2017 STOCK INCENTIVE PLAN
Effective May 24, 2017
Adopted by the Board of Directors February 16, 2017
Section 1. Purpose
The purpose of the
Sierra Bancorp 2017 Stock Incentive Plan (the “Plan”) is to (i) encourage selected employees, directors and consultants
of Sierra Bancorp (the “Company”) and its subsidiaries to acquire a proprietary and vested interest in the growth and
performance of the Company; (ii) generate an increased incentive to contribute to the Company's future success and prosperity,
thus enhancing the value of the Company for the benefit of shareholders; and (iii) enhance the ability of the Company and its subsidiaries
to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability
of the Company depend.
Section 2. Definitions
For purposes of the
Plan, the following terms have the following meanings:
means any award under the Plan, including any Option or Restricted Stock Award.
Agreement” means, with respect to each Award, the signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.
means Board of Directors of the Company.
means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute and shall be deemed to include
any regulations or other interpretive guidance under such section and any amendments or successor provisions to such section, regulations
means the Compensation Committee of Sierra Bancorp and Bank of the Sierra; provided, however, that during any time that the Stock
is publicly traded, the Committee shall be a committee of the Board consisting solely of two or more directors as necessary in
each case to satisfy the requirements of Code Section 162(m) and Rule 16b-2 under the Exchange Act with respect to Awards granted
under the Plan.
means attorneys, accountants, other professionals, or any other persons who provide services to the Company or its subsidiaries.
Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.
Market Value” means, as of any date, the closing price of a share of Stock as reported on the principal securities exchange
or market on which the Stock is then listed or principally traded. If the relevant date does not fall on a day on which the Stock
has traded on such securities exchange or market, the date on which the Fair Market Value shall be established shall be the last
day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Committee,
in its discretion. In all events, the value of the Stock will be determined in accordance with Code Section 409A.
Date” means the date on which the granting of an Award is authorized, or such other date as may be specified in such authorization;
provided, for purposes of Code Sections 422 and 409A of the Code, as applicable, Grant Date shall mean the date of grant determined
in accordance with the requirements of Code Sections 422 and 409A, as applicable.
means the holder of a Restricted Stock Award granted under Section 7.
Option” means any Option intended to be and designated as an "incentive stock option" within the meaning of Section
422 of the Code.
Date” shall mean the date established by the Board or the Committee on which Certificates representing shares of Restricted
Stock shall be issued by the Company pursuant to the terms of Section 7(b).
Stock Option” means any Option that is not an Incentive Option.
means an option granted under Section 6.
means the holder of an Option granted under Section 6.
means an employee, director or Consultant who is selected by the Board or the Committee to receive an Award under the Plan, and
includes a Holder and/or an Optionee.
Compensation Award” shall mean any Award designated by the Committee as a Performance Compensation Award pursuant to Section
8 of the Plan, which, for the avoidance of doubt, could include, without limitation, performance units, performance-based shares
and other equity and non-equity performance-based awards.
Criteria” shall mean the criterion or criteria that the Committee shall select for purposes of establishing the Performance
Goal(s) for a Performance Period with respect to any Performance Compensation Award under the Plan.
Formula” shall mean, for a Performance Period, the one or more objective formulae applied against the relevant Performance
Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but
less than all, or none of the Performance Compensation Award has been earned for the Performance Period.
Goals” shall mean, for a Performance Period, the one or more goals established by the Committee for the Performance Period
based upon the Performance Criteria.
Period” shall mean the one or more periods of time, as the Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a Participant’s right to, and the payment of, a Performance
Transferee” means any of the persons or entities to which certain awards may be transferred as provided in Section 10(g)
of the Plan.
Stock” or “Restricted Stock Award” means an Award of Stock subject to restrictions, as more fully described in
Period” means the period determined by the Board or the Committee under Section 7(b).
16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act, as amended from time to time, and any successor rule.
means the common stock, no par value, of the Company, and any successor security.
