Document:

Nonqualifed Deferred Compensation Plan

 TEJON RANCH 
 NONQUALIFIED DEFERRED COMPENSATION PLAN 
  
  
 Effective as of January 1, 2004 

 TEJON RANCH 
 NONQUALIFIED DEFERRED COMPENSATION PLAN 
  
 Effective as of January 1, 2004 
  
 TABLE OF CONTENTS 
  

					
	ARTICLE 1
	DEFINITIONS
	1.1	  	ACCOUNT	  	1
	1.2	  	BENEFICIARY	  	1
	1.3	  	BOARD	  	1
	1.4	  	CHANGE IN CONTROL	  	1
	1.5	  	CODE	  	1
	1.6	  	COMMON STOCK	  	1
	1.7	  	COMPENSATION	  	2
	1.8	  	COMPENSATION DEFERRAL ACCOUNT	  	2
	1.9	  	COMPENSATION DEFERRALS	  	2
	1.10	  	DESIGNATION DATE	  	2
	1.11	  	EFFECTIVE DATE	  	2
	1.12	  	ELIGIBLE INDIVIDUAL	  	2
	1.13	  	EMPLOYER	  	2
	1.14	  	EMPLOYER CONTRIBUTION CREDIT ACCOUNT	  	2
	1.15	  	EMPLOYER CONTRIBUTION CREDITS	  	2
	1.16	  	ENTRY DATE	  	2
	1.17	  	FORM AND TIMING OF PAYMENT ELECTION FORM	  	2
	1.18	  	PARTICIPANT	  	2
	1.19	  	PHANTOM STOCK	  	3
	1.20	  	PLAN	  	3
	1.21	  	PLAN YEAR	  	3
	1.22	  	SIP	  	2
	1.23	  	SPONSOR	  	3
	1.24	  	SPONSOR STOCK FUND	  	3
	1.25	  	STOCK UNIT AGREEMENT	  	3
	1.26	  	STOCK UNIT CONTRIBUTION ACCOUNT	  	3
	1.27	  	STOCK UNIT CONTRIBUTIONS	  	3
	1.28	  	TRUST	  	3
	1.29	  	TRUSTEE	  	3
	1.30	  	UNREALIZED EQUITY GAINS	  	3
	1.31	  	UNREALIZED EQUITY GAINS CONTRIBUTION ACCOUNT	  	3
	1.32	  	UNREALIZED EQUITY GAINS CONTRIBUTIONS	  	4
	1.33	  	VALUATION DATE	  	4

  
  

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	ARTICLE 2
	ELIGIBILITY AND PARTICIPATION
			
	2.1	  	REQUIREMENTS	  	4
	2.2	  	RE-EMPLOYMENT	  	4
	2.3	  	CHANGE OF EMPLOYMENT CATEGORY/BOARD MEMBERSHIP	  	4
	
	ARTICLE 3
	CONTRIBUTIONS AND CREDITS
			
	3.1	  	PARTICIPANT CONTRIBUTIONS AND CREDITS	  	5
	3.2	  	EMPLOYER CONTRIBUTION CREDITS	  	7
	3.3	  	CONTRIBUTIONS TO THE TRUST	  	7
	
	ARTICLE 4
	ALLOCATION OF FUNDS
			
	4.1	  	ALLOCATION OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS	  	7
	4.2	  	ACCOUNTING FOR DISTRIBUTIONS	  	8
	4.3	  	SEPARATE ACCOUNTS	  	8
	4.4	  	INTERIM VALUATIONS	  	8
	4.5	  	DEEMED INVESTMENT DIRECTIONS OF PARTICIPANTS	  	8
	4.6	  	DEEMED INVESTMENTS IN PHANTOM STOCK	  	9
	4.7	  	EXPENSES AND TAXES	  	10
	
	ARTICLE 5
	ENTITLEMENT TO BENEFITS
			
	5.1	  	TERMINATION OF EMPLOYMENT/BOARD MEMBERSHIP	  	11
	5.2	  	FIXED PAYMENT DATES	  	11
	5.3	  	IMMEDIATE DISTRIBUTION ELECTION	  	11
	5.4	  	HARDSHIP DISTRIBUTIONS	  	12
	5.5	  	CHANGE IN CONTROL	  	12
	5.6	  	RE-EMPLOYMENT/BOARD MEMBERSHIP OF RECIPIENT	  	13
	
	ARTICLE 6
	DISTRIBUTION OF BENEFITS
			
	6.1	  	AMOUNT	  	13
	6.2	  	METHOD OF PAYMENT	  	13
	6.3	  	DEATH BENEFITS	  	14

  

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	ARTICLE 7
	BENEFICIARIES; PARTICIPANT DATA
			
	7.1	  	DESIGNATION OF BENEFICIARIES	  	14
	7.2	  	INFORMATION TO BE FURNISHED BY PARTICIPANTS ANDBENEFICIARIES; INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES	  	14
	
	ARTICLE 8
	ADMINISTRATION
			
	8.1	  	ADMINISTRATIVE AUTHORITY	  	15
	8.2	  	UNIFORMITY OF DISCRETIONARY ACTS	  	16
	8.3	  	LITIGATION	  	16
	8.4	  	CLAIMS PROCEDURE	  	16
	
	ARTICLE 9
	AMENDMENT
			
	9.1	  	RIGHT TO AMEND	  	18
	9.2	  	AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN	  	18
	9.3	  	CHANGES IN LAW AFFECTING TAXABILITY	  	18
	
	ARTICLE 10
	TERMINATION
			
	10.1	  	SPONSOR’S RIGHT TO TERMINATE OR SUSPEND PLAN	  	19
	10.2	  	AUTOMATIC TERMINATION OF PLAN	  	19
	10.3	  	SUSPENSION OF DEFERRALS	  	19
	10.4	  	ALLOCATION AND DISTRIBUTION	  	19
	10.5	  	SUCCESSOR TO SPONSOR	  	19
	10.6	  	WITHDRAWAL OR TERMINATION BY AN EMPLOYER	  	19
	
	ARTICLE 11
	THE TRUST
			
	11.1	  	ESTABLISHMENT OF TRUST	  	20
	
	ARTICLE 12
	MISCELLANEOUS
			
	12.1	  	LIABILITY OF SPONSOR LIMITATIONS ON LIABILITY OF SPONSOR OR EMPLOYER OR EMPLOYER	  	20
	12.2	  	CONSTRUCTION	  	20
	12.3	  	SPENDTHRIFT PROVISION	  	21
	12.4	  	SPONSOR SHARES SUBJECT TO THE PLAN	  	21

  
  

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 TEJON RANCH 
 NONQUALIFIED DEFERRED COMPENSATION PLAN 
  
 Effective as of January 1, 2004 
  
 RECITALS 
  
 This Tejon Ranch Nonqualified
Deferred Compensation Plan (the “Plan”) is adopted by Tejon Ranch Co. (the “Sponsor”) for its directors and certain of the executive and management employees of Tejon Ranchcorp (the “Employer”). The purpose of the Plan
is to offer participants an opportunity to elect to defer the receipt of compensation in order to provide deferred compensation benefits taxable pursuant to section 451 of the Internal Revenue Code of 1986, as amended (the “Code”), and to
provide a deferred compensation vehicle to which the Employer may credit certain amounts on behalf of participants. The Plan is intended to be a “top-hat” plan (i.e., an unfunded deferred compensation plan maintained for a select group of
management or highly-compensated employees) under sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). 
  
 Accordingly, the following Plan is adopted. 
  
 ARTICLE 1 
 DEFINITIONS 
  
 1.1 ACCOUNT means
the balance credited to a Participant’s or Beneficiary’s Plan account, including amounts credited under the Compensation Deferral Account, the Unrealized Equity Gains Contribution Account, the Stock Unit Contribution Account and the
Employer Contribution Credit Account and deemed income, gains and losses (as determined by the Employer, in its discretion) credited thereto. A Participant’s or Beneficiary’s Account shall be determined as of the date of reference.

  
 1.2 BENEFICIARY means any person or person so
designated in accordance with the provisions of Article 7. 
  
 1.3
BOARD means the Sponsor’s Board of Directors, or with respect to any powers or duties in respect of the Plan described herein, a committee thereof, if any, duly authorized to make determinations and act for the Board under this Plan.

  
 1.4 CHANGE IN CONTROL means a transaction or series of
transactions occurring after the Effective Date that constitutes a “change of control”, as defined in the Tejon Ranch Co. Stock Unit Agreement, as amended from time to time. Notwithstanding the preceding, with respect to the Participant s
Stock Unit Contributions, and deemed income, gains and losses thereon, if any, Change in Control shall be as defined under the applicable Stock Unit Agreement. 
  

1.5 CODE means the Internal Revenue Code of 1986 and the regulations thereunder, as amended from time to time. 
  
 1.6 COMMON STOCK means the Sponsor’s common stock, $.50 par value
per share. 
  
  

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 1.7 COMPENSATION means the total current cash remuneration, including regular salary, bonus awards
and/or cash retainers, paid by the Employer to an Eligible Individual with respect to his or her service for the Employer (as determined by the Employer, in its discretion). 
  
 1.8 COMPENSATION DEFERRAL ACCOUNT is defined in Section 3.1(a). 
  
 1.9 COMPENSATION DEFERRALS is defined in Section 3.1(a). 

 
 1.10 DESIGNATION DATE means the date or dates as of which a
designation of deemed investment directions by an individual pursuant to Section 4.5, or any change in a prior designation of deemed investment directions by an individual pursuant to Section 4.5, shall become effective. The Designation Dates in any
Plan Year shall be designated by the Employer. 
  
 1.11
EFFECTIVE DATE means January 1, 2004. 
  
 1.12 ELIGIBLE
INDIVIDUAL means, for any Plan Year (or applicable portion thereof), an individual who is determined by the Sponsor to be a member of the Sponsor’s Board, an officer of the Sponsor or who is otherwise a member of a select group of
management or highly compensated employees of the Employer and who is designated by the Board to be an Eligible Individual under the Plan. 
  
 By each November 1 (or before the Effective Date for the Plan’s first Plan Year), the Sponsor shall notify those individuals, if any,
who will be Eligible Individuals for the next Plan Year. If the Sponsor determines that an individual first becomes an Eligible Individual during a Plan Year, the Sponsor shall notify such individual of its determination and of the date during the
Plan Year on which the individual shall first become an Eligible Individual. 
  
 1.13 EMPLOYER means Tejon Ranchcorp and its successors and assigns unless otherwise herein provided, and any affiliated or related corporation or business organization which agrees, with the consent of the
Sponsor, to become an Employer under the Plan. 
  
 1.14
EMPLOYER CONTRIBUTION CREDIT ACCOUNT is defined in Section 3.2. 
  
 1.15 EMPLOYER CONTRIBUTION CREDITS is defined in Section 3.2. 
  
 1.16 ENTRY DATE with respect to an individual means the first day of the pay period following the date on which the individual first becomes an Eligible Individual. 
  
 1.17 FORM AND TIMING OF PAYMENT ELECTION FORM means the form or forms
on which a Participant elects the form and timing of the Participant’s Plan benefit. 
  
 1.18 PARTICIPANT means any person so designated in accordance with the provisions of Article 2, including, where appropriate according to the context of the Plan, any former employee or Board member who is or
may become (or whose Beneficiaries may become) eligible to receive a benefit under the Plan. 
  
  

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 1.19 PHANTOM STOCK means an artificial unit of value, the amount of one unit of which varies with
the value of one share of Common Stock. Except as otherwise provided herein, all distributions to a Participant or Beneficiary with respect to Phantom Stock shall be made in Common Stock. 
  
 1.20 PLAN means this Tejon Ranch Nonqualified Deferred Compensation Plan, as amended from time to time. 

 
 1.21 PLAN YEAR means the twelve (12) month period ending on the
December 31 of each year during which the Plan is in effect. 
  
 1.22 SIP means the Tejon Ranch Co. 1998 Stock Incentive Plan, as the same may be amended from time to time. 
  
 1.23 SPONSOR means Tejon Ranch Co. and its successors and assigns. 
  
 1.24 SPONSOR STOCK FUND means an account maintained on the books of the Sponsor reflecting credits to
Participants’ Accounts in Phantom Stock. 
  
 1.25 STOCK
UNIT AGREEMENT means an agreement between an Eligible Individual and the Sponsor with respect to Stock Unit Contributions. 
  
 1.26 STOCK UNIT CONTRIBUTION ACCOUNT is defined in Section 3.1(c). 
  
 1.27 STOCK UNIT CONTRIBUTIONS means units of value, varying (as provided in the applicable Stock Unit Agreement) with
the value of shares of Common Stock, credited under Section 3.1(c) to an Eligible Individual s Stock Unit Contribution Account pursuant to a Stock Unit Agreement between the Eligible Individual and the Sponsor. 
  
 1.28 TRUST means the Trust described in Article 11. 
  
 1.29 TRUSTEE means the trustee of the Trust described in Article 11.

  
 1.30 UNREALIZED EQUITY GAINS, with respect to a given
option award or restricted stock award granted to a particular Participant under the SIP, means, (i) in the case of options, the difference in dollar value between the exercise price of the option elected to be converted to an Unrealized Equity
Gains Contribution hereunder and the fair market value of the underlying Common Stock determined as of the effective date of the conversion or, (ii) in the case of restricted stock, the fair market value of the restricted stock elected to be
converted to an Unrealized Equity Gains Contribution hereunder determined as of the effective date of the conversion. In each case, fair market value is determined with reference to the closing price of the shares of Common Stock underlying the
option or held as restricted stock on the day that immediately precedes the conversion date specified in the election, or if such day is not a trading day, on the next trading day (or on such other date as the Sponsor shall reasonably elect).

  
 1.31 UNREALIZED EQUITY GAINS CONTRIBUTION ACCOUNT is
defined in Section 3.1(b). 
  
  

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 1.32 UNREALIZED EQUITY GAINS CONTRIBUTIONS means contributions made under Section 3.1(b).

  
 1.33 VALUATION DATE means the last day of each Plan
Year and any other date that the Sponsor, in its sole discretion, designates as a Valuation Date. 
  
 ARTICLE 2 
 ELIGIBILITY AND PARTICIPATION 
  
 2.1 REQUIREMENTS. Every Eligible Individual on the Effective Date
shall be eligible to become a Participant on the Effective Date. Every other Eligible Individual shall be eligible to become a Participant on the first Entry Date occurring on or after the date on which he or she becomes an Eligible Individual. No
individual shall become a Participant, however, if he or she is not an Eligible Individual on the date his or her participation is to begin. 
  
