Document:

ASSIGNMENT AND ASSUMPTION AGREEMENT

Exhibit 10.1

 

ASSIGNMENT
AND ASSUMPTION AGREEMENT

This
Assignment and Assumption Agreement (the “Agreement”) is made as of
April 21, 2010 (the “Effective Date”), by
and between Real Estate Associates Limited II, a California limited partnership
(“Assignor”), and Equity Resource Fund 2009 Limited Partnership, a
Massachusetts limited partnership (“ER”), or its permitted assignee
(“Assignee” and together with Assignor, each a “Party“ and,
collectively, the “Parties”), with reference to the following:

A.        
Valebrook Associates, a Massachusetts limited partnership (the
“Partnership”), was formed as a limited partnership under the laws of the
Commonwealth of Massachusetts and is being governed pursuant to an Second
Amended and Restated Agreement and Certificate of Limited Partnership, dated as
of June 10, 1980, a true and complete copy of which is attached hereto as
Exhibit A (the “Partnership Agreement”) (any capitalized word or phrase
used but not defined herein shall have the meaning set forth in the Partnership
Agreement).

B.        
Assignor is the sole Limited Partner (as distinct from Special Limited Partner
or General Partner) of the Partnership and has agreed to assign all of its
limited partnership interest in the Partnership to Assignee and withdraw from
the Partnership, Assignee has agreed to acquire such interest, all pursuant to
the terms of this Agreement.

NOW
THEREFORE, in consideration of the mutual promises and for such other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

1.                 
Assignment and Assumption. Subject to the terms and conditions set
forth below, Assignor agrees to assign and transfer to Assignee, and Assignee
agrees to purchase and accept, one hundred percent (100%) of Assignor’s interest
in the Partnership, including, without limitation, all of Assignor’s rights to
Profits and Losses, Cash from Operations, Net Refinancing Cash, surplus cash
from Disposition, and all other Partnership assets, and, in addition, all of
Assignor’s rights to any fees, loan repayments and/or reimbursements and all
voting and other rights pursuant to, or arising under, the Partnership Agreement
(collectively, the “Interest”).

2.                 
Consideration, Deposit and Escrow.

2.1             
In consideration for Assignor’s assignment of the Interest, at the
“Closing” (as hereinafter defined) Assignee shall pay to Assignor an amount (the
“Payment”) equal to Two Million Six Hundred Thousand and no/100 Dollars
($2,600,000.00) payable as follows:

(a)              
Within two (2) business days (i.e., any day other than a Saturday or
Sunday or Federal holiday or legal holiday in the states of Massachusetts or
California) after Assignee’s receipt of a counterpart of this Agreement executed
by Assignor, Assignee shall deliver to First American Title Insurance Company of
New York, located at 633 3rd Avenue, New York City, New York, 10017,
telephone number (212) 922-9700 (“Escrow Agent”), a deposit of
Twenty-Five Thousand and no/100 Dollars ($25,000.00) by wire transfer of
immediately available funds (“Good Funds”), which deposit shall be
non-refundable except as expressly provided in this Agreement; and

(b)              
One business day prior to the Closing, the balance of the Payment (i.e.
$2,575,000) shall be paid to and received by Escrow Agent by wire transfer of
Good Funds no later than 10:00 a.m. on the “Closing Date” (as hereinafter
defined).

2.2             
In consideration of Assignee’s payment of the Payment, Assignor shall
execute and deliver to Assignee an Assignment of Partnership Interest in the
form attached hereto as Exhibit B (the “Assignment”), and Assignor
and Assignee shall each deliver executed counterparts thereof to Escrow Agent
one (1) business day prior to the Closing. 

2.3             
The Payment shall be treated as having been made in consideration of
Assignee’s direct acquisition of the Interest. Assignor covenants and agrees
that such sum shall be received in full satisfaction of all obligations and
liabilities due Assignor in connection with or in any manner arising out of the
Partnership, the Project or any other assets owned by the Partnership and/or
otherwise pursuant to the Partnership Agreement.

