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EXHIBIT 10.1  

LANDMARK BANCORP, INC.  

 2001 STOCK INCENTIVE PLAN  

 
 

LANDMARK BANCORP, INC.    
    
    2001 STOCK INCENTIVE PLAN    
  

Section 1.    Purpose of the Plan.  

        The LANDMARK BANCORP, INC. 2001 STOCK INCENTIVE PLAN (the
"Plan") is intended to provide a means whereby directors, officers, employees, consultants and advisors of LANDMARK
BANCORP, INC., a Delaware corporation (the "Company"), and the Related Corporations may sustain a sense of proprietorship
and personal involvement in the continued development and financial success of the Company and the Related Corporations, and to encourage them to remain with and devote their best efforts to the
business of the Company and the Related Corporations, thereby advancing the interests of the Company and its stockholders. Accordingly, the Company may permit certain directors, officers, employees,
consultants and advisors to acquire Shares or otherwise participate in the financial success of the Company, on the terms and conditions established herein. 

Section 2.    Definitions.  

        The following terms, when used herein and unless the context clearly requires otherwise, shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined): 

        (a)  "Board" means the board of directors of the Company. 

        (b)  "Cause" means the commission of fraud, the misappropriation of or intentional material damage to the property or business
of the Company, the material failure to fulfill the duties and responsibilities of a regular position and/or comply with the Company's policies, rules or regulations, or the conviction of a felony. 

        (c)  "Change of Control" means: 

          (i)  the
consummation of the acquisition by any person (as such term is defined in Section 13(d) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty-three percent (33%) or more of the combined voting power of the then outstanding voting securities of the Company
other than through the receipt of Shares pursuant to the Plan; 

        (ii)  the
individuals who, as of the Effective Date, are members of the Board cease for any reason to constitute a majority of the Board, unless the election, or nomination
for election by the stockholders of the Company, of any new director was approved by a vote of a majority of the Board, and such new director shall, for purposes of the Plan, be considered as a member
of the Board; or 

        (iii)  consummation
by the Company of: (A) a merger or consolidation if those who are stockholders of the Company, immediately before such merger or consolidation, do
not, as a result of such merger or consolidation, own, directly or indirectly, more than sixty-seven percent (67%) of the combined voting power of the then outstanding voting securities of the entity
resulting from such merger or consolidation in substantially the same proportion as their ownership of the combined voting power of the voting securities of the Company outstanding immediately before
such merger or consolidation; or (B) a complete liquidation or dissolution or an agreement for the sale or other disposition of all or substantially all of the Company's consolidated assets. 

Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because thirty-three percent (33%) or more of the combined voting power of the then outstanding securities of the
Company are acquired by: (x) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained for employees of the Company or a Related Corporation; or
(y) any corporation which, immediately prior to such acquisition, is owned directly 

 

or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company immediately prior to such acquisition. 

        (d)  "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated
thereunder. 

        (e)  "Committee" means a committee appointed by the Board to administer the Plan, or if no Committee is appointed, the Board.
Each member of the Committee shall be (i) a "non-employee director" for purposes of Section 16 and Rule 16b-3 of the Exchange Act, and (ii) an
"outside director" for purposes of Section 162(m) of the Code, unless the Board has fewer than two (2) such outside directors. 

        (f)    "Disability" means a physical or mental disability (within the meaning of Section 22(e)(3) of the Code) which
impairs the individual's ability to substantially perform his or her current duties for a period of at least twelve (12) consecutive months, as determined by the Committee. 

        (g)  "Effective Date" means September 27, 2001, which was the date that the Plan was adopted by the Board. 

        (h)  "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations
promulgated thereunder. 

        (i)    "Fair Market Value" means as of any date, the value of a share of the Company's common stock determined as follows: 

          (i)  if
such common stock is then quoted on the NASDAQ National Market, its last reported sale price on the NASDAQ National Market on such date or, if no such reported sale
takes place on such date, the average of the closing bid and asked prices; 

        (ii)  if
such common stock is publicly traded and is then listed on a national securities exchange, the last reported sale price on such date or, if no such reported sale
takes place on such date, the average of the closing bid and asked prices on the principal national securities exchange on which the common stock is listed or admitted to trading; 

        (iii)  if
such common stock is publicly traded but is not quoted on the NASDAQ National Market nor listed or admitted to trading on a national securities exchange, the
average of the closing bid and asked prices on such date, as reported by The Wall Street Journal, for the over-the-counter market; or 

        (iv)  if
none of the foregoing is applicable, by the Board of Directors of the Company in good faith. 