Event” means: (i) the acquisition of more than fifty percent (50%) of the total fair market value or total voting power of
the Company’s stock or that of its wholly owned subsidiary, Bank of the Sierra (the “Bank”), by a person (including
an entity) or group; (ii) the acquisition in a period of twelve (12) months or less of at least thirty-five percent (35%) of the
Bank’s or the Company’s stock by a person or group; (iii) the replacement of a majority of the Bank’s or the
Company’s Board in a period of twelve (12) months or less by directors who were not endorsed by a majority of the current
Board members; or (iv) the acquisition in a period of twelve (12) months or less of forty percent (40%) or more of the Company’s
assets by an unrelated entity. In addition, notwithstanding anything herein to the contrary, in any circumstance in which the definition
of “Terminating Event” under this Plan would otherwise be operative and with respect to which the additional tax under
Section 409A of the Code would apply or be imposed, but where such tax would not apply or be imposed if the meaning of the term
"Terminating Event" met the requirements of Section 409A(a)(2)(A)(v) of the Code, then the term "Terminating Event"
herein shall mean, but only for the transaction, event or circumstance so affected and the item of income with respect to which
the additional tax under Section 409A of the Code would otherwise be imposed, a transaction, event or circumstance that is both
(x) described in the preceding provisions of this definition, and (y) a “change in control event” within the meaning
of Treasury Regulations Section 1.409A-3(i)(5).
means, for purposes of the Plan, with respect to a Participant, that (a) if the Participant is a director of the Company, he or
she has ceased to be, for any reason, a director and (b) if the Participant is an employee, he or she has ceased to be, for any
reason, employed by the Company or a subsidiary.
for Cause” in the case of an employee, shall mean termination for malfeasance or gross misfeasance in the performance of
duties, conviction of illegal activity in connection therewith, any conduct seriously detrimental to the interests of the Company
or a subsidiary corporation, or removal pursuant to the exercise of regulatory authority by the Board of Governors of the Federal
Reserve System (the “FRB”) or any applicable bank supervisory agency; and, in any event, the determination of the Board
with respect thereto shall be final and conclusive. In the case of a director, Termination for Cause shall mean removal pursuant
to Sections 302 or 304 of the California Corporations Code or removal pursuant to the exercise of regulatory authority by the FRB
or any applicable bank supervisory agency.
Date” means, for an Option or a portion of an Option, the first date on which the Option or such portion may be exercised
by the Optionee and, for shares of Restricted Stock, the date on which the shares cease to be forfeitable and become freely transferable
shares in the hands of the Holder.
Section 3. Administration
The Plan shall be administered by the Committee with respect to (i) approving Option grants and Restricted Stock Awards to the
Company’s “Named Executive Officers” as that term is defined in applicable SEC regulations; (ii) modifying or
canceling existing grants or awards to Named Executive Officers; or (iii) imposing limitations, restrictions and conditions upon
any such grant or award as the Committee deems necessary or advisable, unless the Board, in its discretion shall elect to grant
or modify any awards to Named Executive Officers which are not intended to be exempt compensation pursuant to Section 162(m) of
the Code. In connection with the administration of the Plan, the Committee, to the extent authorized, shall have the powers possessed
by the Board. The Board shall administer the Plan in all other respects, unless the Board in its discretion shall elect to delegate
such administration to the Committee with respect to such other aspects of the Plan. The members of the Committee shall at all
times (i) meet the independence requirements of the Nasdaq Stock Market, Inc.; (ii) qualify as “non-employee directors”
as defined in Section 16 of the Exchange Act; and (iii) qualify as “outside directors” under Section 162(m) of the
Code. Nothing contained herein shall prevent the Board from delegating to the Committee full power and authority over the administration
of the Plan.
Any action of the Board
or the Committee with respect to administration of the Plan shall be taken pursuant to a majority vote of its members; provided,
however, that with respect to action by the Board in granting an option or other award to an individual director, such action must
be authorized by the required number of directors without counting the interested director, who shall abstain as to any vote on
his or her option or award. An interested director may be counted in determining the presence of a quorum at a meeting of the Board
where such action will be taken.
The Board or the Committee as appropriate pursuant to Section 3(a) shall grant Awards to directors and eligible employees. In particular
and without limitation, the Board or the Committee, subject to the terms of the Plan, shall:
(i) select the eligible
Participants to whom Awards may be granted;
(ii) determine whether
and to what extent Awards are to be granted under the Plan;
(iii) determine the
number of shares to be covered by each Award granted under the Plan; and
(iv) determine the
terms and conditions of any Award granted under the Plan based upon factors determined by the Board or the Committee.