3.                 
Closing. “Closing” shall mean the date on which the Interest is
transferred to Assignee after the satisfaction of the conditions set forth in
Section 4. Closing shall occur on the date which is seven (7)
business days after the end of the "Consent Period" (as hereinafter
defined) (the “Closing Date”), or such other time as may be
mutually agreed upon by Assignor and Assignee, through an escrow with Escrow
Agent, whereby Assignor, Assignee and their attorneys need not be physically
present at the Closing. In the event the Closing does not occur on or before the
Closing Date, this Agreement shall terminate automatically without the necessity
of any further action on the part of either of the Parties unless the Parties
otherwise agree in writing. As of the Closing:

3.1             
Escrow Agent shall release the full amount of the Payment to Assignor;
and 

3.2             
Escrow Agent shall release to Assignee the counterpart of the Assignment
executed by Assignor and release to Assignor the counterpart of the Assignment
executed by Assignee.

 

4.                 
Conditions to Closing.

4.1             
Assignee acknowledges that the written consent of the Operating General
Partner is a condition precedent to the transfer of the Interest to Assignee and
the admission of Assignee into the Partnership. Further, Assignee acknowledges
that the Operating General Partner and the Corporation shall have a period of
fifteen (15) days to elect to purchase the Interest on the same terms and
conditions contained in this Agreement. For a period of thirty (30) days after
the Effective Date (the “Consent Period”), Assignee, at its sole cost and
expense, shall use commercially reasonable efforts (i) to obtain the
written consent of the Operating General Partner to the transactions
contemplated by this Agreement, including, but not limited to, the admission of
Assignee into the Partnership pursuant to all of the terms of Section 8.2 of the
Partnership Agreement and (ii) to cause the Operating General Partner and
the Corporation to waive in writing their right of first refusal to purchase the
Interest as set forth in the Partnership Agreement. Without limiting the
generality of item (i), above, Assignee further acknowledges that any opinion of
counsel required in connection with Assignee’s admission pursuant to Section
8.2.2.6 of the Partnership Agreement shall be the sole responsibility of
Assignee. If on or before the expiration of the Consent Period Assignee does not
deliver originals to Assignor and copies to Escrow Agent of both the Operating
General Partner’s written consent to the transfer of the Interest as herein
provided and the Operating General Partner’s and the
Corporation’s written waiver of their right of first refusal, Escrow Agent,
without the necessity of any further action on the part of either of the
Parties, shall release the Deposit to Assignor, and neither Assignor nor
Assignee shall have any further rights or obligations hereunder.

4.2             
Notwithstanding anything to the contrary contained or implied in this
Agreement, there are no other conditions to Assignor’s or Assignee’s obligation
to close except as expressly set forth in Section 4.1.

5.                 
Representations, Warranties and Covenants.

5.1             
As a material inducement to Assignee entering into this Agreement,
Assignor hereby represents and warrants to Assignee that the following are true
and correct as of the Effective Date, shall be true and correct as of the
Closing Date, and shall survive the Closing and the withdrawal of Assignor from
the Partnership:

(a)              
Assignor is the owner of the Interest and the Interest is not subject to
any lien, pledge or encumbrance of any nature whatsoever and Assignee shall
acquire the same free of any rights or claims thereto by any other party
claiming by, through or under Assignor.

(b)              
The execution and delivery of this Agreement by Assignor and the
performance of the transactions contemplated herein have been duly authorized by
all requisite corporate and partnership proceedings and, assuming the due and
proper execution and delivery by Assignee, this Agreement is binding upon and
enforceable against Assignor in accordance with its terms.

(c)              
No litigation, action, proceeding, investigation or claim before any
federal, state, municipal or other governmental department, commission, board or
agency is pending or, to Assignor’s knowledge, threatened against or involving
the Interest, or which questions the validity of this Agreement or pursuant to
which an unfavorable judgment would restrain, prohibit, invalidate, set aside,
rescind, prevent or make unlawful this Agreement or the transactions
contemplated hereunder, and, to Assignor’s knowledge, there is no fact or
circumstance which could give rise to any such litigation, action, proceeding,
investigation or claim.

5.2             
As a material inducement to Assignor entering into this Agreement,
Assignee hereby represents and warrants to Assignor that the following are true
and correct as of the Effective Date, shall be true and correct as of the
Closing Date, and shall survive the Closing and the withdrawal of Assignor from
the Partnership:

(a)              
The execution and delivery of this Agreement by Assignee and the
performance of the transactions contemplated herein have been duly authorized by
all requisite corporate and partnership proceedings.

(b)              
Assuming the due and proper execution and delivery by Assignor, this
Agreement is binding upon and enforceable against Assignee in accordance with
its terms.

