plan may be granted only to
Directors. The granting of Options and Restricted Stock Awards under this Plan will be
entirely discretionary with the Committee. Adoption of this Plan will not confer on any
Director any right to receive an Option or a Restricted Stock Award under this Plan unless and
until said Option or Restricted Stock Award, as the case may be, is granted by the Committee
in its sole discretion. Neither the adoption of this Plan nor the granting of any Options or
Restricted Stock Awards under this Plan will confer upon any Optionee, Grantee or any other
Director any right with respect to continuation of status as a Director, nor will the same
interfere in any way with his or her right or with the right of the shareholders of Bancorp or
any Subsidiary to terminate his or her status as a Director at any time.
	 
	6.  	Terms and Conditions of Options. All Options granted under this Plan shall be authorized by
the Committee, and shall be documented in written Option agreements in such form as the
Committee will approve from time to time, which agreements shall comply with and be subject to
all of the following terms and conditions:

	 	a.  	Number of Shares; Annual Limitation. Each Option agreement shall state
the number of shares subject to Option. Any number of Options may be granted to a
single eligible Director at any time and from time to time.
	 
	 	b.  	Exercise Price and Consideration. Each option agreement must state the
Exercise Price for the shares of Common Stock to be issued under the Option, which
price must be not less than the greater of (1) the Fair Market Value of the Common
Stock or (2) the net book value of the Common Stock at the time of grant, as is
determined by the Committee. The Exercise Price shall be payable either (i) in United
States dollars upon exercise of the Options, or (ii) if approved by the Board or
Committee, other consideration including without limitation Common Stock, services,
debt instruments or other property.
	 
	 	c.  	Term of Option. Subject to other applicable provisions of this Plan
including but not limited to subparagraphs 6(g), 6(h) and 6(i), the term of each Option
will be determined by the Committee in its discretion.

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	 	d.  	Non-transferability of Options. No Option may be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
	 
	 	e.  	Manner of Exercise. An Option will be deemed to be exercised when
written notice of exercise has been given to Bancorp in accordance with the terms of
the Option by the person entitled to exercise the Option, together with full payment
for the shares of Common Stock subject to said notice.
	 
	 	f.  	Rights as Shareholder. An Optionee shall have none of the rights of a
shareholder with respect to any shares covered by his or her Option unless and until
the Optionee has exercised such Option and submitted full payment for the shares.
	 
	 	g.  	Death of Optionee. In the event of the death of an Optionee who at the
time of his or her death was a Director and who had been in Continuous Status as a
Director since the Date of Grant of the Option, the Option will terminate on the
earlier of (i) one year after the date of death of the Optionee, or (ii) the expiration
date otherwise provided in the Option agreement, except that if the expiration date
should occur during the 180-day period immediately following the Optionee’s death, such
Option will terminate at the end of such 180-day period. The Option will be
exercisable at any time prior to such termination by the Optionee’s estate, or by such
person or persons who have acquired the right to exercise the Option by bequest or by
inheritance or by reason of the death of the Optionee.
	 
	 	h.  	Disability of Optionee. If an Optionee’s status as a Director is
terminated at any time during the Option period by reason of a disability (within the
meaning of Section 22(e)(3) of the Internal Revenue Code) and if said Optionee had
maintained Continuous Status as a Director at all times between the date of grant of
the Option and the termination of his or her status as a Director, his or her Option
shall terminate no later than the earlier of (i) one year after the date of termination
of his or her status as a Director, or (ii) the expiration date otherwise provided in
his or her Option agreement.
	 
	 	i.  	Termination of Status as a Director.

	 	(1)  	If an Optionee’s status as a Director is terminated at any time
after the grant of an Option to such Director for any reason other than death
or disability (as described in subparagraphs 6.g and 6.h of this Plan, and
excepting if the Director is removed for cause, as provided in subparagraph (2)
below), then such Option will terminate no later than the earlier of (i) the
same day of the sixth month after the date of termination of his or her status
as a Director, or (ii) the expiration date otherwise provided in his or her
Option agreement.
	 
	 	(2)  	If an Optionee is removed as a Director for cause at any time
after the grant of an Option to such Director, then such Option shall terminate
at the end of the day on the date of termination of his or her status as a
Director. For this purpose, “cause” includes fraud or willful misconduct or
any other conduct that the Board reasonably believes will cause or has caused
Bancorp substantial injury as a result of gross negligence or dishonesty.

	 	j.  	Adjustments Upon Changes in Capitalization. Subject to any required
action by the shareholders of Bancorp, the number of shares of Common Stock covered by
each outstanding Option, the number of shares of Common Stock available for grant of
additional Options, and the per-share Exercise Price in each outstanding Option, will
be proportionately adjusted for any increase or decrease in the number of issued shares
of Common Stock resulting from any stock split or other subdivision or consolidation of
shares, the payment of any stock dividend (but only on the Common Stock) or any other
increase or decrease in the number of such shares of Common Stock effected without
receipt of consideration by Bancorp; provided, however, that conversion of any
convertible securities of Bancorp will not be deemed to have been “effected without
receipt of consideration.” Such adjustment will be made by the Committee, whose
determination in that respect will be final, binding and conclusive.