        (j)    "Incentive Stock Option" means an award under the Plan that satisfies the general requirements of Section 422 of
the Code, namely: (i) grantees must be employees; (ii) the exercise price may not be less
than the fair market value of the underlying Shares at the date of grant; (iii) no more than $100,000 worth of Shares may become exercisable in any year; (iv) the maximum duration of an
award may be ten (10) years; (v) awards must be exercised within three (3) months after termination of employment, except in the event of Disability or death; and
(vi) Shares received upon exercise must be retained for the greater of two (2) years from the date of grant or one (1) year from the date of exercise. 

        (k)  "Nonqualified Option" means an option award under the Plan that is not an Incentive Stock Option. 

        (l)    "Related Corporation" means any corporation, bank or other entity which would be a parent or subsidiary corporation with
respect to the Company as defined in Section 424(e) or (f), respectively, of the Code. 

2

 

        (m)  "Retirement" means Termination of Service, other than for Cause, after attainment of age sixty-five
(65) for directors, officers, employees, consultants and advisors. 

        (n)  "Restricted Stock" means an award of Shares under the Plan that are restricted as to transfer and subject to forfeiture. 

        (o)  "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, as amended from
time to time. 

        (p)  "Shares" means shares of the common stock, $.01 par value per share, of the Company. 

        (q)  "Stock Appreciation Rights" means rights entitling the grantee to receive the appreciation in the market value of a
stated number of Shares. 

        (r)  "Securities Act" means the Securities Act of 1933, as amended from time to time, and the rules and regulations
promulgated thereunder. 

        (s)  "Termination of Service" means the termination of a person's status as a director, officer, employee, advisor or
consultant of the Company or a Related Corporation. 

Section 3.    Administration of the Plan.  

        The Plan shall be administered by the Board, or a committee appointed by the Board. The Board, or the Committee, as the case may be, shall have sole authority to: 

        (a)  select
the directors, officers, employees, consultants and advisors to whom awards shall be granted under the Plan; 

        (b)  establish
the amount and conditions of each such award; 

        (c)  prescribe
any legend to be affixed to certificates representing such awards; 

        (d)  interpret
the Plan; 

        (e)  correct
any defect, supply any omission, or reconcile any inconsistency in the Plan, any award or any agreement related thereto; and 

        (f)    adopt
such rules, regulations, forms and agreements, not inconsistent with the provisions of the Plan, as it may deem advisable to carry out the Plan. 

        All
decisions made by the Board, or the Committee, as the case may be, in administering the Plan shall be final. 

Section 4.    Shares Subject to the Plan.  

        The aggregate number of Shares that may be obtained by directors, officers, employees, consultants and advisors under the Plan shall be 150,000 Shares. Each
person is eligible to receive awards with respect to an aggregate maximum of 100,000 Shares over the term of the Plan. Any Shares that remain unissued at the termination of the Plan shall cease to be
subject to the Plan, but until termination of the Plan, the Company shall at all times make available sufficient Shares to meet the requirements of the Plan. 

Section 5.    Stock Options.  

        (a)    Type of Options.    The Board may issue options that constitute Incentive Stock Options to officers and
employees and Nonqualified Options to directors, officers, employees, consultants and advisors of the Company and the Related Corporations; provided that such consultants and advisors render bona fide
services not in connection with the offer and sale of securities in a capital-raising transaction. The grant of each option shall be confirmed by a stock option agreement that shall be 

3

 

executed by the Company and the optionee as soon as practicable after such grant. The stock option agreement shall expressly state or incorporate by reference the provisions of the Plan and state
whether the option is an Incentive Stock Option or a Nonqualified Option. 

        (b)    Terms of Options.    Except as provided in paragraphs (c) and (d) of this Section, each option
granted under the Plan shall be subject to the terms and conditions set forth by the Board in the stock option agreement including, without limitation, option price, vesting schedule and option term. 

        (c)    Additional Terms Applicable to All Options.    Each option shall be subject to the following terms and
conditions: 

        (i)    Written Notice.    An option may be exercised only by giving written notice to the Company specifying the
number of Shares to be purchased. The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an option; provided that the minimum number will not prevent
the option holder from exercising an option for the full number of Shares for which it is then exercisable. 