(c)              
No proceeding before any federal, state, municipal or other governmental
department, commission, board or agency is pending against Assignee or, to the
knowledge of Assignee, threatened against Assignee pursuant to which an
unfavorable judgment would restrain, prohibit,
invalidate, set aside, rescind, prevent or make unlawful this Agreement or the
transactions contemplated hereunder, nor does Assignee know of any reason to
believe any such proceeding will be instituted.

(d)              
Assignee has incurred no obligation or liability, contingent or
otherwise, for brokerage or finders’ fees or agents’ commissions or other
similar payment in connection with this Agreement.

(e)              
Assignee is aware of the restrictions on transfer or encumbrance of the
Interest under the Partnership Agreement, as well as the transfer restrictions
imposed by the Securities Act of 1933, as amended, and applicable state
securities laws (the “Securities Laws”).  Assignee is able to bear
the economic risk of its investment in the Interest, is aware that it must hold
the Interest for an indefinite period and that the Interest has not been
registered under the applicable Securities Laws and may not be sold or otherwise
transferred unless permitted by the terms of the Partnership Agreement and the
Interest is registered, or an exemption from the registration requirements is
available with respect thereto, under the Securities Laws.  Assignee is
acquiring the Interest for its own account and not with a view to resell,
transfer or otherwise dispose thereof.

5.3             
Except as expressly provided in this Section 5, no Party has made any other representation or warranty
concerning the Interest, the Partnership or any other matter.

5.4             
Assignee covenants and agrees to use its commercially reasonable efforts
to obtain the consents of HUD and the Authority as its “Contract Administrator”
to the transactions contemplated by this Agreement.  Assignee shall prepare
and file all materials necessary to obtain such consents promptly after the
execution of this Agreement and shall pursue its obtaining of such consents with
due diligence.  Assignee shall indemnify Assignor and save Assignor
harmless from any loss, cost, damage or expense that it may suffer as a result
of Assignee’s failure to obtain such consents, except to the extent that such
failure results from any act or omission of Assignor.

6.                 
Default.

6.1             
If the assignment and transfer contemplated by this Agreement are not
completed as a result of a default of Assignee, Assignor’s sole and exclusive
remedy shall be to retain the Deposit paid or deposited hereunder, as agreed
upon full liquidated damages for such default by Assignee, and the parties
hereunder shall have no further rights or liabilities under this
Agreement.  Assignor hereby expressly waives and releases any right to sue
Assignee for specific performance or to assert that Assignor's actual damages
exceed the Deposit, which waiver and release is a substantial inducement to
Assignee entering into this Agreement.

6.2             
If the assignment and transfer contemplated by this Agreement are not
completed solely as a result of a default of Assignor, Assignee shall have and
be entitled to the right to seek either specific performance of this Agreement
or to terminate this Agreement and demand and receive a refund of the Deposit,
which shall be Assignee’s sole and exclusive remedies.

7.                 
Escrow Agent and Escrow Procedure.

7.1             
Escrow Agent shall hold the Deposit and make delivery of the Deposit to
the party entitled thereto under the terms of this Agreement.  Escrow Agent
shall invest the Deposit in an interest-bearing bank
account as Escrow Agent, in its discretion, deems suitable, and all interest and
income thereon shall become part of the Deposit and shall be remitted to the
party entitled to the Deposit pursuant to this Agreement. Escrow Agent shall
hold the Deposit until the earlier occurrence of (i) the Closing Date, at which
time the Deposit shall be applied against the Payment and (ii) the termination
of this Agreement, at which time the Deposit shall be released to Assignor or
Assignee as provided in this Agreement. The tax identification numbers of the
parties shall be furnished to Escrow Agent upon request.

7.2             
If prior to the Closing Date either party makes a written demand upon
Escrow Agent for payment of the Deposit, Escrow Agent shall give written notice
to the other party of such demand.  If Escrow Agent does not receive a
written objection from the other party to the proposed payment within five (5)
business days after the giving of such notice, Escrow Agent is hereby authorized
to make such payment.  If Escrow Agent does receive such written objection
within such period, Escrow Agent shall continue to hold such amount until
otherwise directed by written instructions from the parties to this Agreement or
a final judgment or arbitrator's decision.  However, Escrow Agent shall
have the right at any time to deliver the Deposit and interest thereon, if any,
to a court of competent jurisdiction in the state in which the Project is
located.  Escrow Agent shall give written notice of such deposit to
Assignor and Assignee.