	 	(1)  	Except as otherwise expressly provided in this subparagraph
6(j), no Optionee will have any rights by reason of any stock split or the
payment of any stock dividend or any other increase or decrease in the number
of shares of Common Stock, and no issuance by Bancorp of shares of stock of any
class, or securities convertible into shares of stock of any class, will affect
the number of shares or Exercise Price subject to any Options, and no

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	 	   	adjustments in Options will be made by reason thereof. The grant of an
Option under this Plan will not affect in any way the right or power of
Bancorp to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure.

	 	k.  	Conditions Upon Issuance of Shares. Shares of Common Stock will not be
issued with respect to an Option granted under this Plan, unless the exercise of such
Option and the issuance and delivery of such shares pursuant thereto will comply with
all applicable provisions of law, including, without limitation, applicable federal and
state securities laws. As a condition to the exercise of an Option, Bancorp may
require the person exercising such Option to represent and warrant at the time of
exercise that the shares of Common Stock are being purchased only for investment and
without any present intention to sell or distribute such Common Stock if, in the
opinion of counsel for Bancorp, such a representation is required by any of the
aforementioned relevant provisions of law.
	 
	 	l.  	Corporate Sale Transactions. In the event of the merger or
reorganization of Bancorp with or into any other corporation, the sale of substantially
all of the assets of Bancorp, or a dissolution or liquidation of Bancorp (collectively,
“Sale Transaction”), (1) all outstanding Options that are not then fully exercisable
will become exercisable upon the date of closing of any sale transaction or such
earlier date as the Committee may fix; and (2) the Committee may, in the exercise of
its sole discretion, terminate all outstanding Options as of a date fixed by the
Committee. In such event, however, the Committee shall notify each Optionee of such
action in writing not less than sixty (60) days prior to the termination date fixed by
the Committee, and each Optionee shall have the right to exercise his or her Option
prior to said termination date.
	 
	 	m.  	Substitute Stock Options. In connection with an internal
reorganization of Bancorp, the Committee is authorized, in its discretion, to
substitute for any unexercised Option, a new option for shares of the resulting
entity’s stock.
	 
	 	n.  	Tax Compliance. Bancorp, in its sole discretion, may take actions
reasonably believed by it to be required to comply with any local, state, or federal
tax laws relating to the reporting or withholding of taxes attributable to the grant or
exercise of any Option or the disposition of any shares of Common Stock issued upon
exercise of an Option, including, but not limited to (i) withholding from any Optionee
exercising an Option a number of shares of Common Stock having a Fair Market Value
equal to the amount required to be withheld by Bancorp under applicable tax laws, and
(ii) withholding from any form of compensation or other amount due an Optionee, or
holder, of shares of Common Stock issued upon exercise of an Option any amount required
to be withheld by Bancorp under applicable tax laws. Withholding or reporting will be
considered required for purposes of this subparagraph if the Committee, in its sole
discretion, so determines.
	 
	 	o.  	Other Provisions. Option agreements executed under this Plan may
contain such other provisions as the Committee will deem advisable.

	7.  	Restricted Stock Awards. The Committee will determine all terms and conditions of a
Restricted Stock Award (including, without limitation, to which Directors a Restricted Stock
Award will be granted, the number of shares of Common Stock the Director may purchase pursuant
thereto, and the restrictions to which the shares of Common Stock so purchased will be
subject), subject to the following:

	 	a.  	Restricted Stock Purchase Agreement. All purchases under a Restricted
Stock Award will be evidenced by a written agreement (the “Restricted Stock Purchase
Agreement”). The Restricted Stock Purchase Agreement will be in substantially a form
(which may differ among Grantees) that the Committee shall from time to time approve,
and will comply with and be subject to the terms and conditions of the Plan. A Grantee
can accept a Restricted Stock Award only by signing and delivering to Bancorp the
Restricted Stock Purchase Agreement, and paying in full the Purchase Price, if any,
within thirty (30) days after the date that the Restricted Stock Purchase Agreement is
delivered to the Grantee. If the Grantee does not so accept the Restricted Stock
Award, then the offer represented by the Restricted Stock Award will terminate without
the need for further action by any party, unless the Committee determines otherwise.
	 
	 	b.  	Purchase Price. The Purchase Price for shares acquired by Grantee under
a Restricted Stock Award will be determined by the Committee, and may be less than the
Fair Market Value of the shares of Common Stock on the date the Restricted Stock Award
is granted. The Purchase Price, if any, shall be payable in

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	 	   	accordance with any procedures established by Bancorp and may be paid in the form of
either (i) United States dollars, or (ii) if approved by the Board, other consideration
including without limitation Common Stock, services, debt instruments or other property.
	 