        (ii)    Method of Exercise.    Except as otherwise provided in any written option agreement, the exercise price of an
option shall be paid in full (i) in cash; (ii) in Common Stock valued at its Fair Market Value on the date of exercise, provided it has been owned by the optionee for at least six
(6) months prior to the exercise; (iii) in cash by an unaffiliated broker-dealer to whom the holder of the option has submitted an exercise notice consisting of a fully endorsed option;
(iv) by agreeing to surrender SARs then exercisable by him valued at their Fair Market Value on the date of exercise; (v) by such other medium of payment as the Committee, in its
discretion, shall authorize; or (vi) by any combination of clauses (i) through (v) above, as the optionee shall elect. In the case of payment pursuant to clauses
(ii) through (v) above, the optionee's election must be made on or prior to the date of exercise of the option and must be irrevocable. In lieu of a separate election governing each
exercise of an option, an optionee may file a blanket election that shall govern all future exercises of options until revoked by the optionee. 

        (iii)    Term of Option.    An option shall be exercisable as provided under the Plan or by the Board. 

        (iv)    Cessation of Vesting.    Immediately upon an optionee's Termination of Service for any reason, all vesting of
outstanding and unvested Options shall cease and all unvested Options shall be forfeited, unless otherwise provided by the Committee or in the Stock Option Agreement. 

        (v)    Disability or Death of Optionee.    If an optionee's Termination of Service occurs due to Retirement,
Disability or death prior to exercise in full of any options, he or she, or his or her beneficiary, executor, administrator or personal representative, shall have the right to exercise the options
within a period of twelve (12) months after the date of such termination to the extent that the right was exercisable at the date of such termination as provided in the stock option agreement,
or as may otherwise be provided by the Board. 

        (vi)    Transferability.    No option may be transferred, assigned or encumbered by an optionee, except: (A) by
will or the laws of descent and distribution; (B) by gifting for the benefit of descendants for estate planning purposes; or (C) pursuant to a certified domestic relations order. 

        (d)    Additional Terms Applicable to Incentive Options.    Each Incentive Option shall be subject to the following
terms and conditions: 

        (i)    Option Price.    The option price per Share shall be 100% of the fair market value of a Share on the date the
option is granted. Notwithstanding the preceding sentence, the option price per Share granted to an individual who, at the time such option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company 

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(a "10% Stockholder") shall not be less than 110% of the fair market value of a Share on the date the option is granted. 

        (ii)    Term of Option.    No option may be exercised more than ten (10) years after the date of grant. No
option granted to a 10% Stockholder may be exercised more than five (5) years after the date of grant. Notwithstanding any other provisions hereof, no option may be exercised more than three
(3) months after the optionee terminates employment with the Company, except in the event of death or Disability, in which case the option may be exercised as provided in subparagraph
(c)(v) of this Section. 

        (iii)    Annual Exercise Limit.    The aggregate fair market value of Shares which first become exercisable during any
calendar year shall not exceed $100,000. For purposes of the preceding sentence, the fair
market value of each Share shall be determined on the date the option with respect to such Share is granted. 

        (iv)    Transferability.    No option may be transferred, assigned or encumbered by an optionee, except by will or the
laws of descent and distribution, and during the optionee's lifetime an option may only be exercised by him or her. 

        (v)    Notice of Disqualifying Dispositions.    If an optionee sells or otherwise disposes of any Shares acquired
pursuant to the exercise of an Incentive Option on or before the later of (1) the date two (2) years after the date of grant, and (2) the date one year after the exercise of the
Incentive Option (in either case, a "Disqualifying Disposition"), the optionee must immediately notify the Company in writing of such disposition. The optionee may be subject to income tax withholding
by the Company on the compensation income recognized by the optionee from the Disqualifying Disposition. 

Section 6.    Restricted Stock Awards.  

        (a)    Grants.    An award of Restricted Stock under the Plan ("RSAs")
shall be evidenced by a written agreement in such form and consistent with the Plan as the Board shall approve from time to time. A grantee can accept an RSA only by signing and delivering to the
Company a purchase agreement in such form as the Board shall establish, and full payment of the purchase price, within thirty (30) days from the date the RSA agreement was delivered to the
grantee. If the grantee does not accept the RSA in this manner within thirty (30) days, then the offer of the RSA will terminate, unless the Committee determines otherwise. 