 Participation in the Compensation Deferral, Unrealized Equity Gains Contribution and Stock Unit Contribution portion of the Plan is
voluntary. In order to participate in the Compensation Deferral and Unrealized Equity Gains Contribution portions of the Plan, an otherwise Eligible Individual must make written application in such manner as may be required by Section 3.1 and by the
Employer and must agree to make Compensation Deferrals or Unrealized Equity Gains Contributions as provided in Article 3. An Eligible Individual shall have the right to make Unrealized Equity Gains Contributions only as provided by the Sponsor in a
Notice of Right to Conversion Contribution and only subject to the terms and conditions specified in the Notice. In order to participate in the Stock Unit Contribution portion of the Plan, an otherwise Eligible Individual must enter into a written
Stock Unit Agreement with the Sponsor in such manner as may be required by Section 3.1 and by the Sponsor and must agree to make Stock Unit Contributions as provided in Article 3. 
  
 Participation in the Employer Contribution Credit Account portion of the Plan, if and when it is activated
by the Board, is automatic and does not require a Participant’s election to participate. 
  
 2.2 RE-EMPLOYMENT. If a Participant whose employment with the Employer (or Board membership, as applicable) is terminated is subsequently re-employed (or again becomes a Board member), he or she shall become a
Participant in accordance with the provisions of Section 2.1. 
  
 2.3 CHANGE OF EMPLOYMENT CATEGORY/BOARD MEMBERSHIP. During any period in which a Participant remains in the employ of the Employer (or a member of the Board), but ceases to be an Eligible Individual, he or she shall not be eligible
to make Compensation Deferrals, Unrealized Equity Gains Contributions or Stock Unit Contributions hereunder or to receive Employer Contribution Credits hereunder. 
  

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 ARTICLE 3 
 CONTRIBUTIONS AND CREDITS 
  
 3.1 PARTICIPANT CONTRIBUTIONS AND CREDITS. 
  
 (a) Compensation Deferrals. In accordance with rules established by the Sponsor and subject to such amount limitations as might be imposed by the Sponsor in its discretion, a Participant may elect to defer
Compensation which is due to be earned and which would otherwise be paid to the Participant, in any fixed periodic dollar amounts or percentages designated by the Participant. Amounts so deferred will be considered a Participant’s
“Compensation Deferrals.” Ordinarily, a Participant shall make such an election with respect to a coming twelve (12) month Plan Year during the period beginning on the November 1 and ending on the November 30 of the prior calendar year, or
during such other period as might be established by the Sponsor. 
  
 Compensation Deferrals shall be made through regular payroll deductions (including, if applicable, deductions of regular cash retainer payments to a Participant who is a Board member) or through an election by the
Participant to defer the payment of a bonus not yet payable to him or her at the time of the election. The Participant may change his or her regular payroll deduction Compensation Deferral amount as of, and by written notice delivered to the
Employer prior to, the beginning of any regular payroll period, with such change being first effective for Compensation to be earned in that payroll period. In the case of bonus payment deferrals, the Participant may reduce his or her bonus due to
be paid by the Employer by delivering written notice to the Employer of the bonus Compensation Deferral amount prior to the date the applicable bonus is first due to be paid. 
  
 Once made, a Compensation Deferral regular payroll deduction election shall continue in force only for the
Plan Year to which the election relates, unless changed as provided above. A Compensation Deferral bonus payment election shall continue in force only for the bonus payment for which the election is specifically effective. Compensation Deferrals
shall be deducted by the Employer from the pay of a deferring Participant and shall be credited to the Compensation Deferral Account of the deferring Participant. 
  
 There shall be established and maintained a separate Compensation Deferral Account in the name of each
Participant to which shall be credited or debited: (a) amounts equal to the Participant’s Compensation Deferrals; and (b) amounts equal to any deemed earnings or losses (to the extent realized, based upon deemed fair market value of the
Compensation Deferral Account’s deemed assets, as determined by the Sponsor, in its discretion) attributable or allocable thereto. With respect to any Participant having an amount credited on his or her behalf under the Plan immediately prior
to the Effective Date, such amount shall, as of the Effective Date, be credited to the Participant’s Compensation Deferral Account. 
  
 A Participant shall at all times be 100% vested in amounts credited to his or her Compensation Deferral Account. 
  
 (b) Unrealized Equity Gains Contributions. In
accordance with rules established by the Sponsor, a Participant may elect to have amounts in respect of Unrealized Equity Gains made as Unrealized Equity Gains Contributions to the Participant’s Unrealized Equity Gains Contribution Account. The
value of the Unrealized Equity Gains Contributions to be credited to the Participant’s 
  

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 Account shall be the value of the Unrealized Equity Gains converted as determined pursuant to Section
1.29. 
  
 A Participant shall be entitled to make
an Unrealized Equity Gains Contribution solely at the time and in the form and manner determined by the Sponsor and communicated to the Participant. No Participant shall have a right to make an Unrealized Equity Gains Contribution unless and until
notified in writing by the Sponsor and only to the extent provided in such notice. 
  
 An Unrealized Equity Gains Contribution election shall be made by a Participant with respect to options granted under the SIP no earlier
than the date on which the options become exercisable, and must be made prior to the date on which the options are exercised or lapse. With respect to any options for which such election is made, the Participant exercise those options solely by
delivery of Common Stock that have been held by the Participant owned for at least six (6) months (i.e., so-called “mature shares”) having a value equal to the option exercise price, unless the Employer, in its sole discretion, permits or
requires the Participant to pay the option exercise price in an alternative form of payment that the Sponsor determines would not result in unfavorable financial reporting treatment to the Sponsor. An Unrealized Equity Gains Contribution election
shall be made by a Participant with respect to restricted stock granted under the SIP during the applicable election period established by the Board which ends no later than the day before the date on which the restricted stock are to become
unrestricted. The preceding notwithstanding, if a Participant makes an Unrealized Equity Gains Contribution election with respect to options or restricted stock and events occur or conditions exist that would have caused the option or restricted
stock to be forfeited, to the extent of any such forfeiture, the Unrealized Equity Gains Contribution shall be null and void and the forfeiture amount (determined by the Sponsor in its discretion) shall be returned to the Sponsor. 
  
 There shall be established and maintained a separate
Unrealized Equity Gains Contribution Account in the name of each Participant to which shall be credited or debited: (a) amounts equal to the Participant’s Unrealized Equity Gains Contribution; and (b) amounts equal to any deemed earnings or
losses (to the extent realized, based upon deemed fair market value of the Unrealized Equity Gains Contribution Account’s deemed assets, as determined by the Sponsor, in its discretion) attributable or allocable thereto. 
  
 A Participant shall at all times be 100% vested in amounts
credited to his or her Unrealized Equity Gains Contribution Account made in respect of converted options. A Participant shall become vested in amounts credited to his or her Unrealized Equity Gains Contribution Account made in respect of converted
restricted stock on the date that the restricted stock otherwise would have vested under the SIP without regard to the conversion. 
  
 (c) Stock Unit Contributions in Lieu of Restricted Stock Grants. At such times and in accordance with such rules established by the
Sponsor, a Participant may elect to enter into a Stock Unit Agreement with the Sponsor, thereby electing to have Stock Unit Contributions credited to his or her Stock Unit Contribution Account in lieu of receiving restricted stock grants under the
SIP. The number of units of value which are credited as Stock Unit Contributions to the Participant’s Stock Unit Contribution Account, as well as any other terms, conditions and restrictions on the Stock Unit Contributions, shall be governed by
the applicable Stock Unit Agreement as well as this Plan. 
  
  

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 There shall be established and maintained a separate Stock Unit Contribution Account in
the name of each Participant to which shall be credited or debited: (a) amounts equal to the Participant’s Stock Unit Contribution; and (b) amounts equal to any deemed earnings or losses (to the extent realized, based upon deemed fair market
value of the Stock Unit Contribution Account’s deemed assets, as determined by the Sponsor, in its discretion) attributable or allocable thereto. 
  
 A Participant shall vest in the amounts credited to his or her Stock Unit Contribution Account at a time determined under the Stock Unit
Agreement. 
  
 3.2 EMPLOYER CONTRIBUTION CREDITS. There
shall be established and maintained a separate Employer Contribution Credit Account in the name of each Participant to which shall be credited or debited, as applicable, with (a) amounts equal to the Employer’s Contribution Credits; and (b)
amounts equal to any deemed earnings and losses (to the extent realized, based upon deemed fair market value of the Employer Contribution Credit Account’s deemed assets as determined by the Sponsor, in its discretion) attributable or allocable
thereto. 
  
 The Employer Contribution Credits
credited to a Participant’s Employer Contribution Credits Account for any particular Plan Year shall be an amount (if any) determined by the Board, in its discretion. The Sponsor shall credit such contributions on behalf of such individuals, in
such amounts and with such frequency, and subject to such vesting requirements, as the Board determines in its sole discretion. 
  
 3.3 CONTRIBUTIONS TO THE TRUST. Except as otherwise provided in Section 4.6, an amount shall be contributed by the Sponsor to the Trust maintained
under Section 11.1 equal to the amount(s) required to be credited to the Participant’s Account under Sections 3.1 and 3.2. The Sponsor shall make a good faith effort to contribute these amounts to the Trust as soon as practicable following the
date on which the contribution credit amount(s) are determined. 
  
 ARTICLE 4 
 ALLOCATION OF FUNDS 
  
 4.1 ALLOCATION OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS. Subject to such limitations as may from time to time be
required by law, imposed by the Sponsor or the Trustee or contained elsewhere in the Plan (including Section 4.6), and subject to such operating rules and procedures as may be imposed from time to time by the Sponsor, prior to the date on which a
direction will become effective, the Participant shall have the right to direct the Sponsor as to how amounts in his or her Account shall be deemed to be invested. The Sponsor, may, but is not required to, direct the Trustee to invest the account
maintained in the Trust on behalf of the Participant pursuant to the deemed investment directions the Sponsor properly has received from the Participant. 
  
 The value of the Participant’s Account shall be equal to the value of the deemed investments including, if applicable, any Phantom
Stock deemed to be held in the Participant’s Account. As of each valuation date of the Trust, the Participant’s Account will be credited or debited to reflect the Participant’s deemed investments of the Trust. The Participant’s
Plan Account will be credited or debited with the increase or decrease in the realizable net asset value or credited interest, as applicable, of the designated deemed investments, as follows. As of each Valuation Date, an 
  

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 amount equal to the net increase or decrease in realizable net asset value or credited interest, as
applicable (as determined by the Trustee), of each deemed investment option within the Account since the preceding Valuation Date shall be allocated among all Participants’ Accounts deemed to be invested in that investment option in accordance
with the ratio which the portion of the Account of each Participant which is deemed to be invested within that investment option, determined as provided herein, bears to the aggregate of all amounts deemed to be invested within that investment
option. 
  
 4.2 ACCOUNTING FOR DISTRIBUTIONS. As of the
date of any distribution hereunder, the distribution made hereunder to the Participant or his or her Beneficiary or Beneficiaries shall be charged to such Participant’s Account. If a cash distribution is requested, the amount of the
distribution shall first be charged against the investments of the Trust other than the Sponsor Stock Fund in which the Participant’s Account is deemed to be invested, on a pro rata basis, until such deemed investments are exhausted. If an
in-kind distribution is requested, the amount of the distribution shall be charged on a pro rata basis against all the investments of the Trust in which the Participant’s Account is deemed to be invested. 
  
 4.3 SEPARATE ACCOUNTS. A separate bookkeeping account under the Plan
shall be established and maintained by the Sponsor to reflect the Account for each Participant with bookkeeping sub-accounts to show separately the Participant’s Compensation Deferral Account, the Participant’s Unrealized Equity Gains
Contribution Account, the Participant’s Stock Unit Contribution Account and the Participant’s Employer Contribution Credit Account. Separate sub-accounts shall also be maintained to reflect portions of a Participant’s Compensation
Deferral Account, Unrealized Equity Gains Contribution Account, Stock Unit Contribution Account and Employer Contribution Credit Account representing the Plan’s Sponsor Stock Fund and, if different, the Plan’s other deemed investment
categories. Each sub-account will separately account for the credits and debits described in Article 3. In addition, the Accounts of those Participants employed by one Employer shall be accounted for separately from the Accounts of Participants
employed by other Employers. 
  
 4.4 INTERIM VALUATIONS. If
it is determined by the Sponsor that the value of a Participant’s Account as of any date on which distributions are to be made differs materially from the value of the Participant’s Account on the prior Valuation Date upon which the
distribution is to be based, the Sponsor, in its discretion, shall have the right to designate any date in the interim as a Valuation Date for the purpose of revaluing the Participant’s Account so that the Account will, prior to the
distribution, reflect its share of such material difference in value. 
  
 4.5 DEEMED INVESTMENT DIRECTIONS OF PARTICIPANTS. Subject to such limitations as may from time to time be required by law, imposed by the Sponsor or the Trustee or contained elsewhere in the Plan (including Section 4.6), and subject
to such operating rules and procedures as may be imposed from time to time by the Sponsor, prior to and effective for each Designation Date, each Participant may communicate to the Sponsor a direction (in accordance with (a), below) as to how his or
her Plan Accounts should be deemed to be invested among such categories of deemed investments as may be made available by the Sponsor hereunder, which may be unlimited, at the Sponsor’s sole discretion. Such direction shall designate the
percentage (in any whole percent multiples) of each portion of the Participant’s Plan Accounts which is requested to be deemed to be invested in such categories of deemed investments, and shall be subject to the following rules: 
  

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 (a) Any initial or subsequent deemed investment direction shall be in writing, on a form
supplied by and filed with the Sponsor, and/or, as required or permitted by the Sponsor, shall be by oral designation and/or electronic transmission designation. A designation shall be effective as of the Designation Date next following the date the
direction is received and accepted by the Sponsor on which it would be reasonably practicable for the Sponsor to effect the designation. 
  
 (b) All amounts credited to the Participant’s Account shall be deemed to be invested in accordance with the then effective deemed
investment direction, and as of the Designation Date with respect to any new deemed investment direction, all or a portion of the Participant’s Account at that date shall be reallocated among the designated deemed investment funds according to
the percentages specified in the new deemed investment direction unless and until a subsequent deemed investment direction shall be filed and become effective. An election concerning deemed investment choices shall continue indefinitely as provided
in the Participant’s most recent investment direction form provided by and filed with the Sponsor. 
  
 (c) If the Sponsor receives an initial or revised deemed investment direction which it deems to be incomplete, unclear or improper, the
Participant’s investment direction then in effect shall remain in effect (or, in the case of a deficiency in an initial deemed investment direction, the Participant shall be deemed to have filed no deemed investment direction) until the next
Designation Date, unless the Sponsor provides for, and permits the application of, corrective action prior thereto. 
  