7.3             
The parties acknowledge that Escrow Agent is acting solely as a
stakeholder at their request and for their convenience, and that Escrow Agent
shall not be deemed to be the agent of either of the parties for any act or
omission on its part unless taken or suffered in bad faith in willful disregard
of this Agreement or involving gross negligence.  Assignor and Assignee
jointly and severally shall indemnify and hold Escrow Agent harmless from and
against all costs, claims and expenses, including reasonable attorney's fees,
incurred in connection with the performance of Escrow Agent's duties hereunder,
except with respect to actions or omissions taken or suffered by Escrow Agent in
bad faith, in willful disregard of this Agreement or involving gross negligence
on the part of the Escrow Agent.

7.4             
The parties shall deliver to Escrow Agent an executed copy of this
Agreement.  Escrow Agent shall execute the signature page for Escrow Agent
attached hereto which shall confirm Escrow Agent's agreement to comply with the
terms of Assignor's closing instruction letter delivered at Closing and the
provisions of this Section 6.

7.5             
Assignor and Assignee shall each pay one-half (1/2) of Escrow Agent’s fee
and costs promptly upon receipt of an invoice from or on behalf of Escrow
Agent.

8.                 
Miscellaneous. All notices, demands, requests and other
communications required pursuant to the provisions of this Agreement
(“Notice”) shall be in writing and shall be deemed to have been properly
given or served for all purposes (i) if sent by Federal Express or any other
nationally recognized overnight carrier for next business day delivery, on the
first business day following deposit of such Notice with such carrier, or (ii)
if personally delivered, on the actual date of delivery or (iii) if sent by
certified mail, return receipt requested postage prepaid, on the fifth (5th)
business day following the date of mailing addressed as follows:

8.1             
If to Assignor:

c/o
National Partnership Investments Corp.

6701
Center Drive, Suite 520

Los
Angeles, CA 90045

Attention: 
Asset Management

and

c/o
AIMCO

639
Granite Street, Suite 312

Braintree,
MA 02184

Attention:
Brian Flaherty

with
a copy to:

Law
Offices of Peter H. Alpert, Inc.

601
S. Figueroa Street, Suite 2330

Attention:
Peter H. Alpert

Los
Angeles, CA 90017

8.2             
If to Assignee:

c/o
Equity Resource Investments, LLC

1280
Massachusetts Avenue, Ste 4

Cambridge,
MA 02138

Attention:
Eggert Dagbjartsson

with
a copy to: 

Victor
J. Paci 

c/o
Equity Resource Investments, LLC

1280
Massachusetts Avenue, Ste 4

Cambridge,
MA 02138

Any
notice required hereunder to be delivered to the Escrow Agent shall be delivered
in accordance with above provisions as follows:

First
American Title Insurance Company of New York

633
3rd Avenue

New
York City, NY 10017

Attention: 
                                         

Either
of the Parties or Escrow Agent may designate a change of address by Notice in
writing to the other Party and Escrow Agent. Whenever in this Agreement the
giving of Notice by mail or otherwise is required, the giving of such Notice may
be waived in writing by the person or persons entitled to receive such
Notice.

8.3             
Assignee may assign this Agreement, without first obtaining the prior
written approval of Assignor, to one or more entities so long as (a) Assignee is
an affiliate of ER, (b) ER is not released from its liability hereunder, and (c)
ER provides notice to Assignor of any proposed assignment no later than ten (10)
days prior to the Closing Date.  As used herein, an affiliate is a person
or entity controlled by, under common control with, or controlling another
person or entity. Except as provided herein, Assignee
shall not assign any of its rights under this Agreement without the prior
consent of Assignor, which Assignor may withhold in its sole and absolute
discretion.

8.4             
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future laws, such provision shall be fully
severable. This Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement.

8.5             
This Agreement may be signed in any number of counterparts, each of which
shall be an original for all purposes, but all of which taken together shall
constitute only one agreement. The production of any executed counterpart of
this Agreement shall be sufficient for all purposes without producing or
accounting for any other counterpart thereof.

8.6             
This Agreement shall be binding upon and inure to the benefit of the
heirs, executors, administrators, legal representatives and permitted successors
and, subject to the restrictions set forth in Section 8.3, assigns of the Parties. This Agreement shall be
interpreted in accordance with the internal laws of the state of California.