        (b)    Restriction Period.    RSAs awarded under the Plan shall be subject to such terms, conditions and restrictions
as shall be determined by the Board at the time of grant, including, without limitation: (i) prohibitions against transfer; (ii) substantial risks of forfeiture; (iii) attainment
of performance objectives; and (iv) repurchase by the Company or right of first refusal for such period or periods as shall be determined by the Board. The Board shall have the power to permit,
in its discretion, an acceleration of the expiration of the applicable restriction period with respect to any part or all of the RSAs awarded to a grantee. 

        (c)    Restrictions Upon Transfer.    RSAs awarded, and the right to vote underlying Shares and to receive dividends
thereon, may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered during the restriction period applicable to such Shares, except: (i) by will or the
laws of descent and distribution; (ii) by gifting for the benefit of descendants for estate planning purposes; or (iii) pursuant to a certified domestic relations order. Subject to the
foregoing, and except as otherwise provided in the Plan, the grantee shall have all the other rights of a stockholder including, without limitation, the right to receive dividends and the right to
vote such Shares. 

        (d)    Lapse of Restrictions.    Each restricted stock agreement shall specify the terms and conditions upon which any
restrictions upon Shares awarded under the Plan shall lapse, as determined by the 

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Board. Upon the lapse of such restrictions, Shares, free of the foregoing restrictive legend, shall be issued to the grantee or his or her legal representative. 

        (e)    Termination Prior to Lapse of Restrictions.    In the event of a grantee's Termination of Service prior to the
lapse of restrictions applicable to any RSAs awarded to such grantee, all Shares as to which there still remain restrictions shall be forfeited by such grantee without payment of any consideration to
the grantee, and neither the grantee nor any successors, heirs, assigns, or personal representatives of such grantee shall thereafter have any further rights or interest in such Shares or
certificates. 

Section 7.    Stock Appreciation Rights.  

        (a)    Grants.    An award of Stock Appreciation Rights under the Plan
("SARs") may be granted separately or in tandem with or by reference to an option granted prior to or simultaneously with the grant of such rights, to
such eligible directors, officers, employees, consultants and advisors as may be selected by the Board, and shall be evidenced by a written agreement in such form and consistent with the Plan as the
Board shall approve from time to time. 

        (b)    Terms of Grant.    SARs may be granted in tandem with or with reference to a related option, in which event the
grantee may elect to exercise either the option or the SAR, but not both, as to the same Share subject to the option and the SAR, or the SAR may be granted independently of a related option. SARs
shall not be transferable, except: (i) by will or the laws of descent and distribution; (ii) by gifting for the benefit of descendants for estate planning purposes; or
(iii) pursuant to a certified domestic relations order. 

        (c)    Payment on Exercise.    Upon exercise of a SAR, the grantee shall be paid the excess of the then fair market
value of the number of Shares to which the SAR relates over the fair market value of such number of Shares at the date of grant of the SAR or of the related option, as the case may be. Such excess
shall be paid in cash or in such other form as the Board shall determine. 

Section 8.    Right of First Refusal  

        (a)    Restrictions on Transfer.    As a condition to the receipt of any award under this Plan and without the express
prior written consent of the Company, an owner of any Shares issued under the Plan ("Plan Shares") shall not sell any Plan Shares without first
complying with the terms of this Section. The terms of this Section shall apply if any Shares issued under the Plan are not readily tradable on an established market on the date an owner intends to
sell such Shares. Any owner of Plan Shares (the "Owner") who receives a bona fide offer to purchase all of any portion of the Owner's Plan Shares (the
"Offer") shall first offer the Plan Shares to the Company in accordance with the terms of this Section. The Owner shall give written notice to the
Company stating that he or she has received the Offer, stating the number of Plan Shares to be sold, the name and address of the person(s) making the Offer and the purchase price and terms of payment
described in the Offer. The Company or any assignee named by the Company shall have sixty (60) days to exercise the Company's right to purchase the Plan Shares which are the subject of the
Offer. If the Company assigns such right to purchase, then such assignee shall have all of the rights of the Company with respect to such right to purchase as described in this Section. If neither the
Company nor any assignee of the Company decides to purchase the Plan Shares, the Owner may accept the Offer and sell the Plan Shares, but only in strict accordance with the terms of the Offer and only
if consummated within sixty (60) days after the expiration of the Company's and assignee's 60-day exercise period. If the Company decides to purchase the Plan Shares, it may make
payment to the Owner in a lump sum or, if the lump sum exceeds $50,000, in substantially equal annual or more frequent installments over a period not exceeding three (3) years in the discretion
of the Board. If a method of deferred payment is selected, the unpaid balance shall earn interest at a rate that is substantially equal to the rate at which the Company could borrow the amount 