 (d) If the Sponsor possesses (or is deemed to possess as provided in (c), above) at any time directions as to the deemed investment of
less than all of a Participant’s Account, the Participant shall be deemed to have directed that the undesignated portion of the Account be deemed to be invested in a money market, fixed income or similar fund made available under the Plan as
determined by the Sponsor in its discretion. 
  
 (e) Each Participant hereunder, as a condition to his or her participation hereunder, agrees to indemnify and hold harmless the Employer, the Sponsor and their agents and representatives from any losses or damages of any kind relating to
the deemed investment of the Participant’s Account hereunder. 
  
 (f) Each reference in this Section to a Participant shall be deemed to include, where applicable, a reference to a Beneficiary of a deceased Participant. 
  
 4.6 DEEMED INVESTMENTS IN PHANTOM STOCK. Unless the Sponsor, in its sole discretion, permits otherwise,
Participants’ Unrealized Equity Gains Contributions and Stock Unit Contributions automatically will be deemed to be invested in Phantom Stock, through the Sponsor Stock Fund. 
  
 Unless the Sponsor, in its sole discretion, permits otherwise, a Participant may not transfer any portion of
his or her Account from the Sponsor Stock Fund into another deemed investment option, nor may a Participant transfer any amounts from another deemed investment option into the Sponsor Stock Fund. 
  

 9 

 All amounts invested in Phantom Stock shall be treated as if they had been invested in
shares of Common Stock purchased from the Sponsor at fair market value, determined with reference to the closing price on the shares of Common Stock on the day that immediately precedes the deemed investment date, or if such a day is not a trading
day, on the next trading day (or such other date as the Sponsor shall reasonably elect). 
  
 Notwithstanding Section 3.3, with respect to any amounts deemed as invested in Phantom Stock through the Sponsor Stock Fund, the Sponsor
may, but is not required to, contribute to the Trust shares of Common Stock having the fair market value (determined as described above) equal to the amount(s) to be credited. 
  
 Unless the Sponsor, in its sole discretion, permits otherwise, all distributions with respect to the portion
of a Participant’s Account allocated to the Sponsor Stock Fund shall be made solely in shares of Common Stock. For purposes of making distributions with respect to amounts allocated to the Sponsor Stock Fund, any fractional shares credited to
the Participant’s Account shall be rounded up to the nearest full share. 
  
 In the event that the Sponsor declares a cash dividend to the holders of its Common Stock, with respect to each Participant deemed to hold Phantom Stock in the Sponsor Stock Fund, the Sponsor shall credit the
Participant’s Compensation Deferral Account with an amount equal to that amount of cash that a holder of a share of Common Stock would receive multiplied by the shares of Phantom Stock credited to the Participant’s Sponsor Stock Fund on
the date of record of such dividend. Such contributions shall be treated as Compensation Deferrals for all purposes of this Plan, including being eligible for Participant investment direction among the Plan’s deemed investments. 
  
 Notwithstanding the preceding, no amount held under the Plan
in respect of Unrealized Equity Gains Contributions or Stock Unit Contributions can be deemed to be an investment in any deemed investment other than the Sponsor Stock Fund until the Participant has satisfied the vesting requirements with regard to
such amounts. 
  
 Despite the foregoing, the
Sponsor may, but need not, prohibit or delay the liquidation, disposition, or acquisition of any Phantom Stock units by any Participant who is subject to short swing trading liability under Section 16(b) of the Securities and Exchange Act of 1934 if
said liquidation, disposition, or acquisition may result in the imposition of such liability. 
  
 4.7 EXPENSES AND TAXES. Expenses, including Trustee fees, associated with the administration or operation of the Plan shall be paid by the Sponsor from its general assets unless the Sponsor elects to charge
such expenses against the appropriate Participant’s Account or Participants’ Accounts. Any taxes allocable to an Account (or portion thereof) maintained under the Plan which are payable prior to the distribution of the Account (or portion
thereof), as determined by the Sponsor, shall be paid by the Sponsor unless the Sponsor elects to charge such taxes against the appropriate Participant’s Account or Participants’ Accounts. 
  

 10 

 ARTICLE 5 
 ENTITLEMENT TO BENEFITS 
  
 5.1 TERMINATION OF EMPLOYMENT/BOARD MEMBERSHIP. Upon a Participant’s termination of employment with the Employer for any reason (or, with respect to any non-employee Participant, upon his or her termination of Board membership),
the Participant’s as-yet undistributed vested Account shall be valued and payable according to the provisions of Article 6. 
  
 5.2 FIXED PAYMENT DATES. On his or her Form and Timing of Payment Election Form, a Participant may select a fixed payment date for the payment or
commencement of payment of that portion of his or her vested Account attributable to Compensation Deferrals, Unrealized Equity Gains Contributions, Stock Unit Contributions and/or Employer Contribution Credits made by the Participant or on the
Participant’s behalf during the period indicated in the Form and Timing of Payment Election Form which portion will be valued and payable according to the provisions of Article 6. Any such fixed date elected by a Participant must be a date no
earlier than the January 1 of the third calendar year after the calendar year in which the applicable Compensation Deferrals, Unrealized Equity Gains Contributions, Stock Unit Contributions and/or Employer Contribution Credits were made by the
Participant or on the Participant’s behalf. Any such fixed payment date may be extended to a later fixed payment date so long as election to so extend the date is made by the Participant at least six (6) months prior to the date on which the
distribution is to be made or commence and such extension is at least three (3) full calendar years in length. Such payment dates may not be accelerated, except as provided in the remaining Sections of this Article. 
  
 Notwithstanding the preceding, a Participant who selects
payment or commencement of payment of the designated portion of his or her vested Account on a fixed date or dates shall receive payment of the designated portion of his or her vested Account at the earlier of such fixed payment date or dates (as
extended, if applicable) or his or her termination of employment with the Employer (or, with respect to non-employee Participants, upon his or her termination of Board membership). Distributions made with respect to this Section 5.2 shall be in a
single lump sum payment. 
  
 5.3 IMMEDIATE DISTRIBUTION
ELECTION. A Participant (including any former Eligible Individual who has not yet received a complete distribution of his or her vested Account) may elect at any time to have his or her vested Account (or a portion thereof) paid or commence to
be paid immediately upon his or her election. Any amount paid pursuant to this Section shall be subject to a ten percent (10%) penalty, with the amount of the penalty being forfeited by the Participant and returned to the Sponsor. In addition, a
Participant who is an Eligible Individual and who elects an immediate distribution under this Section shall not be eligible to make, or to have made on his or her behalf, any contributions to the Plan for the one (1) year period beginning on the
date of receipt of the immediate distribution. 
  
 Any Participant wishing to elect an immediate distribution pursuant to this Section must complete an Immediate Distribution Election Form. The distribution shall be in a lump sum payment and shall occur or commence as soon as is
administratively feasible following the Sponsor’s receipt of the Immediate Distribution Election Form. 
  
 Notwithstanding the foregoing, the Sponsor may but need not deny an immediate distribution election made by any Participant who is subject
to short-swing trading liability of Section 16(b) of the Securities and Exchange Act of 1934 under circumstances in which said distribution may result in the imposition of such liability. 
  

 11 

 5.4 HARDSHIP DISTRIBUTIONS. In the event of financial hardship of the Participant, as hereinafter
defined, the Participant may apply to the Sponsor for the distribution of all or any part of his or her vested Account. The Sponsor shall consider the circumstances of each such case, and the best interests of the Participant and his or her family,
and shall have the right, in its sole discretion, if applicable, to allow such distribution, or, if applicable, to direct a distribution of part of the amount requested, or to refuse to allow any distribution. Upon a finding of financial hardship,
the Sponsor shall direct that the appropriate distribution is made to the Participant with respect to the Participant’s vested Account in a lump sum payment. In no event shall the aggregate amount of the distribution exceed either the full
value of the Participant’s vested Account or the amount determined by the Sponsor to be necessary to alleviate the Participant’s financial hardship (which financial hardship may be considered to include any taxes due because of the
distribution occurring because of this Section), and which is not reasonably available from other resources of the Participant. For purposes of this Section, the value of the Participant’s vested Account shall be determined as of the date of
the distribution. 
  
 “Financial
hardship” means (a) a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (as defined in Code section 152(a)) of the Participant, (b) loss of the
Participant’s property due to casualty, or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, each as determined to exist by the Sponsor. A distribution may be
made under this Section only with the consent of the Sponsor. 
  
 Notwithstanding the foregoing, the Sponsor may but need not deny a hardship distribution election made by a Participant who is subject to short-swing trading liability of Section 16(b) of the Securities and Exchange
Act of 1934 under circumstances in which said distribution may result in the imposition of such liability. 
  
 5.5 CHANGE IN CONTROL. Notwithstanding anything herein to the contrary, upon a Change in Control, each Participant shall become fully vested in his
or her Account (except that, with respect to his or her Stock Unit Contribution Account, the Participant shall only become fully vested to the extent provided in the applicable Stock Unit Agreement), and shall become entitled to receive the entire
balance of his or her vested Account in a single lump sum payment on the thirtieth (30th) day following the Change in Control (or as soon thereafter as is administratively feasible). Notwithstanding the preceding, the Participant may irrevocably
elect, prior to the end of such thirty (30) day period, to waive his or her right to receive such a Change in Control distribution. If such waiver election is timely made, the Participant shall receive his or her entire vested Account balance at the
time designated in the most recent Participant Enrollment and Election Form received by the Sponsor from the Participant or, if no election as to timing of Account distribution has been made on the Participant’s Enrollment and Election Form, at
the time the Participant terminates employment with the Employer. 
  
 15.6 RE-EMPLOYMENT/BOARD MEMBERSHIP OF RECIPIENT. If a Participant receiving installment distributions pursuant to Section 6.2 is re-employed by the Employer (or again becomes a Board member), the remaining distributions due to the
Participant shall be suspended until such time as the Participant (or his or her Beneficiary) once again becomes eligible for benefits under 
  

 12 

 this Article, at which time such distribution shall commence, subject to the limitations and conditions contained in this
Plan. 
  
 ARTICLE 6 
 DISTRIBUTION OF BENEFITS 
  
 6.1 AMOUNT. A Participant (or his or her Beneficiary) shall become entitled to receive, within ninety (90) days following the date or dates
selected by the Participant on his or her Form and Timing of Payment Election Form, or if no such selection is made or if the Participant’s employment with the Employer (or Board membership, as applicable) is terminated before the selected
date(s), on or about the date of such termination (or earlier as provided in Sections 5.4 or 5.5), a distribution (or commencement of distributions) in an aggregate amount equal to the Participant’s vested Account (or applicable portion
thereof). A Participant may alternatively elect to receive an immediate distribution, subject to a ten percent (10%) penalty and a suspension from the Plan, of all or a portion of his or her vested Account pursuant to Section 5.3. Any payment due
hereunder from the Trust which is not paid by the Trust for any reason will be paid by the Sponsor from its general assets. 
  
 6.2 METHOD OF PAYMENT. 
  
 (a) Cash Or In-Kind Payments. Payments under the Plan (other than payments with respect to amounts deemed invested in Phantom
Stock) shall be made in cash or in-kind, as elected by the Participant and as permitted by the Sponsor and the Trustee in their sole and absolute discretion, subject, however, to Section 12.4 and any other applicable restrictions on transfer that
may be applicable legally or contractually. Unless the Sponsor, in its discretion, permits otherwise, all amounts deemed invested in Phantom Stock through the Sponsor Stock Fund shall be distributed in shares of Common Stock. 
  
 (b) Timing and Manner of Payment. Except as otherwise
provided herein, in the case of distributions to a Participant or his or her Beneficiary by virtue of an entitlement pursuant to Sections 5.1, an aggregate amount equal to the Participant’s vested Account will be paid by the Trust or the
Sponsor, as provided in Section 6.1, in a lump sum or, if permitted by the Sponsor in its sole and absolute discretion, in five (5), ten (10) or fifteen (15) annual installments (adjusted for gains and losses), as selected by the Participant as
provided in Article 5. If a Participant fails to designate properly the manner of payment of the Participant’s benefit under the Plan, such payment will be in a lump sum. 
  
 If the whole or any part of a payment hereunder is to be in installments, the total to be so paid shall
continue to be deemed to be invested pursuant to Article 4 under such procedures as the Sponsor may establish, in which case any deemed income, gain, loss or expense or tax allocable thereto (as determined by the Sponsor, in its discretion) shall be
reflected in the installment payments, using such method for the calculation of the installments as the Sponsor shall reasonably determine. 
  
 6.3 DEATH BENEFITS. If a Participant dies before terminating his or her employment with the Employer (or his or her Board membership, as
applicable) and before the commencement of payments to the Participant hereunder, the entire value of the Participant’s Account shall be paid, within ninety (90) days following the Participant’s death, in a lump sum, to the person or
persons designated in accordance with Section 7.1. 
  
  

 13 

 Upon the death of a Participant after payments hereunder have begun but before he or she has received all
payments to which he or she is entitled under the Plan, the remaining benefit payments shall be paid to the person or persons designated in accordance with Section 7.1, in the manner in which such benefits were payable to the Participant.

  
 ARTICLE 7 
 BENEFICIARIES; PARTICIPANT DATA 
  
 7.1 DESIGNATION OF BENEFICIARIES. Each Participant from time to time may designate any person or persons (who may be named contingently or
successively) to receive such benefits as may be payable under the Plan upon or after the Participant’s death, and such designation may be changed from time to time by the Participant by filing a new designation. Each designation will revoke
all prior designations by the same Participant, shall be in a form prescribed by the Sponsor, and will be effective only when filed in writing with the Sponsor during the Participant’s lifetime. 
  
 In the absence of a valid Beneficiary designation, or if, at
the time any benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Participant, the Sponsor shall pay any such benefit payment to the Participant’s spouse, if then living, but otherwise to the
Participant’s then living descendants, if any, per stirpes, but, if none, to the Participant’s estate. In determining the existence or identity of anyone entitled to a benefit payment, the Sponsor may rely conclusively upon
information supplied by the Participant’s personal representative, executor or administrator. If a question arises as to the existence or identity of anyone entitled to receive a benefit payment as aforesaid, or if a dispute arises with respect
to any such payment, then, notwithstanding the foregoing, the Sponsor, in its sole discretion, may distribute or direct that the Trustee distribute such payment to the Participant’s estate without liability for any tax or other consequences
which might flow therefrom, or may take such other action as the Sponsor deems to be appropriate. 
  