8.7             
Nothing herein shall be construed to be for the benefit of or enforceable
by any third party including, but not limited to any creditor of
Assignor.

8.8             
The Parties shall execute and deliver such further instruments and do
such further acts and things as may be required to carry out the intent and
purposes of this Agreement. Without limiting the generality of the foregoing,
the Parties acknowledge that pursuant to Section 8.2.2.4 of the Partnership
Agreement, one of the conditions precedent to the admission of Assignee to the
Partnership is the execution by Assignor and Assignee of such instrument or
instruments as the Operating General Partner reasonably may deem necessary or
desirable to effectuate such admission.  Assignor agrees that provided such
instrument or instruments are consistent with the terms of this Agreement and do
not impose any obligation on Assignor (other than its obligation to withdraw
from the Partnership as herein provided) or any cost, expense or other
liability, Assignor shall not unreasonably withhold, condition or delay its
consent to its execution and delivery of such instrument or instruments.

8.9             
All article and section titles or captions contained in this Agreement
are for convenience only and shall not be deemed part of the text of this
Agreement.

8.10         
In the event that any court or arbitration proceedings is brought under
or in connection with this Agreement, the prevailing party in such proceeding
(whether at trial or on appeal) shall be entitled to recover from the other
party all costs, expenses, and reasonable attorneys’ fees incident to any such
proceeding. The term “prevailing party” as used herein shall mean the party in
whose favor the final judgment or award is entered in any such judicial or
arbitration proceeding.

8.11         
This Agreement constitutes the sole agreement of the Parties with respect
to the matters herein, all prior oral or written agreements being merged herein.
This Agreement may only be modified by a writing signed by all of the Parties
hereto and time is of the essence of this Agreement.

8.12         
In interpreting this Agreement it shall be presumed that the Agreement
was jointly drafted and no presumption shall arise against any Party in the
event of any ambiguity.

IN WITNESS WHEREOF, the Parties have entered into this
Agreement as of the date set forth above.

ASSIGNOR:                                                   
REAL ESTATE ASSOCIATES LIMITED II,

a
California limited partnership

By 
National Partnership Investments Corp.,

a
California corporation,

General
Partner

By
/s/Jesse Curll

Name:
Jesse Curll

Title:
Vice President

ASSIGNEE:                                                    
EQUITY RESOURCE FUND 2009 LIMITED PARTNERSHIP,

a
Massachusetts limited partnership

By 
ERF Fund 2009 GP, LLC,

a
Massachusetts limited liability company,

General
Partner

By
/s/Eggert Dagbjartsson

Name:
Eggert Dagbjartsson

Title:
Managing Memberex10-1.htm

Exhibit 10.1

HICKORYTECH CORPORATION

LONG-TERM EXECUTIVE INCENTIVE PROGRAM

(Amended and Restated January 1, 2010)

HickoryTech Corporation, a Minnesota corporation (the “Company”), has established, effective January 1, 2005, the HickoryTech Corporation Long-Term Executive Incentive Program (the “Program”).

Shares issued under this Program are granted under the 1993 Stock Award Plan, which was authorized by shareholders in 1993 and amended by shareholders in 2000.

1. Purpose

This Long-Term Executive Incentive Program is designed to drive shareholder value through alignment of executive pay with corporate strategic goals and to ensure alignment between executive actions and HickoryTech’s long-term strategic plan.

2. Definitions

As used in this Program, the following terms are defined as indicated unless the context clearly requires a different meaning.

	
a.  

	
Retirement: Termination for any reason (other than death or permanent and total disability) after attaining age 55 with ten years of service or after attaining age 62, irrespective of service.

	
b.  

	
Participant:  An executive of the Company who has been selected to participate in the Program.

3. Gender

Except where otherwise indicated by the context, any masculine terminology when used in this document shall also include the feminine gender.

4. Summary of Program

	
a.  

	
Eligible Participants:  Executives who, by virtue of their position, exert a significant impact on the Company’s performance are eligible to participate in this Program.  Participation is at the recommendation of the President/CEO, with the approval of the Compensation Committee.

	
  

	
Eligible Participants whose employment begins after the start of a Program Period will be eligible for a prorated award based on the date of hire or promotion to such position.

	
b.  

	
Program Period:  This Program provides for restricted shares to be granted to eligible Participants if pre-established strategic objectives are achieved.  These strategic objectives are to be achieved over a two or three year performance period.  If the objectives are not obtained, no award will be granted.