6

 

due and shall be secured by a pledge of the Plan Shares purchased or such other adequate security as agreed to by the Company and the Owner. For purposes of this Section, the Owner shall include any
person who acquires Shares from any other person and for any reason; including, without limitation, by gift, death or sale. 

        (b)    Legends.    Each certificate issued by the Company that represents any Plan Shares shall bear the following
legends: 

"This
certificate and the shares represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in the LANDMARK BANCORP, INC. 2001
Stock Incentive Plan. Release from such terms and conditions shall be obtained only in accordance with the provisions of such Plan, a copy of which is on file in the office of the Secretary of said
Company." 

"The
shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), or any applicable state law, and such shares may not be sold or otherwise
transferred unless (a) they are registered under the Act and any applicable state law or (b) such sale or transfer is exempt from such registration." 

Section 9.    Amendment or Termination of the Plan  

        The Board may amend, suspend or terminate the Plan or any portion thereof at any time, but (except as provided in  Section 13 below)
no amendment shall be made without approval of the stockholders of the Company which shall: (a) materially increase the
aggregate number of Shares with respect to which Incentive Stock Option awards may be made under the Plan; or (b) change the class of persons eligible to receive Incentive Stock Option awards
under the Plan; provided, however, that no amendment, suspension or termination shall impair the rights of any individual, without his or her consent,
in any award theretofore made pursuant to the Plan. 

Section 10.    Term of Plan.  

        The Plan shall be effective upon the date of its adoption by the Board; provided that Incentive Stock Options may be granted only if the Plan is approved by the
stockholders within twelve (12) months before or after the date of adoption by the Board. Unless sooner terminated under the provisions of  Section 9 above, options, RSAs and SARs shall not be
granted under the Plan after the expiration of ten (10) years from the Effective
Date. However, awards may be exercisable after the end of the term of the Plan. 

Section 11.    Rights as Stockholder.  

        Upon delivery of any Share to a director, officer, employee, consultant or advisor, such person shall have all of the rights of a stockholder of the Company with
respect to such Share, including the right to vote such Share and to receive all dividends or other distributions paid with respect to such Share. 

Section 12.    Merger or Consolidation.  

        In the event the Company is merged or consolidated with another corporation and the Company is not the surviving corporation, the surviving corporation may agree
to exchange options and SARs issued under this Plan for options and SARs (with the same aggregate option price) to acquire and participate in that number of shares in the surviving corporation that
have a fair market value equal to the fair market value (determined on the date of such merger or consolidation) of Shares that the grantee is entitled to acquire and participate in under this Plan on
the date of such merger or 

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consolidation. In the event of a Change of Control, options and SARs shall become immediately and fully exercisable. 

Section 13.    Changes in Capital and Corporate Structure.  

        The aggregate number of Shares and interests awarded and which may be awarded under the Plan shall be adjusted to reflect a change in the outstanding Shares of
the Company by reason of a recapitalization, reclassification, reorganization, stock split, reverse stock split, combination of shares, stock dividend or similar transaction. The adjustment shall be
made in an equitable manner which will cause the awards and the economic benefits thereof to remain unchanged as a result of the applicable transaction. 

Section 14.    Assumption of Awards by the Company.  

        The Company, from time to time, may substitute or assume outstanding awards granted by it or another company, whether in connection with an acquisition of another
company or otherwise, by either (a) granting an Award under the Plan in substitution of such other company's award, or (b) assuming such award as if it had been granted under the Plan if
the terms of such assumed award could be applied to an Award granted under the Plan. Such substitution or assumption shall be permissible if the holder of the substituted or assumed award would have
been eligible to be granted an Award under the Plan if the other company had applied the rules of the Plan to such grant. In the event the Company assumes an award granted by another company, the
terms and conditions of such award shall remain unchanged (except that the exercise price and the number and nature of Shares issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new option rather than assuming an existing option, such new option may be granted with a similarly adjusted
exercise price. 