 7.2 INFORMATION TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES; INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES. Any communication, statement
or notice addressed to a Participant or to a Beneficiary at his or her last post office address as shown on the Employer’s records shall be binding on the Participant or Beneficiary for all purposes of the Plan. Neither the Employer nor the
Sponsor shall be obliged to search for any Participant or Beneficiary beyond the sending of a registered letter to such last known address. If the Sponsor or Employer notifies any Participant or Beneficiary that he or she is entitled to an amount
under the Plan and the Participant or Beneficiary fails to claim such amount or make his or her location known to the Employer within three (3) years thereafter, then, except as otherwise required by law, if the location of one or more of the next
of kin of the Participant is known to the Employer, the Sponsor may distribute or direct distribution of such amount to any one or more or all of such next of kin, and in such proportions as the Sponsor determines. If the location of none of the
foregoing persons can be determined, the Sponsor shall have the right to direct that the amount payable shall be deemed to be a forfeiture, except that the dollar amount of the forfeiture, unadjusted for deemed gains or losses in the interim, shall
be paid by the Sponsor if a claim for the benefit subsequently is made by the Participant or the Beneficiary to whom it was payable. If a benefit payable to an unlocated Participant or Beneficiary is subject to escheat pursuant to applicable state

  
  

 14 

 law, neither the Employer nor the Sponsor shall be liable to any person for any payment made in accordance with such law.

  
 ARTICLE 8 
 ADMINISTRATION 
  
 8.1 ADMINISTRATIVE AUTHORITY. Except as otherwise specifically provided herein, the Sponsor shall have the sole responsibility for and the sole
control of the operation and administration of the Plan, and shall have the power and authority to take all action and to make all decisions and interpretations which may be necessary or appropriate in order to administer and operate the Plan,
including, without limiting the generality of the foregoing, the power, duty and responsibility to: 
  
 (a) Resolve and determine all disputes or questions arising under the Plan, and to remedy any ambiguities, inconsistencies or omissions in
the Plan. 
  
 (b) Adopt such rules of procedure
and regulations as in its opinion may be necessary for the proper and efficient administration of the Plan and as are consistent with the Plan. 
  
 (c) Implement the Plan in accordance with its terms and the rules and regulations adopted as above. 
  
 (d) Make determinations with respect to the eligibility of
any Eligible Individual as a Participant and make determinations concerning the crediting of Plan Accounts. 
  
 (e) Appoint any persons or firms, or otherwise act to secure specialized advice or assistance, as it deems necessary or desirable in
connection with the administration and operation of the Plan, and the Sponsor shall be entitled to rely conclusively upon, and shall be fully protected in any action or omission taken by it in good faith reliance upon, the advice or opinion of such
firms or persons. The Sponsor shall have the power and authority to delegate from time to time by written instrument all or any part of its duties, powers or responsibilities under the Plan, both ministerial and discretionary, as it deems
appropriate, to any person or committee, and in the same manner to revoke any such delegation of duties, powers or responsibilities. Any action of such person or committee in the exercise of such delegated duties, powers or responsibilities shall
have the same force and effect for all purposes hereunder as if such action had been taken by the Sponsor. Further, the Sponsor may authorize one or more persons to execute any certificate or document on behalf of the Sponsor, in which event any
person notified by the Sponsor of such authorization shall be entitled to accept and conclusively rely upon any such certificate or document executed by such person as representing action by the Sponsor until such notified person shall have been
notified of the revocation of such authority. 
  
 8.2
UNIFORMITY OF DISCRETIONARY ACTS. Whenever in the administration or operation of the Plan discretionary actions by the Sponsor are required or permitted, such actions shall be consistently and uniformly applied to all persons similarly
situated, and no such action shall be taken which shall discriminate in favor of any particular person or group of persons. 
  
  

 15 

 8.3 LITIGATION. Except as may be otherwise required by law, in any action or judicial proceeding
affecting the Plan, no Participant or Beneficiary shall be entitled to any notice or service of process, and any final judgment entered in such action shall be binding on all persons interested in, or claiming under, the Plan. 
  
 8.4 CLAIMS PROCEDURE. This Section 8.4 is based on final regulations
issued by the Department of Labor and published in the Federal Register on November 21, 2000 and codified at section 2560.503-1 of the Department of Labor Regulations. If any provision of this Section 8.4 conflicts with the requirements of those
regulations, the requirements of those regulations will prevail. 
  
 (a) Initial Claim. A Participant or Beneficiary (hereinafter referred to as a “Claimant”) who believes he or she is entitled to any Plan benefit under this Plan may file a claim with the Sponsor. The
Sponsor shall review the claim itself or appoint an individual or an entity to review the claim. 
  
 The Claimant shall be notified within ninety (90) days after the claim is filed whether the claim is allowed or denied, unless the
Claimant receives written notice from the Sponsor or appointee of the Sponsor prior to the end of the ninety (90) day period stating that special circumstances require an extension of the time for decision, such extension not to extend beyond the
day which is one hundred eighty (180) days after the day the claim is filed. 
  
 If the Sponsor denies a claim, it must provide to the Claimant, in writing or by electronic communication: 
  
 (i) The specific reasons for the denial; 
  
 (ii) A reference to the Plan provision upon which the denial is based; 
  
 (iii) A description of any additional information or material that the Claimant must provide in order to
perfect the claim; 
  
 (iv) An explanation of why
such additional material or information is necessary; 
  
 (v) Notice that the Claimant has a right to request a review of the claim denial and information on the steps to be taken if the Claimant wishes to request a review of the claim denial; and 
  
 (vi) A statement of the Claimant’s right to bring a
civil action under ERISA section 502(a) following a denial on review of the initial denial. 
  

 16 

 (b) Review Procedures. A request for review of a denied claim must be made in
writing to the Sponsor within sixty (60) days after receiving notice of denial. The decision upon review will be made within sixty (60) days after the Sponsor’s receipt of a request for review, unless special circumstances require an extension
of time for processing, in which case a decision will be rendered not later than one hundred twenty (120) days after receipt of a request for review. A notice of such an extension must be provided to the Claimant within the initial sixty (60) day
period and must explain the special circumstances and provide an expected date of decision. 
  
 The reviewer shall afford the Claimant an opportunity to review and receive, without charge, all relevant documents, information and
records and to submit issues and comments in writing to the Sponsor. The reviewer shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim regardless of whether the information
was submitted or considered in the initial benefit determination. 
  
 Upon completion of its review of an adverse initial claim determination, the Sponsor will give the Claimant, in writing or by electronic notification, a notice containing: 
  
 (i) its decision; 
  
 (ii) the specific reasons for the decision; 
  
 (iii) the relevant Plan provisions on which its decision is
based; 
  
 (iv) a statement that the Claimant is
entitled to receive, upon request and without charge, reasonable access to, and copies of, all documents, records and other information in the Plan’s files which is relevant to the Claimant’s claim for benefits; 
  
 (v) a statement describing the Claimant’s right to
bring an action for judicial review under ERISA section 502(a); and 
  
 (vi) if an internal rule, guideline, protocol or other similar criterion was relied upon in making the adverse determination on review, a statement that a copy of the rule, guideline, protocol or other similar
criterion will be provided without charge to the Claimant upon request. 
  
 (c) Calculation of Time Periods. For purposes of the time periods specified in this Section, the period of time during which a benefit determination is required to be made begins at the time a claim is filed in
accordance with the Plan procedures without regard to whether all the information necessary to make a decision accompanies the claim. If a period of time is extended due to a Claimant’s failure to submit all information necessary, the period
for making the determination shall be tolled from the date the notification is sent to the Claimant until the date the Claimant responds. 
  
 (d) Failure of Plan to Follow Procedures. If the Plan fails to follow the claims procedures required by this Section 8.4, a
Claimant shall be deemed to have exhausted the administrative remedies available under the Plan and shall be entitled to pursue any available remedy 
  
  

 17 

 under ERISA section 502(a) on the basis that the Plan has failed to provide a reasonable claims procedure
that would yield a decision on the merits of the claim. 
  
 (e) Failure of Claimant to Follow Procedures. A Claimant’s compliance with the foregoing provisions of this Section 8.4 is a mandatory prerequisite to the Claimant’s right to commence any legal action
with respect to any claim for benefits under the Plan. 
  
 ARTICLE 9 
 AMENDMENT 
  
 9.1 RIGHT TO AMEND. The Sponsor, by action of its Board of Directors, shall have the right to amend the Plan, at any
time and with respect to any provisions hereof, and all parties hereto or claiming any interest hereunder shall be bound by such amendment; provided, however, that no such amendment shall deprive a Participant or a Beneficiary of a right accrued
hereunder prior to the date of the amendment. 
  
 9.2
AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN. Notwithstanding the provisions of Section 9.1, the Plan may be amended by the Sponsor, by action of the Board, at any time, retroactively if required, if found necessary, in the opinion of
the Sponsor, in order to ensure that the Plan is characterized as “top-hat” plan of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA sections 201(2), 301(a)(3), and
401(a)(1), and to conform the Plan to the provisions and requirements of any applicable law (including ERISA and the Code). No such amendment shall be considered prejudicial to any interest of a Participant or a Beneficiary hereunder. 
  
 9.3 CHANGES IN LAW AFFECTING TAXABILITY. This Section shall become
operative upon the enactment of any change in applicable statutory law or the promulgation by the Internal Revenue Service of a final regulation or other pronouncement having the force of law, which statutory law, as changed, or final regulation or
pronouncement, as promulgated, would cause any Participant to include in his or her federal gross income amounts accrued by the Participant under the Plan on a date (an “Early Taxation Event”) prior to the date on which such amounts are
made available to him or her hereunder. 
  
 (a)
Affected Right or Feature Nullified. Notwithstanding any other Section of this Plan to the contrary (but subject to subsection (b), below), as of an Early Taxation Event, the feature or features of this Plan that would cause the Early
Taxation Event shall be null and void, to the extent, and only to the extent, required to prevent the Participant from being required to include in his or her federal gross income amounts accrued by the Participant under the Plan prior to the date
on which such amounts are made available to him or her hereunder. If only a portion of a Participant’s Account is impacted by the change in the law, then only such portion shall be subject to this Section, with the remainder of the Account not
so affected being subject to such rights and features as if the law were not changed. If the law only impacts Participants who have a certain status with respect to the Sponsor, then only such Participants shall be subject to this Section.

  
 (b) Tax Distribution. If an Early
Taxation Event is earlier than the date on which the statute, regulation or pronouncement giving rise to the Early Taxation Event is enacted or promulgated, as applicable (i.e., if the change in the law is retroactive), there shall be distributed to

  
  

 18 

 each Participant, as soon as practicable following such date of enactment or promulgation, the amounts
that became taxable on the Early Taxation Event. 
  
 ARTICLE
10 
 TERMINATION 
  
 10.1 SPONSOR’S RIGHT TO TERMINATE OR SUSPEND PLAN. The Sponsor reserves the right to terminate the Plan and/or obligations to make further
credits to Plan Accounts, by action of the Board. The Sponsor also reserves the right to suspend the operation of the Plan for a fixed or indeterminate period of time, by action of the Board. Finally, the Sponsor reserves the right to terminate any
Employer’s participation herein as provided in Section 10.6. 
  
 10.2 AUTOMATIC TERMINATION OF PLAN. The Plan automatically shall terminate upon the dissolution of the Sponsor, or upon its merger into or consolidation with any other corporation or business organization if there is a failure by the
surviving corporation or business organization to adopt specifically and agree to continue the Plan. 
  
 10.3 SUSPENSION OF DEFERRALS. In the event of a suspension of the Plan, the Sponsor shall continue all aspects of the Plan, other than
contributions to the Plan, during the period of the suspension, in which event payments hereunder will continue to be made during the period of the suspension in accordance with Articles 5 and 6. 
  
 10.4 ALLOCATION AND DISTRIBUTION. This Section shall become operative
on a complete termination of the Plan. The provisions of this Section also shall become operative in the event of a partial termination of the Plan, as determined by the Sponsor, but only with respect to that portion of the Plan attributable to the
Participants to whom the partial termination is applicable. Upon the effective date of any such event, notwithstanding any other provisions of the Plan, no persons who were not theretofore Participants shall be eligible to become Participants, the
value of the interest of all Participants and Beneficiaries shall be determined and, after deduction of estimated expenses in liquidating and, if applicable, paying Plan benefits, paid to them as soon as is practicable after such termination.

  
 10.5 SUCCESSOR TO SPONSOR. Any corporation or other
business organization which is a successor to the Sponsor by reason of a consolidation, merger or purchase of substantially all of the assets of the Sponsor shall have the right to become a party to the Plan by adopting the same by resolution of the
entity’s board of directors or other appropriate governing body. If, within ninety (90) days from the effective date of such consolidation, merger or sale of assets, such new entity does not become a party hereto, as above provided, the Plan
automatically shall be terminated, and the provisions of Section 10.4 shall become operative. 
  
 10.6 WITHDRAWAL OR TERMINATION BY AN EMPLOYER. Any Employer, by action of its board of directors or other governing authority and notice to the Sponsor and the Trustee, may withdraw from the Plan and Trust at
any time, or may terminate the Plan and Trust with respect to its Employees at any time, without affecting other Employers not withdrawing or terminating. A withdrawing Employer may arrange for the continuation of this Plan and Trust in separate
forms for its own Employees, with such amendments, if any, as it may deem proper, and may arrange for continuation of the Plan and Trust by merger with an existing plan and trust. The 
  
  

 19 

 Sponsor may, in its absolute discretion, terminate an Employer’s participation in this Plan at any time, without the
consent of any Employer, Participant or Beneficiary. 
  
 ARTICLE 11 
 THE TRUST 
  
 11.1 ESTABLISHMENT OF TRUST. The Sponsor shall establish the Trust with the Trustee pursuant to such terms and
conditions as are set forth in the Trust agreement to be entered into between the Sponsor and the Trustee or the Sponsor shall cause to be maintained one or more separate subaccounts in an existing Trust maintained with the Trustee with respect to
one or more other plans of the Sponsor, which subaccount or subaccounts represent Participants’ interests in the Plan. Any such Trust shall be intended to be treated as a “grantor trust” under the Code and the establishment of the
Trust or the utilization of any existing Trust for Plan benefits, as applicable, shall not be intended to cause any Participant to realize current income on amounts contributed thereto, and the Trust shall be so interpreted. 
  