  

1

  

	
  

	
This Program will have overlapping performance periods of two or three years.  The Compensation Committee will recommend, for Board approval, the number of years in each Program Period in advance of the Program Period beginning.  The overlapping performance periods provide for multiple two or three year Programs to run concurrently.

	
c.  

	
Performance Objectives:  Performance Objectives will be established prior to the beginning of each Program Period.  The objectives will support the Company’s long-term strategic plan and will be recommended for Board approval by the Compensation Committee.  Each Performance Objective will be assigned a weighting.

	
d.  

	
Award Determination:  The Award under this Program will be determined at the end of the Program Period, based on the level of achievement of each objective, using linear interpolation between the performance levels of Threshold, Target and Maximum.  The Threshold is 75% performance achievement, the Target is 100% performance achievement, and the Maximum is 125% performance achievement.

	
  

	
No Award will be provided for performance less than 75% of an objective.  There will be a cap or maximum of 125% for each Performance Objective.

	
  

	
The results of each performance measure will be determined separately and the resulting award will be aggregated into a total award.

	
e.  

	
Disposition and Vesting of Awards:  Awards granted under this Program will be granted in restricted shares of HickoryTech Stock.  One-half of the restricted shares will vest 30 days after grant, and the remaining one-half will vest on the first anniversary of grant.

	
  

	
Award grants will be made in shares of restricted stock as soon as practicable following the end of the Program Period, but no later than March 15 of the year following the close of the Program Period.  Unvested restricted shares will be held by the Company until vested.  Once vested, all restrictions will lapse.

	
  

	
A review of the Award payouts will be made by the Compensation Committee.  The Committee will have the discretion to review and adjust award payouts, if deemed appropriate.

	
f.  

	
Restrictions:  All certificates for restricted shares issued under the Program shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Program or the rules, regulations and other requirements of the Securities and Exchange Commission and any applicable federal or state laws.  The Committee may cause a legend or legends to be placed on any such certificate to make appropriate reference to such restrictions.  HickoryTech shall retain possession of all certificates for restricted shares until the restrictions lapse.

 

  

2

  

 

	
g.  

	
Program Period Award Opportunity:  An at-target range of the potential award that can be earned under each Program Period will be established for each Participant, based on their position prior to the beginning of the Program Period.  The at-target potential value of the award will be converted into a share value by dividing the at-target dollar award value by the share price at the end of the Program Period. All awards earned under the Program are paid in restricted shares of HickoryTech stock.

5. Restricted Share Dividends and Voting Rights

Dividends will be paid to the Participant on the restricted shares once they are granted.  Dividends will be paid to the Participant as if they had full ownership of the shares for both vested and unvested restricted shares.  Participants will also have the right to vote both vested and unvested restricted shares.

6. Effect of a Participant’s Death, Retirement or Disability

Upon death, retirement or permanent and total disability of a Participant, all unvested shares that have been granted will immediately vest.  They will be paid out within 90 days of retirement, or death, or receipt of the required documentation in the event of total disability.

Additionally, if the Participant was a participant in Program Periods that have been initiated, but not yet completed at the time of their retirement, death or disability, and if the Participant has been in the Program Period for at least one year following the Program Period’s initiation, the Participant will remain eligible for a prorated portion of any payouts earned under such Program Period based on achievement of the pre-established Performance Objectives at the close of the Program Period.  Any award earned will be prorated based on the portion of time the Participant was active in the Program Period.  (For example, if the Participant retired, died or became disabled in the second year of a three year Program Period, they would receive 2/3 of any Award earned through achievement of the pre-established Performance Objectives.) If the Participant has been in the Program Period for less than one year following the Program Period’s initiation at the time of their retirement, death or disability, the Board has the sole discretion to grant a prorated payout earned under the Program Period to such Participant under the Plan.

Any shares granted to a Participant who had partial participation in the Program Period through retirement, death or disability, will be immediately vested upon grant.

A deceased Participant’s granted but unvested restricted shares will be paid to the Participant’s designated beneficiary.  A Participant may, by written notice to the Company in the form of Attachment B, designate a beneficiary to receive any payments made after the Participant’s death.  The Participant may select as his beneficiary any person or entity, including a trust.  The Participant may designate multiple, successive or contingent beneficiaries and may change his designation at any time.  If a Participant dies without having any valid beneficiary designation in effect, his estate shall be the beneficiary.