(c) Board and
Committee Determinations Binding. Subject to the express provisions of the Plan, the Board or the Committee shall have the
authority to construe and interpret the Plan, any Award and any Award Agreement; to define the terms used therein; to prescribe,
amend, and rescind rules and regulations relating to administration of the Plan, to determine the duration and purposes of leaves
of absence which may be granted to Participants without constituting a termination of their employment for purposes of the Plan;
and to make all other determinations necessary or advisable for administration of the Plan, including, without limitation, compliance
with Rule 16b-3. Any determination made by the Board or the Committee pursuant to the provisions of the Plan with respect to any
Award shall be made in its sole discretion at the Grant Date or, unless in contravention of any express term of the Plan or Award,
at any later time. Determinations of the Board or the Committee on matters referred to in this section shall be final and conclusive,
and shall be binding on all persons, including the Company and Participants.
Section 4. Stock Subject to Plan
(a) Shares Available
for Awards. The total number of shares of the Company’s authorized but unissued Stock reserved and available for issuance
pursuant to Awards under this Plan shall be 850,000 shares, subject to adjustment as provided in Section 4(b). If any Option terminates
or expires without being exercised in full or if any shares of Stock subject to a Restricted Stock Award are forfeited or settled
in cash, the shares issuable under such Option or Award shall again be available for issuance in connection with Awards to be granted
under the Plan. If any shares subject to an Award are not delivered to a Participant because such shares are withheld for the payment
of taxes or the Award is exercised through a reduction of shares subject to the Award through the “net exercise” feature
described herein, the number of shares that are not delivered to the Participant will remain available for issuance under the Plan.
In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split or other change in capital
structure affecting the Stock without receipt of consideration by the Company, such substitution or adjustments shall be made in
the aggregate number of shares of Stock reserved for issuance under the Plan, in the number and exercise price of shares subject
to outstanding Options, and in the number of shares subject to other outstanding Awards, as may be determined to be appropriate
by the Board or the Committee, in its sole discretion; provided, however, that no fractional shares of Stock shall be issued under
the Plan on account of any such adjustment. In the case of adjustments made pursuant to this Section 4(b), the Committee shall,
in the case of Incentive Stock Options, ensure that any adjustments under this Section 4(b) will not constitute a modification,
extension or renewal of the Incentive Stock Options within the meaning of Section 424(h)(3) of the Code and in the case of Nonqualified
Stock Options, ensure that any adjustments under this Section 4(b) will not constitute a modification of such Nonqualified Stock
Options within the meaning of Section 409A of the Code. Any adjustments made under this Section 4(b) shall be made in a manner
which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. Further, with respect to
Awards intended to qualify as "performance-based compensation" under Section 162(m) of the Code, any adjustments or substitutions
will not cause the Company to be denied a tax deduction on account of Section 162(m) of the Code. The Company shall give each Participant
notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.
Limitation. The Company may not grant Awards under the Plan for more than 100,000 shares to any one Participant in any one
fiscal year, subject to adjustment from time to time as provided in Section 4(b) above. Subject to Section 4(b) above, (i) no more
than 100,000 shares of Stock may be earned in respect of Performance Compensation Awards to any one Participant in any one fiscal
year during a Performance Period, or in the event such Performance Compensation Award is paid in cash, other securities, other
Awards or property, no more than the Fair Market Value of 100,000 shares of Stock on the last day of the Performance Period to
which such Award relates; and (ii) the maximum amount that can be paid to any single Participant in any one calendar year pursuant
to a cash bonus award described in Section 8(a) of the Plan shall be $2,000,000. Determinations under the preceding sentence shall
be made in a manner that is consistent with Section 162(m) of the Code and regulations promulgated thereunder. The provisions of
this Section 4(c) shall not apply in any circumstance with respect to which the Board or the Committee determines that compliance
with Section 162(m) of the Code is not necessary.
Section 5. Eligibility
Awards may be granted
to all employees, officers (whether or not they are also directors), non-employee directors, and Consultants of the Company and
its subsidiaries. However, Consultants and directors who are not also officers or employees of the Company or a subsidiary corporation
are not eligible to receive Incentive Options under the Plan, but only other types of Awards.
Section 6. Stock Options
Any Option granted under the Plan shall be in such form as the Board or the Committee may from time to time approve. The Board
or the Committee shall have the authority to grant to any eligible Participant Incentive Options, Nonqualified Stock Options or
both types of Options. All Options granted under the Plan shall be Nonqualified Stock Options unless the applicable Award agreement
expressly states that the Option is intended to be an Incentive Stock Option.