 ARTICLE 12 
 MISCELLANEOUS 
  
 12.1 LIABILITY OF SPONSOR; LIMITATIONS ON LIABILITY OF SPONSOR OR EMPLOYER. Notwithstanding anything herein that may suggest otherwise, the Sponsor
shall be solely liable for the payment of any benefits due hereunder. However, neither the establishment of the Plan nor any modification thereof, nor the creation of any account under the Plan, nor the payment of any benefits under the Plan shall
be construed as giving to any Participant or other person any legal or equitable right against the Sponsor or Employer or any officer or employer thereof except as provided by law or by any Plan provision. Neither Sponsor nor the Employer in any way
guarantee any Participant’s Account from loss or depreciation, whether caused by poor investment performance of a deemed investment or the inability to realize upon an investment due to an insolvency affecting an investment vehicle or any other
reason. In no event shall the Sponsor, the Employer or any successor, employee, officer, director or stockholder of the Sponsor or the Employer, be liable to any person on account of any claim arising by reason of the provisions of the Plan or of
any instrument or instruments implementing its provisions, or for the failure of any Participant, Beneficiary or other person to be entitled to any particular tax consequences with respect to the Plan, or any credit or distribution hereunder.

  
 12.2 CONSTRUCTION. If any provision of the Plan is held
to be illegal or void, such illegality or invalidity shall not affect the remaining provisions of the Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provision had never been inserted
herein. For all purposes of the Plan, where the context admits, the singular shall include the plural, and the plural shall include the singular. Headings of Articles and Sections herein are inserted only for convenience of reference and are not to
be considered in the construction of the Plan. The laws of California shall govern, control and determine all questions of law arising with respect to the Plan and the interpretation and validity of its respective provisions, except where those laws
are preempted by the laws of the United States. Participation under the Plan will not give any Participant the right to be retained in the service of the Employer nor any right or claim to any benefit under the Plan unless such right or claim has
specifically accrued hereunder. 
  
  

 20 

 The Plan is intended to be and at all times shall be interpreted and administered so as
to qualify as an unfunded deferred compensation plan, and no provision of the Plan shall be interpreted so as to give any individual any right in any assets of the Sponsor which is greater than the rights of a general unsecured creditor of the
Sponsor. 
  
 12.3 SPENDTHRIFT PROVISION. No amount payable
to a Participant or a Beneficiary under the Plan will, except as otherwise specifically provided by law, be subject in any manner to anticipation, alienation, attachment, garnishment, sale, transfer, assignment (either at law or in equity), levy,
execution, pledge, encumbrance, charge or any other legal or equitable process, and any attempt to do so will be void; nor will any benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the
person entitled thereto. Further, (i) the withholding of taxes from Plan benefit payments, (ii) the recovery under the Plan of overpayments of benefits previously made to a Participant or Beneficiary, (iii) if applicable, the transfer of benefit
rights from the Plan to another plan, or (iv) the direct deposit of benefit payments to an account in a banking institution (if not actually part of an arrangement constituting an assignment or alienation) shall not be construed as an assignment or
alienation. 
  
 In the event that any
Participant’s or Beneficiary’s benefits hereunder are garnished or attached by order of any court, the Sponsor, the Employer or the Trustee may bring an action or a declaratory judgment in a court of competent jurisdiction to determine the
proper recipient of the benefits to be paid under the Plan. During the pendency of said action, any benefits that become payable shall be held as credits to the Participant’s or Beneficiary’s Account or, if the Sponsor, the Employer or the
Trustee prefers, paid into the court as they become payable, to be distributed by the court to the recipient as the court deems proper at the close of said action. 
  
 12.4 SPONSOR SHARES SUBJECT TO THE PLAN. 
  
 (a) Changes in Capital Structure. Subject to any required action by the shareholders and directors of
the Sponsor, the number of units of Phantom Stock allocable to the Account of any Participant and the number of shares of Common Stock distributable from the Account of any Participant and the per-unit value or per-share price thereof shall be
proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, combination, reclassification, the payment of a stock dividend 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 the Sponsor. Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding, and conclusive.

  
 The Sponsor may, if it so determines in the
exercise of its sole discretion, also make provision for adjusting the number or class of securities covered by the Plan, as well as the value thereof or price to be paid therefor, in the event of the Sponsor’s effecting one or more
reorganizations, recapitalizations, rights, offerings, or other increase or reductions of the number of shares of its outstanding Common Stock, or in the event of the Sponsor’s being consolidated with or merged into any other corporation.
Unless otherwise determined by the Board, upon the dissolution or liquidation of the Sponsor or upon any merger or consolidation in any Plan Year, if the Sponsor is not the surviving corporation, a Participant’s right to receive shares of
Common Stock hereunder shall terminate and thereupon become null and void. 
  

 21 

 (b) Necessary Actions. Shares of Common Stock shall not be issued under the Plan
unless the issuance and delivery of such securities pursuant thereto shall comply with all relevant provisions of federal, state, and local securities laws. As a condition to the issuance of securities under the Plan, the Sponsor may require the
Participant to represent and warrant, at the time of any allocation of securities, that the securities are being acquired only for investment and without any present intention to sell or distribute such securities if, in the opinion of the Sponsor,
such a representation is required by any of the aforementioned relevant provisions of law. During the term of this Plan, the Sponsor will at all times reserve and keep available the number of securities as shall be sufficient to satisfy the
requirements of the Plan. Inability of the Sponsor to obtain pertinent approval or exemption from any regulatory body having jurisdiction and authority deemed by the Sponsor to be necessary to the lawful allocation, issuance, or sale of any
securities hereunder shall relieve the Sponsor of any liability in respect of the nonallocation, nonissuance, or nonsale of such securities as to which such requisite authority shall not have been obtained. 
  
 IN WITNESS WHEREOF, the Sponsor has caused the Plan to be executed and
its seal to be affixed hereto, effective as of the 1st day of January, 2004. 
  

											
	ATTEST/WITNESS:	 	 	 	TEJON RANCH CO.
					
	
	 	 	 	 By:
	 	
	 	 (SEAL)

					
	 Print:
	 	
	 	 	 	 Print Name:
	 	

					
	 	 	 	 	 	 	 Date:
	 	

				
	ATTEST/WITNESS:	 	 	 	TEJON RANCHCORP	 	 
					
	
	 	 	 	 By:
	 	
	 	 (SEAL)

					
	 Print:
	 	
	 	 	 	 Print Name:
	 	

					
	 	 	 	 	 	 	 Date:
	 	

  

 22EXHIBIT 10.2

 EXHIBIT 10.2 
 EMPLOYMENT AGREEMENT 
  
 EMPLOYMENT AGREEMENT 
  
 THIS AGREEMENT is made this 1st
day of July, 2000, by and between Harbor Bankshares Corporation, a Maryland corporation, and The Harbor Bank of Maryland, 25 W. Fayette Street, Baltimore, MD 21201, a Maryland commercial bank, (each of which being referred to as a
“Company” and together collectively referred to as the “Companies”) and Joseph Haskins, Jr. (the “Executive”). 
  
 INTRODUCTION 
  
 The Board of Directors of each Company has determined that it is in the best interests of the Company to retain the Executive’s services and to
reinforce and encourage the continued attention and dedication of the Executive, to his assigned duties without distraction in potentially disturbing circumstances an’sing from the possibility of a change in control of the Company or the
assertion of claims and actions against employees. Hereafter, and unless otherwise specified herein, references to the “Bankshares Board” will be to the Board of Directors of Harbor Bankshares Corporation. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Companies and the Executive
hereby agree as follows: 
  
 1. Employment. Upon the terms
and subject to the conditions contained in this Agreement, the Executive agrees to provide full-time services for the Companies during the term of this Agreement. The Executive agrees to devote his best efforts to the business of the Companies, and
shall perform his duties in a diligent, trustworthy, and business-like manner, all for the purpose of advancing the business of the Companies. 
  
 2. Duties. The Executive shall hold the title of Chairman of the Board, President, and Chief Executive Officer of Harbor Bankshares Corporation and
Chairman and CEO of The Harbor Bank of Maryland, and his duties shall be those which can reasonably be expected to be performed by a person holding those positions. The Executive shall report directly to each Company’s Board of Directors. The
Executive’s duties may, from time to time, be changed or modified at the discretion of the Board of Directors of the Companies. 
  
 3. Employment Term. Subject to the terms and conditions hereof, the Companies agree to employ the Executive for a term of four years
commencing as of January 1, 2000 (the “Effective Date”) and continuing through December 31, 2003, unless renewed under this Section 3. The Companies may terminate the Executive’s employment prior to the end of the three-year term
through either a Termination Due to Disability under Section 5(a), a Termination With Cause under Section 5(b), or Termination Without Cause under Section 5(c). 
  

 1 

 Beginning January 1, 2004, this Agreement shall be automatically renewed each December 31” for three
year terms, unless either the Companies or the Executive provides written notice of election not to renew, at least 90 days before the applicable January I”. 
  
 4. Salary and Benefits. 
  
 (a) Base Salary. The Companies shall during the term of this Agreement, pay the Executive an annual base salary of $182,330
beginning on the Effective Date, pro rated for periods of less than 12 months. “Base Salary” is defined as set by the preceding sentence or as the same may be increased from time to time by action of the Bankshares Board. The Base Salary
shall be reviewed by the Companies annually, and any Base Salary increase shall be effective each January I”, beginning January 1, 2000. The Companies may not, however, reduce the Executive’s then existing Base Salary at any time during
the term of this Agreement. 
  
 (b) Annual
Incentive Payment. Each year during this Agreement, the Executive shall be eligible to receive an annual incentive payment (the “Annual Incentive Payment”) under the 2000 Annual Incentive Plan (the “Incentive Plan”), as
amended or replaced by a successor plan approved by the Bankshares Board. The amount of the Annual Incentive Payment shall be targeted at 80% of the Executive’s Base Salary upon completion of goals and objectives as set by the Bankshares Board.
The minimum and maximum incentive payment that the Executive shall be eligible to receive, assuming the appropriate goals for minimum or maximum level have been attained, will be 60% and 100% of the Executive’s Base Salary, respectively. If the
goals and objectives for the minimum level of incentive payment have not been met, there will be no incentive payment made to the Executive in that year. The amount actually awarded and paid to the Executive each year will be determined by the
Bankshares Board in conjunction with the terms of the Incentive Plan document. 
  
 (c) Non-Qualified Retirement Plans. The Companies shall provide an Executive Supplemental Retirement Benefit to the Executive on
the terms and conditions described on Schedule A attached hereto. 
  
 (d) Stock Options. Upon execution of this Agreement, the Companies will grant the Executive a one-time grant of 25,000 option shares on the ten—ns and conditions described on Schedule B attached hereto.
The Companies shall establish a stock option program to the Executive in accordance with the 2000 Officer Long-Term Incentive Plan (“OLIP”), as amended or replaced by a successor plan approved by the Bankshares Board. On an ongoing basis,
the Executive may also receive further grants of options, as determined by the companies. The Executive will not be eligible to participate in any stock option plans reserved for outside directors. 
  
 (e) Life Insurance. Harbor Bankshares Corporation
shall provide life insurance coverage on the life of the Executive in an amount not less than three times the Executive’s Base Salary. 
  

 2 

 Key Man Life Insurance. During the Employment Period, Harbor Bankshares
Corporation shall at its sole expense, maintain a “key man” insurance policy on the life of the Executive with a death benefit of at least $1,000,000 (Ten-n Insurance) and naming the Company as the policy beneficiary. In the event of the
Executive’s death, this Key Man Life Insurance will provide funds to Harbor Bankshares Corporation for the reacquisition of its stock and any unexercised options from the Executive’s heirs or estate, if requested by the Executive’s
estate within six months of the Executive’s death. 
  
 (g) Vacation. The Executive shall be entitled to four weeks of paid vacation during each full year of his employment hereunder in accordance with the vacation policy adopted by the Companies. In addition, upon any
Termination, under Section 5, except for Termination for Cause, the Executive will be paid any remaining accrued vacation that has not been taken through the date of Termination. 
  
 (h) Automobile During the term of this Agreement, the Companies shall provide the Executive with an
annual automobile allowance of $12,000 payable in equal monthly installments of $ 1,000 each. 
  
 (i) Reimbursement of Expenses. The Companies shall reimburse the Executive for all reasonable out-of-pocket expenses incurred by
the Executive in the course of his duties in accordance with any business conducted on behalf of the Companies. 
  
 (j) Employee Benefits. The Executive shall be entitled to participate in the employee benefit programs generally available to
employees of the Companies, and to all normal perquisites provided to senior executive officers of the Companies. 
  
 (k) Benefits Not in Lieu of Compensation. No benefit or perquisite provided to the Executive shall be deemed to be in lieu of Base
Salary, bonus, or other compensation. 
  
 5. Termination of
Employment. The Companies may terminate the employment of the Executive at any time as they deem appropriate. 
  
 (a) Disability. The Companies may terminate the Executive’s employment for Disability if the Executive is incapacitated or
absent and unable to perform substantially all the regular duties of his employment for at least 180 days, consecutive or nonconsecutive, during any 12 month period. Disability shall be determined by mutual agreement or by at least two physicians
who are board certified in the field of the Executive’s affliction. If, during the term of this Agreement, the Executive’s employment terminates due to Disability, the Companies shall provide long-ten-n disability insurance that provides
for an annual benefit in compliance with the personnel policies until the Executive attains age 65. In addition, the Executive’s participation in the Companies’ medical and group life insurance plans shall continue during the period of
Disability until the Executive attains age 65. 
  

 3 

 (b) Voluntary Resignation or Termination for Cause. If the Executive shall
voluntarily terminate his employment for other than Good Reason, as defined in Section 5(c), or if the Companies shall discharge the Executive for Cause, as defined in this Section 5(b), this Agreement shall terminate immediately and the Companies
shall have no further obligation to make any payment under this Agreement which has not already become payable, but has not yet been paid; provided, however, that with respect to any stock options, restricted stock, incentive plans, deferred
compensation arrangements, or other plans or programs in which the Executive is participating at the time of termination of his employment, the Executive’s rights and benefits under each such plan shall be determined in accordance with
the terms, conditions, and limitations of the plan and any separate agreement executed by the Executive which may then be in effect. 
  