 

  

3

  

7. Effect of Other Termination of Employment

If a Participant’s employment with the Company is terminated for any reason other than his death, retirement or permanent and total disability, such Participant’s participation in the Program immediately ceases and he would lose eligibility for payouts under the Program.  Any shares vested at the time of termination will be paid out to the Participant no later than 90 days following such termination.  All unvested shares will be forfeited.

8. Payment in the Event of a Change of Control of the Company

In the case of a Change of Control of the Company and a payment being due, as described in the Participant’s Change of Control Agreement:

	
a)  

	
All unvested shares will become immediately vested.

	
b)  

	
Any restricted stock awards which are payable based on achievement of Performance Objectives through the year in which payment under the Change of Control Agreement becomes due will be paid and fully vested immediately upon the audited close of the fiscal year financials, but in no case later than March 15 of the year following when payment becomes due.

	
c)  

	
Awards that are not earned under this Program based on results at the close of the fiscal year in which the payment becomes due under the Change of Control Agreement becomes due will not be payable.

	
  

	
The Provisions of this Section 8 shall take precedence over all other provisions of this Program.

9. Tax Withholding

All payments and distributions shall be subject to applicable withholding requirements.  Participants receiving shares under the Program must pay the Company, in cash, an amount sufficient to cover any required withholding taxes.

In lieu of cash, the Compensation Committee may permit a Participant to cover withholding obligations through a reduction in the number of shares delivered to such Participant.  The use of stock to satisfy withholding obligations is subject to certain restrictions if the Participant is an officer of the Company or holder of at least ten percent of the Company’s stock.

10. Administration of the Program

This Program will be administered by the Compensation Committee of the Board of Directors, which consists of outside directors, appointed by and accountable to the Board and whose members are not eligible for awards under the Program.  The Committee has full authority to, among other things, (i) interpret and administer the Program; (ii) establish rules and regulations appropriate for proper administration of the Program; (iii) select participants and make awards; (iv) establish the terms and conditions of awards, and; (v) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Program.  Unless otherwise expressly provided in the Program, all designations, determinations, interpretations and other decisions under or with respect to the Program or any award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Participant and any holder or beneficiary of any award. The Committee may establish rules and regulations from time to time that are not inconsistent with the provisions of this Program.

  

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11. Board Approval

Awards earned under this Program are payable only with the approval of the Board of Directors.  In the event of a Change of Control, as defined in the Participant’s Change of Control Agreement, and to the extent provided in Section 8(a); awards will be payable without the Board of Directors’ approval required.

12. Amendment and Termination

The Board of Directors may amend this Program in any respect at any time and may terminate the Program in whole or in part at any time, subject to the following.

	
a.  

	
Performance Objectives may not be altered, amended, suspended or discontinued during any Program Period with respect to that Program Period without the recommendation of the Compensation Committee.

	
b.  

	
Amendment or termination of the Program may not adversely affect the value of any earned Awards under this Program.

13. Denial of Award Payout

Any Participant who voluntarily terminates employment or who is involuntarily discharged for any reason whatsoever prior to the last day of a Program Period will not be entitled to any Award for the Program Period unless such exception is approved by the Committee.  In the event of a Change of Control in the Company, Section 8 will apply.

14. Status of Participant’s Claims

This Program does not create any lien on or security interest in any property of the Company, and no person may assert any rights under the Program superior to the rights of an unsecured general creditor of the Company.

15. Non-alienability

Rights under this Program are not subject to voluntary or involuntary assignment or alienation.  Any attempted assignment or alienation will be disregarded by the Company.

  

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16. Severability

If any provision of this Program is determined to be invalid or illegal, the remaining provisions shall be effective and shall be interpreted as if the invalid or illegal provision did not exist, unless the continuance of the Program in such circumstances would defeat its purpose.

17. Employment Rights

Nothing in the Program shall confer upon any Participant the right to continue in the employment of the Company or any subsidiary or affect any right, which the Company or any subsidiary may have to terminate the employment of the Participant with or without cause.

18. Headings

All headings in this document are for reference only and are not to be utilized to construe its terms.

19. Governing Law

This Program is governed in all respects by the internal law, not the law of conflicts, of the State of Minnesota.  The State of Minnesota will govern all questions concerning the Program.

  

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