Section 15.    Service.  

        An individual shall be considered to be in the service of the Company or a Related Corporation as long as he or she remains a director, officer, employee,
consultant or advisor of the Company or such Related Corporation. Nothing herein shall confer on any individual the right to continued service with the Company or a Related Corporation or affect the
right of the Company or such Related Corporation to terminate such service. 

Section 16.    Withholding of Tax.  

        (a)    Generally.    To the extent the award, issuance, vesting or exercise of option, RSAs or SARs results in the
receipt of compensation by a director, officer, employee, consultant or advisor, the Company may require the director, officer, employee, consultant or advisor to pay to the Company or the grantee may
authorize the Company to withhold a portion of any cash compensation then or thereafter payable to such person, an amount, sufficient to satisfy federal, state and local withholding tax requirements
prior to the delivery of any certificate for the Shares. If an award is to be paid in cash, the payment will be net of an amount sufficient to satisfy such tax withholding obligations 

        (b)    Stock Withholding.    To the extent a grantee incurs tax liability in connection with the exercise or vesting
of any Award that is subject to tax withholding and the grantee is obligated to pay the Company the amount required to be withheld, the Board may, in its sole discretion, allow the grantee to satisfy
the minimum withholding tax obligation by electing to have the Company withhold from the Shares to be issued that number of Shares having a Fair Market Value equal to the minimum amount required to be
withheld, determined on the date that the amount of tax to be withheld is to be determined. All elections by a grantee to have Shares withheld for this purpose shall be made in writing in a form
acceptable to the Board. 

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Section 17.    Delivery and Registration of Stock.  

        The Company's obligation to deliver Shares with respect to an award shall, if the Board so requests, be conditioned upon the receipt of a representation as to the
investment intention of the individual to whom such Shares are to be delivered, in such form as the Board shall determine to be necessary or advisable to comply with the provisions of the Securities
Act or any other federal, state or local securities legislation or regulation. It may be provided that any representation requirement shall become inoperative upon a registration of the Shares or
other action eliminating the necessity of such representation under securities legislation. The Company shall not be required to deliver any Shares under the Plan prior to: (a) the admission of
such Shares to listing on any stock exchange on which Shares may then be listed, and (b) the completion of such registration or other qualification of such Shares under any state or federal
law, rule or regulation, as the Board shall determine to be necessary or advisable. The Plan is intended to comply with Rule 16b-3, if applicable. Any provision of the Plan which is
inconsistent with said rule shall, to the extent of such inconsistency, be inoperative and shall not affect the validity of the remaining provisions of the Plan. 

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QuickLinks

LANDMARK BANCORP, INC. 2001 STOCK INCENTIVE PLANExhibit 10.1

November 21, 2002

Re:  Initial Payment of Annual
Director Retainer

Dear
Mr. Day:

The purpose of this letter
agreement (“Agreement”) is to set forth the terms upon which you will receive
an Initial Payment of a portion of your annual retainer for serving as a member
of the Board of Directors of JDS Uniphase Corporation (the “Company”).

1.     Retainer

As a member of the Board of
Directors (a “Director”) of the Company, you will receive a retainer of
$88,000 (the “Retainer”) for your service during the period from the
shareholders meeting in 2002 through the annual shareholders meeting in
2003.  You will receive an initial
payment of a portion of the Retainer in the lump-sum amount of $40,000 (the
“Initial Payment”).  The remaining
$48,000 of the Retainer will be paid to you in 12 equal monthly installments of
$4,000 beginning on November 1, 2002.

The Company will report the
payment of the Retainer to the Canada Customs and Revenue Agency.  You acknowledge that satisfaction of all tax
obligations applicable to the receipt of the Retainer is your sole
responsibility.

2.     Purchase of
Company Common Stock

You agree to apply the
Initial Payment, which, at your election, shall be net of taxes, toward the
purchase of shares of Company common stock on the open market.  In order to effectuate the purchase of the
Company common stock, the Company will forward the Initial Payment to a Company
designated broker in your name.  The
Company designated broker will use the Initial Payment, less brokerage fees
and, at your election, net of taxes, to purchase shares of Company common stock
on your behalf and transfer such shares to your account.  The Company designated broker will notify
you and the Company of the date on which the shares were purchased, the number
of shares purchased and the purchase price per share.