 For the purposes of this Agreement, the Companies shall have “Cause” to terminate the Executive’s employment hereunder upon

  
 (i) the willful and continued failure by the
Executive to perform his duties with the Companies (other than any such failure, resulting from incapacity due to Disability), after a demand for substantial performance is delivered to the Executive by the Bankshares Board which specifically
identifies the manner in which the Bankshares Board believes that he has not substantially performed his duties; 
  
 (ii) the willful engaging by the Executive in gross misconduct materially and demonstrably injurious to the Companies. For the purpose of
this paragraph, no acts, or failure to act, on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by him not in good faith and without reasonable belief that his action or omission was not in the
best interest of the Companies; 
  
 (iii) the
removal, and/or permanent prohibition of Executive from participating in the conduct of the Companies’ business by an order issued by the Commissioner of Financial Regulation, the Federal Deposit Insurance Corporation, the Board of Governors of
the Federal Reserve System, or other appropriate bank supervisory agency; 
  
 (iv) notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until there have been delivered to him a copy of a resolution duly adopted by the affirmative vote of
not less than majority plus I of the entire authorized membership of the Bankshares Board at a meeting of the Bankshares Board called and held for the purpose (after reasonable notice and an opportunity for the Executive, together with counsel, to
be heard before the Bankshares Board), finding that in the good faith opinion of the Bankshares Board he was guilty of conduct set forth above in clauses (i), (ii), or (iii) of this Section 5(b), and specifying the particulars thereof in detail.

  

 4 

 (c) Termination Without Cause or Resignation for Good Reason. If during the term
of the Agreement, the Executive’s employment is terminated by the Companies without Cause or the Executive voluntarily terminates his employment for Good Reason, as defined in this Section 5(c): 
  
 (i) Base Salary. The Companies shall pay the
Executive in a lump sum an amount equal to three times the current annual Base Salary as provided in Section 4(a) in effect at the date of termination; The payments are to be made over a three year period in equal amounts. The first payment will be
due within 30 days following terminated. The remaining two payments will be due on the 1st and 2nd anniversary dates of the first payment. 
  
 (ii) Annual Incentive. To compensate the Executive for the current year’s annual incentive, the Companies shall pay to the
Executive in a lump sum an amount equal to the aggregate amount awarded to the Executive under Section 4(b) for the most recently completed calendar year multiplied by a ratio whose numerator is the number of the current month in the calendar year
as of the date of termination and the denominator is twelve. 
  
 (iii) Nonqualified Retirement Plans and Stock Options. The Companies shall pay to the Executive any amounts due under Sections 4(c) and 4(d) according with the terms, conditions and limitations of the plans and
any separate agreements under Sections 4(c) and 4(d) without regard to “vesting” thereunder. 
  
 For purposes of this Agreement, “Good Reason” shall mean: 
  
 (i) Without his express written consent, the assignment to the Executive of any duties inconsistent with his
positions, duties, responsibilities and status with the Companies, or a change in his reporting responsibilities, titles or offices, or any removal of the Executive from or any failure to re-elect the Executive to any of such positions, except in
connection with the termination of his employment for Cause, Disability or retirement or as a result of his death or by the Executive other than for Good Reason; 
  
 (ii) Without his express written consent, the failure by the Companies to continue in effect the
Non-Qualified Retirement Plan under Section 4(c), Stock Options under Section 4(d), the Life Insurance under Section 4(e) in which the Executive is participating (or plans providing substantially similar benefits), the taking of any action by the
Companies which would adversely affect the Executive’s participation in or materially reduce his benefits under any of such plans or deprive him of any material fringe benefit enjoyed by him, or the failure by the Companies to provide the
Executive with the number of paid vacation days to which he is then entitled on the basis of years of service with the Companies in accordance with the Companies’ normal vacation policy in effect on the date hereof, 
  
 (iii) Any failure of the Companies to obtain the assumption
of, or the agreement to perform, this Agreement by any successor as contemplated in Section 15(b) hereof, or 
  
 (iv) The Companies’ requiring the Executive to be based anywhere other than Baltimore, Maryland except for required travel on the
Companies business to an extent substantially consistent with his present business travel obligations, or, in the event the Executive consents to any relocation, the failure by the Companies to pay (or reimburse the Executive) for all reasonable
moving expenses incurred by him relating to a change of his principal residence in connection with such relocation and to indemnify the Executive against any loss (defined as the difference between the actual sale price of such 

  

 5 

 
residence and the higher of (a) his aggregate investment in such residence or (b) the fair market value of such residence as determined by a real estate
appraiser designated by the Executive and reasonably satisfactory to the Companies) realized on the sale of the Executive’s principal residence in connection with any such change of residence. 
  
 6. Termination After Change Of Control Benefit. If (i) within 12
months after a Change of Control of either Company, either Company shall terminate the Executive’s employment other than pursuant to Section 5(a) or 5(b) hereof or if the Executive shall terminate his employment for Good Reason, or (ii) within
thirty days after the expiration of 6 months after a Change of Control of either Company, the Executive shall terminate his employment with or without Good Reason, then in any of such events, the Companies shall pay to the Executive a benefit as
defined in Section 6(b). 
  
 (a) Change of
Control. The term Change of Control shall have the following meaning: 
  
 (i) A reorganization, merger, consolidation or other form of corporate transaction or series of transactions, in each case, with respect to which persons who were the stockholders of either Company immediately prior
to such reorganization, merger or consolidation or other transaction do not, immediately thereafter, directly or indirectly, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized,
merged or consolidated entity’s then outstanding voting securities; 
  
 (ii) A liquidation or dissolution of either Company; 
  
 (iii) The sale of more than 50% of the assets of either Company to any person or entity not controlled by or under common control with the
Companies (unless such reorganization, merger, consolidation or other corporate action, liquidation, dissolution or sale is subsequently abandoned); 
  
 (iv) The acquisition by any person, entity or “group”, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, (excluding any employee benefit plan of either Company or its subsidiaries which acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act)) of more than fifty percent (50%)
of either the then outstanding shares of common stock or the combined voting power of either Company’s then outstanding voting securities entitled to vote generally in the election of directors; or 
  
 (v) As the result of, or in connection with, any tender or
exchange offer, merger, consolidation or other business combination, sale or disposition of all or substantially all of either Company’s assets, or contested election, or any combination of the foregoing transactions (a
“Transaction”), the persons who were directors of a Company immediately before the Transaction shall cease to constitute a majority of the Board of Directors of a Company or any successor to the Companies. 
  
 (b) Amount. Upon a terminated of the Executive’s
employment under the circumstances described in the first sentence of this Section 6, the Executive will receive a Change of Control Benefit equal to 2.99 times the Executive’s Base Annual Compensation as defined in this Section 6(b)(1) at the
date of the Change of Control. If the Change in Control Benefit described in this Section 6(b) and Section 6(b)(i) is less than an otherwise applicable payment under Sections 5(c)(i) and (11) of this Agreement upon termination of the
Executive’s employment under the circumstances described in the first sentence of this Section 6, the Executive may receive payment pursuant to Section 5(c)(i) and (ii) in lieu of the Change in Control Benefit. 
  
 (i) Base Annual Compensation. The Executive’s
average annualized compensation on I pal ‘d by the Companies which was includible in the Executive’s gross income during the most recent five taxable years ending before the date of the Change of Control. This definition covers amounts
includible in compensation, i.e., the Base Salary and cash annual incentive prior to any cash or deferred arrangements, and defined as the individual’s “base amount” under Section 28OG of the Internal Revenue Code of 1986, as amended
(the “Code”). 
  

 6 

 (ii) Nonqualified Retirement Plans and Stock Options. The Companies shall pay to
the Executive any amounts due under Sections 4(c) and 4(d) according with the terms, conditions and limitations of the plans and any separate agreements under Sections 4(c) and 4(d) without regard to “vesting” thereunder. 
  
 (c) Consideration of Benefit. As consideration for
the benefit paid in this Section 6, the Executive agrees to work with the new organization for a period of six months; however, if the organization terminates the employment of the Executive except under Terminated for Cause, the Executive is still
entitled to the benefit specified under this Section 6. 
  
 (d) Limitation of Benefit. Notwithstanding anything to the contrary in this Agreement, if there are payments to the Executive which constitute “parachute payments,” as defined in Section 28OG of the
Code, then the payments made to the Executive shall be the maximum of (x) one dollar ($1.00) less than the amount which would cause the payments to the Employee (including payments to the Employee which are not included in this Agreement) to be
subject to the excise tax imposed by Section 4999 of the Code, and (y) the payments to the Employee (including payments to the Employee which are not included in the Agreement) after taking into account the excise tax imposed by Section 4999 of the
Code. 
  
 (e) Payment of Benefit. The
Change of Control Benefit provided herein shall be paid in a lump sum to the Executive within 30 days following a terminated of the Executive’s employment under the circumstances described in the first sentence of this Section 6. 
  
 7. Confidential Information. The Executive recognizes and acknowledges
that he will have access to certain information of the Companies and that such information is confidential and constitutes valuable, special and unique property of the Companies. The Executive shall not at any time, either during or subsequent to
the term of this Agreement, disclose to others, use, copy or permit to be copied, except in pursuance of his duties for or on behalf of the Companies, its successors, assigns or nominees, any Confidential Information of the Companies (regardless of
whether developed by the Executive) without the prior written consent of the Companies. 
  
 The term “Confidential Information” with respect to any person means any secret or confidential information or know-how and shall include, but shall not be limited to, the plans, customers, costs, prices,
uses, and applications of products and services, results of investigations, studies owned or used by such person, and all products, processes, compositions, computer programs, and servicing, marketing or operational methods and techniques at any
time used, developed, investigated, made or sold by such person, before or during the term of this Agreement, that are not readily available to the public or that are maintained as confidential by such person. The Executive shall maintain in
confidence any Confidential Information of third parties received as a result of his employment with the Companies in accordance with the Companies’ obligations to such third parties and the policies established by the Companies. 
  
 8. Delivery of Documents upon Termination. The Executive shall deliver
to the Companies or their designee at the termination of his employment all correspondence, memoranda, notes, records, drawings, sketches, plans, customer lists, product compositions, and other documents and all copies thereof, made, composed or
received by the Executive, solely or jointly with others, that are in the Executive’s possession, custody, or control at termination and that are related in any manner to the past, present, or anticipated business or any member of the
Companies. 
  

 7 

 9. No Competition. Throughout the term of the Agreement and, unless the Agreement terminates
pursuant to Section 3 or Termination for Cause under Section 5(b), through the second anniversary of the expiration of the Agreement, the Executive shall not directly or indirectly engage in the business of banking, or any other business in which
any member of the Companies directly or indirectly engages during the term of the Agreement; provided, however, that the restriction in this Section 9 shall apply only to the reasonable and prove limited geographic area consisting of any county in
which any member of the Companies directly has offices, operations, or customers, or otherwise conducts business. For purposes of this Section 9, the Executive shall be deemed to engage in a business if he directly or indirectly engages or invests
in, owns, manages, operates, controls or participates in the ownership, management, operation or control of, is employed by, associated or in any manner connected with, or renders services or advice to, any business engaged in banking,
provided, however, that the Executive may invest in the securities of any enterprise (but without otherwise participating in the activities of such enterprise) if two conditions are met: (a) such securities are listed on any national or regional
securities (exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934) and (b) the Executive does not beneficially own (as defined in Rule I 3d-3 promulgated under the Securities Exchange Act of 1934) in excess of
5% of the outstanding capital stock of such enterprise. 
  
 10.
No Tampering. Throughout the term of the Agreement and through the second anniversary of the expiration thereof the Executive shall not (a) request, induce or attempt to influence any customers of the Companies to curtail or cancel any
business they may transact with the Companies; or (b) request, induce or attempt to influence any employee of the Companies to terminate his or her employment with the Companies. 
  
 11. Publicity and Advertising. The Executive agrees that the Companies may use his name, picture, or likeness for any
advertising, publicity, or other business purpose at any time, during the term of the Agreement by the Companies and may continue to use materials generated during the term of the Agreement for a period of six months thereafter. The Executive shall
receive no additional consideration if his name, picture or likeness is so used. The Executive further agrees that any negatives, prints or other material for printing or reproduction purposes prepared in connection with the use of his name, picture
or likeness by the Companies shall be and are the sole property of the Companies. 
  
 12. Remedies. The Executive acknowledges that a remedy at law for any breach or attempted breach of the Executive’s obligations under Sections 7 through 10 may be inadequate, agrees that the Companies may
be entitled to specific performance and injunctive and other equitable remedies in case of any such breach or attempted breach and further agrees to waive any requirement for the securing or posting of any bond in connection with the obtaining of
any such injunctive or other equitable relief The Companies shall have the right to offset against amounts to be paid to the Executive pursuant to the terms hereof any amounts from time to time owing by the Executive to the Companies. The
termination of the Agreement pursuant to Section 3. 5(a) or 5(b) shall not be deemed to be a waiver by the Companies of any breach by the Executive of this Agreement or any other obligation owed the Companies, and notwithstanding such a termination
the Executive shall be liable for all damages attributable to such a breach. 
  
 13. Dispute Resolution. Subject to the Companies’ right to seek injunctive relief in court as provided in Section 12 of this Agreement, any dispute, controversy or claim arising out of or in relation to or
connection to this Agreement, including without limitation any dispute as to the construction, validity, interpretation, enforceability or breach of this Agreement, including a claim for indemnification under this Section 13, shall be resolved
either as provided by applicable law, or, at the option of either party, by impartial binding arbitration. In the event that either the Companies or the Executive demands arbitration, the Executive and the Companies agree that such arbitration shall
be the exclusive, final and binding forum for the ultimate resolution of such claims, subject to any rights of appeal that either party may have under the Federal Arbitration Act and/or under applicable state law dealing with the review of
arbitration decisions. 
  
 (a)
Arbitrators. The arbitration shall be heard and determined by one arbitrator, who shall be impartial and who shall be selected by mutual agreement of the parties; provided, however, that if the dispute involves more than $1,000,000, then the
arbitration shall be heard and determined by three (3) arbitrators. If three (3) arbitrators are necessary as provided above, then (i) each side shall appoint an arbitrator of its choice within thirty (30) days of the submission of a notice of
arbitration and (ii) the party-appointed arbitrators shall in turn appoint a presiding arbitrator of the tribunal within thirty (30) days following the appointment of the last party-appointed arbitrator. 
  

 8 

 (b) Demand for Arbitration. In the even that the Executive or the Companies
initially elects to file suit in any court, the other party will have 60 days from the date that it is formally served with a summons and a copy of the suit to notify the party filing the suit of the non-filing party’s demand for arbitration.
In that case, the suit must be dismissed by consent of the parties or by the court on motion, and arbitration commenced with the arbitrators. In situations where suit has not been filed, either the Executive or the Companies may initiate arbitration
by serving a written demand for arbitration upon the other party and the arbitrators. Such a demand must be served within six months of the events giving rise to the dispute, unless a statute provides for a longer period for filing an initial claim
under the statute. Any claim that is not timely made will be deemed waived. 
  