	 	c.  	Terms of Restricted Stock Awards. Shares of Common Stock acquired
pursuant to a Restricted Stock Awards shall be subject to all restrictions, if any,
that the Committee may impose. These restrictions may be based on completion of a
specified number of years of service with Bancorp and/or upon completion of performance
goals that are set forth in the Restricted Stock Purchase Agreement entered into by
Grantee in connection with the Restricted Stock Award. The Restricted Stock Purchase
Agreement shall be in such form and contain such other provisions (which may differ
among Grantees) as the Committee shall from time to time approve and shall comply with,
and be subject to the terms and conditions of, this Plan. Prior to the grant of a
Restricted Stock Award, the Committee shall: (i) determine the nature, length and
starting date of any period that the Grantee must maintain Continuous Status as a
Director before shares of Common Stock received pursuant to a Restricted Stock Award
shall vest; (ii) select from the factors to be used to measure performance goals, if
any; and (iii) determine the number of shares of Common Stock that may be awarded to
the Grantee.
	 
	 	d.  	Termination During Performance Period. Restricted Stock Awards that
have not vested, as provided in the Restricted Stock Purchase Agreement, shall cease to
vest immediately if a Grantee ceases to maintain Continuous Status as a Director for
any reason, unless the Committee determines otherwise, and Bancorp shall have the
right, at the discretion of the Committee, to repurchase all or a portion of the shares
of Common Stock that have not yet vested and that were acquired by Grantee pursuant to
a Restricted Stock Award. The purchase price required to be paid by Bancorp for each
share of Common Stock upon exercise of its rights under this subparagraph 7.d of the
Plan shall be the original per share Purchase Price paid by the Grantee for such
shares.
	 
	 	e.  	Conditions Upon Issuance of Shares. Shares of Common Stock will not be
issued pursuant to a Restricted Stock Award granted under this Plan, unless the
issuance and delivery of such shares pursuant thereto will comply with all applicable
provisions of law, including, without limitation, applicable federal and state
securities laws. As a condition to the issuance of shares of Common Stock pursuant to
a Restricted Stock Award, Bancorp may require the Grantee to represent and warrant
prior to issuance that the shares of Common Stock are being purchased only for
investment and without any present intention to sell or distribute such Common Stock
if, in the opinion of counsel for Bancorp, such a representation is required by any of
the aforementioned relevant provisions of law.
	 
	 	f.  	Tax Compliance. Bancorp, in its sole discretion, may take actions
reasonably believed by it to be required to comply with any local, state, or federal
tax laws relating to the reporting or withholding of taxes attributable to the granting
of a Restricted Stock Award, including, but not limited to withholding from any form of
compensation or other amount due a Grantee any amount required to be withheld by
Bancorp under applicable tax laws. Withholding or reporting will be considered
required for purposes of this subparagraph if the Committee, in its sole discretion, so
determines.
	 
	 	g.  	Other Provisions. Restricted Stock Purchase Agreements executed under
this Plan may contain such other provisions as the Committee shall deem advisable.

	8.  	Term of the Plan. This Plan will become effective, and Options and Restricted Stock Awards
may be granted, upon adoption of the Plan by the Board, subject to shareholder approval.
Unless sooner terminated as provided in subparagraph 8.a of this Plan, this Plan will
terminate on the tenth (10th) anniversary of the original effective date of the Plan. Options
and Restricted Stock Awards may be granted at any time after the effective date and prior to
the date of termination of this Plan.

	 	a.  	Amendment or Early Termination of the Plan. The Board may terminate
this Plan at any time. The Board may amend this Plan at any time and from time to time
in such respects as the Board may deem advisable, except that, without approval of the
shareholders, no revision or amendment will increase the number of shares of Common
Stock subject to this Plan other than in connection with an adjustment under
subparagraph 6.j of this Plan.
	 
	 	b.  	Effect of Amendment or Termination. No amendment or termination of
this Plan will affect Options or Restricted Stock Awards granted prior to such
amendment or termination, and all such Options and

6

 

	 	   	Restricted Stock Awards shall remain in full force and effect notwithstanding such
amendment or termination.

	9.  	Shareholder Approval. Adoption of this Plan shall be subject to ratification by affirmative
vote of shareholders owning at least a majority of the outstanding Common Stock at a duly
convened meeting.

*************

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CERTIFICATE OF ADOPTION

     I certify that the foregoing Amended and Restated Director Stock Plan was originally approved
by the Board of Directors of Intermountain Community Bancorp (f/n/a Panhandle Bancorp) on January
14, 1999, and amended by the Board of Intermountain Community Bancorp on February 24, 2005.

	 	 	 	 	 
	

	 	/s/ Terry L. Merwin
	 	 
	

	 	 	 	 
	

	 	Terry L. Merwin, Secretary	 	 

     I further certify that the foregoing Amended and Restated Director Stock Plan was originally
approved by the shareholders of Intermountain Community Bancorp (f/n/a Panhandle Bancorp) on August
18, 1999, and that the amendments thereto were approved by the shareholders of Intermountain
Community Bancorp on April 30, 2005.

	 	 	 	 	 
	

	 	/s/ Terry L. Merwin
	 	 
	

	 	 	 	 
	

	 	Terry L. Merwin, Secretary	 	 

8

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