3.     Vesting Schedule

The shares purchased with
the Initial Payment pursuant to Section 2 above (the “Shares”) shall be
subject to certain transfer restrictions and a right of repurchase, in favor of
the Company, at the lesser of (a) the purchase price per Share and (b) the
fair market value on the date of repurchase (the “Repurchase Right”).  For purposes of this Agreement, the term
“vest” shall mean, with respect to any Shares, that such Shares are no longer
subject to the Repurchase Right. 
Provided that you continue to serve as a Director of the Company, the
Repurchase Right  shall lapse in accordance with the 

 

following schedule (the “Vesting
Schedule”):

1/3
of the Shares shall vest twelve months after the Vesting Commencement Date, and
an additional 1/3 of the Shares shall vest on each anniversary of the Vesting
Commencement Date thereafter.  The
“Vesting Commencement Date” shall be the date the Shares are purchased by the
Company designated broker in your name.

Notwithstanding the
foregoing Vesting Schedule, (a) in the event your service as a Director of
the Company terminates due to your death, Disability or Retirement (as such
terms are defined below) or (b) in the event of a Corporate Transaction, 100% of
the Shares shall vest and the Repurchase Right as to unvested Shares shall
automatically lapse.

In the event your service as
a Director of the Company terminates for any reason other than your death,
Disability or Retirement, vesting of the Shares shall cease and the unvested
Shares shall be subject to the Company’s Repurchase Right.

You agree that the Shares
may not be sold, transferred by gift, pledged, hypothecated, or otherwise
transferred or disposed of prior to the date that the Shares become vested
pursuant to the Vesting Schedule.

For purposes of Section 16
of the Securities Exchange Act of 1934, you represent that you have not sold
any shares of the Company during the six months immediately preceding the date
of this letter and you agree not to sell any shares during the six months
immediately following the date of this letter without first confirming with the
Company that such sale would not result in any liability for short-swing
profits under Section 16.

For purposes of this
Agreement, the following terms shall have the following meanings:

“Cause” means:

(a)                      willful malfeasance by you
which has a material adverse effect on the Company;

(b)                     substantial and continuing
willful refusal by you to perform duties ordinarily performed by a Director of
the Company or as otherwise required by applicable law;

(c)                      your conviction of a felony
or misdemeanor which has a material adverse effect on the Company’s goodwill if
you remain a Director of the Company; or

(d)                     willful failure by you to
comply with material policies and procedures applicable to members of the Board
of Directors of the Company including but not limited to the JDS Uniphase 

 

Corporation Ethics Policy and Policy Regarding Inside Information and
Securities Transactions

 “Disability” means that you would qualify for benefit
payments under the long-term disability policy of the Company regardless of
whether you are covered by such policy. 
If the Company does not have a long-term disability plan in place,
“Disability” means that you are permanently unable to carry out the
responsibilities and functions of a Director of the Company by reason of any
medically determinable physical or mental impairment.  You will not be considered to have incurred a Disability unless
you furnish proof of such impairment sufficient to satisfy the Company in its
discretion.

“Retirement” means
that, following your completion of a three-year term as a Director (or such
shorter term in the event you were appointed to fill a vacancy on the Board of
Directors), either (a) you determine not to accept the nomination to serve an
additional term as a Director or (b) you are not nominated to serve an
additional term as a Director for any reason other than for Cause.

“Corporate Transaction”
shall include any of the following transactions:

(a)                      a merger or consolidation in which the Company is not the surviving
entity;

(b)                     the sale,
transfer or other disposition of all or substantially all of the assets of the
Company;

(c)                      the liquidation
or dissolution of the Company;

(d)                     any reverse
merger in which the Company is the surviving entity, except for a transaction
the principal purpose of which is to change the state in which the Company is
incorporated; or

(e)                      the direct or
indirect acquisition by any person or related group of persons (other than an
acquisition from or by the Company or by a Company-sponsored employee benefit
plan or by a person that directly or indirectly controls, is controlled by, or
is under common control with, the Company) of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities but excluding any such
transaction that the Board of Directors determines shall not be a Corporate
Transaction.