 (c) Proceedings. Unless otherwise expressly agreed in writing by the parties to the arbitration proceedings: 
  
 (i) The arbitration proceedings shall be held in Baltimore, Maryland, at a site chosen by mutual agreement of the parties, or if the
parties cannot reach agreement on a location within thirty (30) days of the appointment of the last arbitrator, then at a site chosen by the arbitrators; 
  
 (ii) The arbitrators shall be and remain at all times wholly independent and impartial; 
  
 (iii) The arbitration proceedings shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration Association, as amended from time to time; 
  
 (iv) Any procedural issues not determined under the arbitral rules selected pursuant to item (iii) above shall be determined by the law of
the place of arbitration, other than those laws which would refer the matter to another jurisdiction, 
  
 (v) The costs of the arbitration proceedings (including attorneys’ fees and costs) shall be borne in the manner determined by the
arbitrators; 
  
 (vi) The arbitrators may grant
any remedy or relief that would have been available to the parties had the matter been heard in court; 
  
 (vii) The decision of the arbitrators shall be reduced to writing; final and binding without the right of appeal; the sole and exclusive
remedy regarding any claims, counterclaims, issues or accounting presented to the arbitrators; made and promptly paid in United States dollars free of any deduction or offset; and any costs or fees incident to enforcing the award shall to the
maximum extent permitted by law, be charged against the party resisting such enforcement; 
  
 (viii) The award shall include interest from the date of any breach or violation of this Agreement, as determined by the arbitral award,
and from the date of the award until paid in full, at 6% per annum; and 
  

 9 

 (ix) Judgment upon the award may be entered in any court having jurisdiction over the
person or the assets of the party owing the judgment or application may be made to such court for a ‘judicial acceptance of the award and an order of enforcement, as the case may be. 
  
 (d) Acknowledgement of Parties. The Companies and
Executive understand and acknowledge that this Agreement means that neither can pursue an action against the other in a court of law regarding any employment dispute, except for claims involving workers’ compensation benefits or unemployment
benefits, and except as set forth elsewhere in this Agreement, in the event that either party notifies the other of its demand for arbitration under this Agreement. The Companies and Executive understand and agree that this Section 13, concerning
arbitration, shall not include any controversies or claims related to any agreements or provisions (including provisions in this Agreement) respecting confidentiality, proprietary information, non-competition, non-solicitation, trade secrets, or
breaches of fiduciary obligations by the Executive, which shall not be subject to arbitration. 
  
 (e) Consultation. Executive has been advised of his night to consult with an attorney prior to entering into this Agreement.

  
 14. Indemnification. The Executive shall be protected
against any and all legal actions when he is either a party, witness or a participant in any legal action brought against the Companies. He will be protected through any programs that cover the outside directors or other executives of the Companies.

  
 15. Miscellaneous Provisions. 
  
 (a) Binding Agreement. The rights and obligations of
the Companies under this Agreement shall inure to the benefit of, shall be Joint and several between and among, and shall be binding upon, the Companies. 
  
 (b) Successors of the Companies. The Companies will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the Companies, by agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Companies would be required to perform it if no such succession had taken place. Failure of the Companies to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Companies in the same amount and on the same terms as the Executive would be entitled hereunder if the Executive terminated his employment for Good Reason, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, “Company” or “Companies” shall mean the Company or Companies as hereinbefore defined and
any successor to its business and/or assets as aforesaid which executes and delivers the provided for in this Section 15 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. 
  
 (c) Executive’s Heirs, etc. The Executive may
not assign his rights or delegate his duties or obligations hereunder without the written consent of the Companies. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to him hereunder as if he had continued to live, all such amounts, unless other provided herein, shall be
paid in accordance with the terms of this Agreement to his designee or, if there be no such designee, to his estate. 
  

 10 

 (d) Notice. For the purposes of this Agreement, notices and all other
communications provide for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided that all notices to the Companies shall be directed to the attention of the Chairman of the Compensation Committee with a copy to the Secretary of the Companies, or to such
other in writing in accordance herewith except that notices of change of address shall be effective only upon receipt. 
  
 (e) Amendment or Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and such officer as may be specifically designated by the Bankshares Board (which shall not include the Executive). No waiver by either party hereto at any time of any breach by the other
party hereto of or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. 
  
 (f) Invalid Provisions. Should any portion of this
Agreement be adjudged or held to be invalid, unenforceable or void, such holding shall not have the effect of invalidating or voiding the remainder of this Agreement and the parties hereby agree that the portion so held invalid, unenforceable or
void shall if possible, be deemed amended or reduced in scope, or otherwise be stricken from this Agreement to the extent required for the purposes of validity and enforcement thereof 
  
 (g) Survival of the Executive’s Obligations. The Executive’s obligations under this
Agreement shall survive regardless of whether the Executive’s employment by the Companies is terminated, voluntarily or involuntarily, by the Companies or the Executive, with or without Cause. 
  
 (h) Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 
  
 (i) Governing Law. This Agreement shall be governed by and construed under the laws of the State of Maryland. 
  
 (j) Captions and Gender. The use of Captions and
Section headings herein is for purposes of convenience only and shall not effect the interpretation or substance of any provisions contained herein. Similarly, the use of the masculine gender with respect to pronouns in this Agreement is for
purposes of convenience and includes either sex who may be a signatory. 
  

 11 

 IN WITNESS HEREOF, the Executive and a duly authorized Company officer have signed this Agreement.

  

									
	 THE EXECUTIVE:
	 	 	 	 THE COMPANIES:

			
	 	 	 	 	 HARBOR BANKSHARES CORPORATION

				
	 	 	 	 	By:	 	 
	
	 	 	 	 	 	

	 Joseph Haskins, Jr.
 Chairman, President and CEO
	 	 	 	 Title:
	 	 
	 	 	 	 	 	

	 	 	 	 	 	 
			
	 	 	 	 	 THE HARBOR BANK OF MARYLAND

				
	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 Title:
	 	 
	 	 	 	 	 	 	 	 	

  

 12 

 Schedule A 
  

Executive Supplemental Retirement Benefit 
  
 This Schedule A describes the Executive Supplemental Retirement Benefit (the “Benefit”) referred to in Section 4(c) of the Employment Agreement,
to which this is attached and incorporated by reference. 
  
 1.
Amount and Duration of the Benefit: Termination at or after Age 62. The annual amount of the Benefit will be 63% of the Executive’s final Base Salary, but not less than $200,000 per year. Payments will begin at the Executive’s
retirement at or after age 62 and continue for a period of 15 years. Any termination of the Executive’s employment at or after age 62, other than terminated by reason of the Executive’s death or disability, shall be deemed 44
retirement” for this purpose. If the Executive’s employment terminates before age 62 for reasons other than death or disability, the amount and duration of the Benefit shall be determined by the provisions of Section 2 of this Schedule A.

  
 2. Terminated Before Age 62. 
  
 (a) Termination by Executive. 
  
 (1) Without Good Reason. If the Executive terminates
his employment before age 62 without Good Reason, the Executive will receive an annual Benefit of 63% of the Executive’s final Base Salary at termination of employment, multiplied by a fraction the numerator of which is the number of completed
years between the effective date of the Employment Agreement and the effective date of the Executive’s terminated and the denominator of which is the number of years that would have been completed from the effective date of the Employment
Agreement if the Executive had remained in employment until age 62. The Benefit will begin at the termination of employment and continue for 15 years. 
  
 (2) With Good Reason. If the Executive terminates his employment for Good Reason, the Executive will receive, beginning at the
termination of employment, the 63% Benefit described in paragraph (a)(1) of this Section 2, without the fractional reduction. 
  
 (3) After Change in Control. If the Executive terminates his employment without Good Reason upon a Change in Control within 30 days
after the expiration of 6 months after the Change in Control, the Executive will receive, beginning at the terminated of employment, the 63% Benefit described in paragraph (a)(1) of this Section 2, without the fractional reduction. 
  
 (b) Termination By the Companies. 
  
 (1) Termination for Cause. If the Companies terminate
the Executive’s employment for Cause, the Executive will forfeit his entitlement to the Benefit. 
  
 (2) Terminated Without Cause. If the Executive’s employment with the Companies is terminated without Cause, the Executive will
receive, beginning at the termination of employment, the 63% Benefit described in paragraph (a)(1) of this Section 2, without the fractional reduction. 
  
 3. Death. If the Executive dies after beginning to receive the Benefit, the Executive’s designated beneficiary will continue to receive the
Benefit for the remainder of the 15-year term. If the Executive dies before termination, the Executive’s designated beneficiary will receive, beginning upon the Executive’s death, the 63% Benefit described in paragraph (a)(1) of Section 2,
without the fractional reduction. 
  

 13 

 4. Disability. If the Executive’s employment is terminated for Disability, then the Executive
will receive, beginning when the Executive attains age 65, the 63% Benefit described in paragraph (a)(1) of Section 2, without the fractional reduction. 
  
 5. Beneficiary Designation. The Executive shall designate a beneficiary for the Benefit in a writing filed with the Administrator. The beneficiary
designation shall be effective only upon receipt by the Administrator of a properly executed form that the Administrator has approved for that purpose. The Executive may from time to time revoke or change any designation or beneficiary by filing
another approved beneficiary designation form with the Administrator. 
  
 6. Administrator. The plan Administrator of this Benefit will be the Chairman of the Compensation Committee or such person as the Chairman appoints in writing. The Administrator will have the exclusive responsibility for the general
administration of this Benefit in accordance with the terms and provisions of this Benefit and will have all powers necessary to accomplish those purposes, including, but not limited to the complete discretionary right, power, and authority: (i) to
make rules for the administration of this Benefit; (ii) to calculate the Benefit to which the Executive is entitled under the Benefit; (iii) to cause the payment of the Benefit; (iv) to construe all terms, provisions, conditions, and limitations of
the Benefit; (v) to correct any defect, supply any omission or reconcile any inconsistency that may appear in this Benefit in the manner and to the extent it deems expedient to carry this Benefit into effect; and (vi) to delegate those clerical and
ministerial duties of the Administrator, as it deems necessary or advisable for the proper and efficient administration of this Benefit. 
  
 7. Claims Procedure. In general, Benefit distributions are automatic and no claim for the Benefit needs to be filed; however, the Executive or a
designated beneficiary may submit a claim for the Benefit to the Administrator in writing. The following procedure shall apply in such a case: 
  
 (a) If such claim for the Benefit is wholly or partially denied, the Administrator shall notify the claimant of the denial of the claim
within a reasonable period of time, but no later than ninety (90) days after receipt of the written claim, unless special circumstances require an extension of time for processing the claim. In such event, written notice of the extension shall be
furnished to the claimant prior to the end of the ninety (90) day period and shall indicate the special circumstances requiring the extension and the date by which a final decision is expected. In no event shall the extension period exceed ninety
(90) days from the end of the initial ninety (90) day period. The notice of denial shall include: (i) the specific reasons for the denial; (ii) reference to the Benefit provisions upon which the denial is based; (iii) a description of any additional
materials or information necessary for the claimant to perfect the claim; and (iv) an explanation of the Benefit claims review procedure. 
  
 (b) Within sixty (60) days of the receipt by the claimant of the written notice of denial, or if the claim has not been granted within the
applicable time period, the claimant may file a written request with the Administrator that it conduct a review of the denial of the claim. In connection with the claimant’s appeal, the claimant may review pertinent documents and may submit
issues and comments in writing. 
  
 (c) The
Administrator shall deliver to the claimant a written decision on the claim promptly, but not later than sixty (60) days after receipt of the claimant’s request for review, except that if there are special circumstances which require an
extension of time for processing, the sixty (60) day period shall be extended to a maximum of one hundred and twenty (120) days, in which case written notice of the extension shall be furnished to the claimant prior to the end of the sixty (60) day
period. The Administrator’s decision shall include (i) the specific reasons for its decision and (ii) reference to the Benefit provisions on which its decision is based. If a decision is not given to the claimant within the review period, the
claim is deemed denied on the last day of the review period. 
  

 14 

 (d) In all cases, the Executive or a designated beneficiary must submit any and all
claims relating to the Benefit and exhaust all administrative remedies relating to any such claims with the Administrator before serving a Demand for Arbitration on any party. 
  
 8. Funding, Status as Unsecured Creditor. In conformity with Internal Revenue Service requirements, the
Executive’s entitlement to the Benefit will be that of a general creditor of the Companies. The Executive will not have any interest in any specific assets of the Companies to secure the Benefit. The Companies may, however, provide for the
Benefit through a “rabbi” trust or other funding vehicle as long as the establishment or maintenance of the trust or other vehicle does not cause the Executive to take supplemental benefits into income before they are actually received.

  
 9. Construction of the Benefit. The Benefit shall be
administered and construed so as to qualify as an “unfunded” plan providing benefits to a “select group of management or highly compensated employees,” as those terms are used in the Employee Retirement Income Security Act of
1974, as amended. 
  
 10. Assignment. The rights of the
Executive or beneficiary or any other persons to the Benefit amounts payable to or in respect of the Executive or any beneficiary shall not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution.

  
 11. If federal regulations that allow the funding source for
support of the Retirement Benefit are eliminated and/or revised and threaten the financial position of the Company, the Bank will have the night to reassess the commitment and seek alternative measures of funding. 
  

 15 

 Schedule B 
  

Stock Option Grant 
  
 This Schedule B describes the one-time grant of stock options referred to in Section 4(d) of the Employment Agreement, to which this is attached and
incorporated by reference. These terms and conditions are incorporated into the stock option grant agreement with the Executive attached hereto as Exhibit 1, and incorporated by reference. 
  

			
	 Number of Options:
	  	 Options on 25,000 Shares of Common Stock.

		
	 Type of Options:
	  	 Nonstatutory (i.e., “non-qualified”) Stock Options.

		
	 Effective Date of Grant:
	  	 Execution of Employment Agreement (i.e., July 1, 2000).

		
	 Exercise Price:
	  	 Fair Market Value on Date of Grant (i.e., $15.75).

		
	 Expiration Date:
	  	 Ten Years from Date of Grant (i.e., June 30, 2010).

		
	 Vesting:
	  	 Fully Vested at Date of Grant (i.e., July 1, 2000).

  

 16 

 Exhibit I 
  

Nonstatutory Stock Option Grant Agreement 
  
 This Grant Agreement (the “Agreement”) evidences the stock options (each, an “Option” or collectively, the
“Options”) granted to Joseph Haskins, Jr. (the “Optionee”) by Harbor Bankshares Corporation, a Maryland corporation (the “Company”), effective as of the date of execution of the
Employment Agreement (the “Grant Date”), to which this Agreement is attached as Exhibit I and incorporated by reference, conditioned upon the Optionee’s agreement to the terms described below. 
  
 1 . Grant of Options. The Optionee is granted 25,000 Options under
this Agreement. Each Option is a nonstatutory stock option that entitles the Optionee to purchase from the Company, at fair market value on the Grant Date (the “Exercise Price”), one share of Common Stock of the Company. If
not sooner exercised or terminated, the Options expire at 5:00 p.m. Eastern Time on the last business day coincident with or prior to the tenth anniversary of the Grant Date (the “Expiration Date”). 
  
 2. Terminology. For purposes of this Agreement, the terms below have
the following meanings: 
  
 (a)
“Administrator” refers to the Chairman of the Compensation Committee or such person as the Chairman appoints in writing. 
  
 (b) “Cause” has the meaning ascribed to such term in Section 5(b) of the Optionee’s Employment Agreement.

  
 (c) “Change in Control”
has the meaning ascribed to such term in Section 6(a) of the Optionee’s Employment Agreement. 
  
 (d) “Company” includes Harbor Bankshares Corporation and its Affiliates, except where the context otherwise
requires. 
  
 (e) “Good Reason”
has the meaning ascribed to such term in Section 5(c) of the Optionee’s Employment Agreement. 
  
 (f) “Option Shares” mean the shares of Common Stock underlying the Options. 
  
 (g) “Total and Permanent Disability”
has the meaning ascribed to the term “Disability” defined in Section 5(a) of the Optionee’s Employment Agreement. 
  
 3. Vesting. 
  
 The Options vest on the Grant Date 
  
 4. Exercise of Options. 
  
 (a) Right to Exercise. The Optionee may exercise the Options at any time on or before the Expiration Date or the earlier
termination of the Options, unless otherwise provided in this Agreement. Section 5 below describes certain limitations on exercise of the Options that apply in the event of the Optionee’s death, Total and Permanent Disability, or termination of
employment or other service relationship with the Company. The Options may 

  

 17 

 
be exercised only in multiples of whole shares and may not be exercised at any one time as to fewer than one hundred shares (or such lesser number of shares
as to which the Options are then exercisable). No fractional shares will be issued under the Options. 
  
 (b) Exercise Procedure. In order to exercise the Options, the following items must be delivered to the Secretary of the Company
before the expiration or terminated of the Options: (i) an exercise notice, in such form as the Administrator may require from time to time, specifying the number of Option Shares to be purchased, and (ii) full payment of the Exercise Price for such
Option Shares or properly executed, irrevocable instructions, in such form as the Administrator may require from time to time, to effectuate a broker-assisted cashless exercise, each in accordance with Section 4(c) of this Agreement. 
  
 (c) Method of Payment. Payment of the Exercise Price
may be made by delivery of cash, certified or cashier’s check, money order or other cash equivalent acceptable to the Administrator in its discretion, a broker-assisted cashless exercise in accordance with Regulation T of the Board of Governors
of the Federal Reserve System through a brokerage fin-n approved by the Administrator, or a combination of the foregoing. In addition, payment of the Exercise Price may be made by any of the following methods, or a combination thereof, as determined
by the Administrator in its discretion at the time of exercise: 
  
 (i) by tender (via actual delivery or attestation) to the Company of other shares of Common Stock of the Company which have a Fair Market Value on the date of tender equal to the Exercise Price, provided
that such shares have been owned by the Optionee for a period of at least six months free of any substantial risk of forfeiture or were purchased on the open market without assistance, direct or indirect, from the Company; 
  
 (ii) by withholding of Option Shares other-wise issuable
pursuant to the exercise which have a Fair Market Value on the date of exercise equal to the Exercise Price; 
  
 (iii) by delivery of the Optionee’s full recourse promissory note payable to the Company in a fon-n approved by the Administrator; or

  
 (iv) by any other method approved by the
Administrator. 
  
 (e) Issuance of Shares upon
Exercise. Upon exercise of the Options in accordance with the terms of this Agreement, the Company will issue to the Optionee, the brokerage firm specified in the Optionee’s delivery instructions pursuant to a broker-assisted cashless
exercise, or such other person exercising the Options, as the case may be, the number of shares of Common Stock so paid for, in the form of fully paid and nonassessable stock. The Company will deliver stock certificates for the Option Shares as soon
as practicable after exercise, which certificates will, unless such Option Shares are registered or an exemption from registration is available under applicable federal and state law, bear a legend restricting transferability of such shares.

  
 5. Termination of Employment or Service.

  
 (a) Exercise Period Following Cessation of
Employment or Other Service Relationship, In General. If the Optionee ceases to be employed by, or in a service relationship with, the Company for any reason other than death, Total and Permanent Disability, or discharge for Cause, the Options
remain exercisable during the 90-day period following such cessation, but in no event after the Expiration Date. Unless sooner terminated, the Options terminate upon the expiration of such 90-day period. 
  

 18 

 (b) Disability of Optionee. Notwithstanding the provisions of Section 5(a) above,
if the Optionee ceases to be employed by, or in a service relationship with, the Company as a result of the Optionee’s Total and Permanent Disability, the Options remain exercisable during the 180-day period following such cessation, but in no
event after the Expiration Date. Unless sooner terminated, the Options terminate upon the expiration of such 180-day period. 
  
 (c) Death of Optionee. If the Optionee dies prior to the expiration or other termination of the Options, the Options remain
exercisable during the 180-day period following the Optionee’s death, but in no event after the Expiration Date, by the Optionee’s executor, personal representative, or the person(s) to whom the Options are transferred by will or the laws
of descent and distribution. Unless sooner terminated, the Options terminate upon the expiration of such 180-day period. 
  
 (d) Misconduct. Notwithstanding anything to the contrary in this Agreement, the Options terminate in their entirety, regardless of
whether the Options are vested, immediately upon the Optionee’s discharge of employment or other service relationship for Cause. 
  
 6. Nontransferability of Qptions. These Options are nontransferable otherwise than by will or the laws of descent and distribution and during the
lifetime of the Optionee, the Options may be exercised only by the Optionee or, during the period the Optionee is under a legal disability, by the Optionee’s guardian or legal representative. Except as provided above, the Options may not be
assigned, transferred, pledged, hypothecated or disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. 
  
 7. Nonstatutory Nature of the Options. The Options are not intended to qualify as incentive stock options
within the meaning of Code section 422, and this Agreement shall be so construed. The Optionee acknowledges that, upon exercise of the Options, the Optionee will recognize taxable income in an amount equal to the excess of the then Fair Market Value
of the Option Shares over the Exercise Price and must comply with the provisions of Section 8 of this Agreement with respect to any tax withholding obligations that arise as a result of such exercise. 
  
 8. Withholding of Taxes. At the time the Options are exercised, in
whole or in part, or at any time thereafter as requested by the Company, the Optionee hereby authorizes withholding from payroll or any other payment of any kind due the Optionee and otherwise agrees to make adequate provision for foreign, federal,
state and local taxes required by law to be withheld, if any, which arise in connection with the Options. The Company may require the Optionee to make a cash payment to cover any withholding tax obligation as a condition of exercise of the Options
or issuance of share certificates representing Option Shares. 
  
 The Administrator may, in its sole discretion, permit the Optionee to satisfy, in whole or in part, any withholding tax obligation which may arise in connection with the Options either by electing to have the Company withhold from the
shares to be issued upon exercise that number of shares, or by electing to deliver to the Company already-owned shares, in either case having a Fair Market Value equal to the amount necessary to satisfy the statutory minimum withholding amount due.

  

 19 

 9. Adjustments for Corporate Transactions and Other Events. 
  
 (a) Stock Dividend, Stock Split and Reverse Stock
Split. Upon a stock dividend of, or stock split or reverse stock split affecting, the Common Stock, the number of shares covered by and the exercise price and other terms of the Options, shall, without further action of the Board, be adjusted to
reflect such event unless the Board determines, at the time it approves such stock dividend, stock split or reverse stock split, that no such adjustment shall be made. The Administrator may make adjustments, in its discretion, to address the
treatment of fractional shares and fractional cents that arise with respect to the Options as a result of the stock dividend, stock split or reverse stock split. 
  
 (b) Non-Change in Control Transactions. Except with respect to the transactions set forth in Section
9(a), in the event of any change affecting the Common Stock, the Company or its capitalization, by reason of a spin-off, split-up, dividend, recapitalization, merger, consolidation or share exchange, other than any such change that is part of a
transaction resulting in a Change in Control, the Administrator, in its discretion and without the consent of the Optionee, shall make any adjustments in the Options, including but not limited to modifying the number, kind and price of securities
subject to the Options. 
  
 (c) Change in
Control Transactions. In the event of any transaction resulting in a Change in Control, the Options will terminate upon the effective time of any such Change in Control unless provision is made in connection with the transaction in the sole
discretion of the parties thereto for the continuation or assumption of the Options, or the substitution of the Options with new options of the surviving or successor entity or a parent thereof. In the event of such termination, the Optionee will be
permitted, for a period of at least 20 days prior to the effective time of the Change in Control, to exercise all of the Options that are then exercisable or will become exercisable upon or prior to the effective time of the Change in Control;
provided, however, that any such exercise of any Options that become exercisable as a result of the Change in Control shall be deemed to occur immediately prior to the effective time of such Change in Control. 
  
 (d) Pooling of Interests Transaction. Notwithstanding
anything in this Agreement to the contrary, in connection with any business combination authorized by the Board, the Administrator, in its sole discretion and without the consent of the Optionee, may make any modifications to the Options, including
but not limited to cancellation, forfeiture, surrender or other termination of the Options, in whole or in part, regardless of their vested status, but solely to the extent necessary to facilitate the compliance of such transaction with requirements
for treatment as a pooling of interests transaction for accounting purposes under generally accepted accounting principles. 
  
 (e) Adjustments for Unusual Events. The Administrator is authorized to make, in its discretion and without the consent of the
Optionee, adjustments in the terms and conditions of, and the criteria included in, the Options in recognition of unusual or nonrecurring events affecting the Company, or the financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under
the Options. 
  
 (g) Binding Nature of
Adjustments. Adjustments under this Section 9 will be made by the Administrator, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional shares will be issued
pursuant to the Options on account of any such adjustments. The terms and conditions of this Agreement shall apply with equal force to any additional and/or substitute securities received by the Optionee pursuant to this Section 9 in exchange for,
or by virtue of the Optionee’s ownership of, the Options or the Option Shares, except as otherwise determined by the Administrator. 
  
 10. Non-Guarantee of Employment or Service Relationship. Nothing in this Agreement shall alter the employment status or other service relationship
of the Optionee, nor be construed as a contract of employment or service 

  

 20 

 
relationship between the Company and the Optionee, or as a contractual right of Optionee to continue in the employ of, or in a service relationship with, the
Company for any period of time, or as a limitation of the night of the Company to discharge the Optionee at any time with or without cause or notice and whether or not such discharge results in the failure of any Options to vest or any other adverse
effect on the Optionee’s interests. 
  
 11. No Rights as a
Stockholder. The Optionee shall not have any of the rights of a stockholder with respect to the Option Shares until such shares have been issued to him or her upon the due exercise of the Options. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to the date such shares are issued. 
  
 12. The Company’s Rights. The existence of the Options shall not affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any Issue of bonds, debentures, preferred or
other stocks with preference ahead of or convertible into, or otherwise affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company’s assets or
business, or any other corporate act or proceeding, whether of a similar character or otherwise. 
  
 13. Optionee. Whenever the word “Optionee” is used in any provision of this Agreement under circumstances where the provision should
logically be construed, as determined by the Administrator, to apply to the estate, personal representative, beneficiary to whom the Options may be transferred by will or by the laws of descent and distribution, or another permitted transferee, the
word “Optionee” shall be deemed to include such person. 
  
 14. Notices. All notices and other communications made or given pursuant to this Agreement shall be in writing and shall be sufficiently made or given if hand delivered or mailed by certified mail, addressed to the Optionee at the
address contained in the records of the Company, or addressed to the Administrator, care of the Company for the attention of its Corporate Secretary at its principal office or, if the receiving party consents in advance, transmitted and received via
telecopy or via such other electronic transmission mechanism as may be available to the parties. 
  
 15. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the Options granted hereunder. Any oral or
written agreements, representations, warranties, written inducements, or other communications made prior to the execution of this Agreement with respect to the Options granted hereunder shall be void and ineffective for all purposes. 
  
 16. Amendment. This Agreement may be amended from time to time by the
Administrator in its discretion; provided, however, that this Agreement may not be modified in a manner that would have a materially adverse effect on the Options or Option Shares as determined in the discretion of the Administrator,
except as provided in a written document signed by each of the parties hereto. 
  
 17. Governing Law. The validity, construction and effect of this Agreement, and of any determinations or decisions made by the Administrator relating to this Agreement, and the rights of any and all persons
having or claiming to have any interest under this Agreement, shall be determined exclusively in accordance with the laws of the State of Maryland, without regard to its provisions concerning the applicability of laws of other ‘jurisdictions.
Any suit with respect hereto will be brought in the federal or state courts in the districts which include the city and state in which the principal offices of the Company are located, and the Optionee hereby agrees and submits to the personal
‘jurisdiction and venue thereof. 
  
 18. Headings. The
headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 
  

 21 

 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer
as of the date first written above. 
  

			
	 HARBOR BANKSHARES CORPORATION

		
	By:	 	 
	 	 	

	 	 	 

  
 The undersigned hereby
acknowledges that he/she has carefully read this Agreement and agrees to be bound by all of the provisions set forth in this Agreement. 
  

			
	 OPTIONEE

	
	 
	

	 Joseph Haskins, Jr.
 Date: July 1, 2000

  

 22 

 EXERCISE FORM 
  
 Chairman of the Compensation Committee 
 c/o Office of the Corporate Secretary

 The Harbor Bank of Maryland 
 25 West Fayette Street

 Baltimore, Maryland 21201 
  
 Gentlemen: 
  
 I hereby exercise the Options granted to me on July 1, 2000, by Harbor Bankshares Corporation (the “Company”), subject to all the terms and provisions of the applicable grant agreement and notify you of my
desire to purchase shares of Common Stock of the Company at a price of $15.75 per share pursuant to the exercise of said Options. 
  
 Total Amount Enclosed: $ 
  

									
	 	 	 	 	 
				
	 Date:
	 	 	 	 	 	 
	 	 	
	 	 	 	

	 	 	 	 	 	 	 (Optionee)

			
	 	 	 	 	 Received by Harbor Bankshares Corporation on

	 	 	 	 	                     ,
20    .

					
	 	 	 	 	 	 	 By:
	 	 
	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 

  

 23

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