4.     Company
Repurchase Right

The Company’s Repurchase
Right shall be exercisable at any time during the ninety (90) day period
following the termination of your service as a Director (the “Share Repurchase
Period”).  Pursuant to the
Repurchase Right, the Company has the right to repurchase all or any portion of
the Shares that have not vested pursuant to the 

 

terms of the Vesting
Schedule or as a result of your death, Disability or Retirement or the
occurrence of a Corporate Transaction.

The Repurchase Right shall
be exercisable by written notice delivered to you prior to the expiration of
the Share Repurchase Period.  The notice
shall indicate the number of Shares to be repurchased and the date on which the
repurchase is to be effected, such date to be not later than the last day of
the Share Repurchase Period.  On the
date on which the repurchase is to be effected, the Company and/or its assigns
shall pay to you in cash or cash equivalents an amount equal to the lesser of
(a) the purchase price per Share and (b) the fair market value on the date
of repurchase for the unvested Shares which are to be repurchased from the you.

The Repurchase Right shall
terminate with respect to any Shares for which it is not timely exercised.

In the event of any stock
split or stock dividend, any new, substituted or additional securities
distributed with respect to the Shares shall be immediately subject to the
Repurchase Right, but only to the extent the Shares are at the time covered by
such right. 

5.     Federal Tax
Consequences

Set forth below is a brief
summary as of the date of this Agreement of some of the federal tax
consequences of the purchase and disposition of the Shares.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND
THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  YOU SHOULD CONSULT A TAX ADVISER BEFORE PURCHASING OR DISPOSING
OF THE SHARES.

Section 83(b) Election For
Purchase of Share Subject to Vesting.  Because the Shares have not yet vested pursuant to the Vesting
Schedule set forth in this Agreement, under Section 83 of the Internal
Revenue Code (the “Code”) the excess of the fair market value of the
Shares on the date any forfeiture restrictions applicable to the Shares lapse
over the purchase price paid for the Shares will be reportable as ordinary
income on the lapse date.  For this
purpose, the term “forfeiture restrictions” includes the right of the Company
to repurchase the Shares pursuant to the Repurchase Right provided above.  You may elect under Code Section 83(b) to be
taxed at the time the Shares are purchased, rather than when and as the Shares
cease to be subject to the forfeiture restrictions.  Such election (the “83(b) Election”) must be filed with
the Internal Revenue Service within thirty (30) days after the date Shares are
purchased.  If the 83(b) Election is
made, the excess of the fair market value of the Shares on the date of purchase
over the purchase price paid for the Shares will be reportable as ordinary
income.  Even though the fair market
value of the Shares on the date of purchase equals the purchase price paid (and
thus no tax is payable), the 83(b) Election must be made to avoid adverse tax
consequences in the future.  THE FORM
FOR MAKING THIS 83(b) ELECTION IS ATTACHED TO THIS AGREEMENT.  YOU UNDERSTAND THAT FAILURE TO MAKE THIS
FILING WITHIN THE APPLICABLE THIRTY (30)-

 

DAY PERIOD MAY RESULT IN THE
RECOGNITION OF ORDINARY INCOME BY YOU AS THE FORFEITURE RESTRICTIONS LAPSE.

PLEASE SIGN BUT DO NOT DATE
THE 83(b) ELECTION ATTACHED TO THIS LETTER. 
THE COMPANY WILL FILE THE 83(b) ELECTION ON YOUR BEHALF.  THE ADDRESS OF THE IRS SERVICE CENTER WHERE
YOU FILE YOUR ANNUAL FEDERAL TAX RETURNS IS ___________________________________________________.]

YOU ACKNOWLEDGE THAT IT IS
YOUR SOLE RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A TIMELY 83(b)
ELECTION UNDER CODE SECTION 83(b), EVEN IF THE COMPANY OR ITS REPRESENTATIVES
MAKE THIS FILING ON YOUR BEHALF.

Disposition of Shares.  If Shares are held for more than one year,
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes.

*   *   *

We thank you for continued
service as a Director of the Company.

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Christopher Dewees

  
	
   

  	
  Christopher Dewees

  
	
   

  	
  General Counsel

  

 

 

Enclosure: Section 83(b) Election

 

 

AGREED TO:

 

 

	
  /s/ Bruce D. Day

  	
   

  
	
  Bruce D. Day

  	
   

  
	
  Date:  November 22, 2002

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