Options. Incentive Options may be granted only to employees of the Company or a subsidiary. Any portion of an Option that is
not designated as, or does not qualify as, an Incentive Option shall constitute a Nonqualified Stock Option.
(c) Terms and
Conditions. Options granted under the Plan shall be governed by the terms of the Plan and any applicable Award Agreement and
shall be subject to the following terms and conditions:
(i) Option Term.
Each Option and all rights or obligations thereunder shall expire on such date as the Board or the Committee may determine, but
not later than ten (10) years from the Grant Date of such Option, and shall be subject to earlier termination as provided elsewhere
in the Plan. As to any Incentive Option granted to an Optionee who, immediately before the option Grant Date, owns beneficially
more than ten percent (10%) of the outstanding stock of the Company (whether acquired upon exercise of Options or otherwise), such
option must not be exercisable by its terms after five (5) years from the Grant Date.
(ii) Grant Date.
The Grant Date of an Option shall be the day of the action of the Board or the Committee described in Section 3(a) hereof; provided
that the Optionee does not have the ability to further negotiate the terms of his or her grant, and provided further that the material
terms of the grant are communicated to the Optionee within a relatively short period of time following the Board’s action.
If appropriate resolutions of the Board or the Committee indicate that an Option is to be granted as of and on some future date,
the time such Option is granted shall be such future date. If action by the Board or the Committee is taken by the unanimous written
consent of its members, the action of the Board or the Committee shall be deemed to be at the time the last Board member signs
the consent, subject to the same requirements concerning communication with Optionees set forth in the first sentence of this Section
Price. The exercise price per share of stock subject to each Option shall be determined by the Board or the Committee but shall
not be less than one hundred percent (100%) of the Fair Market Value of such stock at the time such Option is granted. As to any
Incentive Option granted to an Optionee who, immediately before the Option is granted, owns shares representing more than ten percent
(10%) of the voting power of all classes of stock of the Company, the purchase price must be at least one hundred ten percent (110%)
of the Fair Market Value per share of the Stock on the Grant Date.
Each Option shall be exercisable in such installments, which need not be equal, and upon such conditions as the Board or the Committee
shall determine; provided, however, that in no event shall any installment of any Option become exercisable less than one (1) year
from the Grant Date. If an Optionee shall not in any given installment period purchase all of the shares which such Optionee is
entitled to purchase in such installment period, such Optionee’s right to purchase any shares not purchased in such installment
period shall continue until the expiration of such Option. The Board or the Committee also may provide that the vesting dates for
an Option will be accelerated upon the subsequent occurrence of such event (e.g., early retirement of the Optionee) as the Board
or the Committee may specify. No Option or installment thereof shall be exercisable except with respect to whole shares, and fractional
share interests shall be disregarded except that they may be accumulated and shall continue until the expiration of the Option.
(v) Limit on Exercisability.
The aggregate Fair Market Value (determined as of Option Grant Date) of the Stock for which any officer or employee may be granted
Incentive Options which are first exercisable during any one calendar year (under all Incentive Stock Option Plans of the Company
and its subsidiaries) shall not exceed One Hundred Thousand Dollars ($100,000), and any such excess shall constitute a Nonqualified
(vi) Method of
Exercise; Payment. Options may be exercised by ten (10) days written notice delivered to the Company, stating the number of
shares with respect to which the Option is being exercised and providing any other information requested by the Company which might
be necessary in order to process and record the option exercise, together with cash or check in the amount of the purchase price
for such shares. Regardless of the method of exercise, the date that full payment of the purchase price is received by the Company,
whether in cash or in the form of shares accepted via a “net exercise,” will be deemed to be the exercise date, which
must occur on or prior to the expiration date of the Option. No fewer than ten (10) shares may be purchased at one time unless
the number purchased is the total number which may be purchased under the Option.
If the Board had so authorized
upon the grant of an Incentive Option or on or after grant of a Nonqualified Option (and subject to such conditions, if any, as
the Board may deem necessary to avoid adverse accounting or tax effects on the Company), Options may also be exercised by:
|·||a “net exercise” of the Option (as further described below);|
|·||delivery to the Company of a cash payment made pursuant to a “cashless” exercise program
(as further described below); or|
|·||any other form of legal consideration that may be acceptable to the Board.|
In the case of a “net
exercise” of an Option, the Company will not require a cash payment of the full exercise price of the Option from the Optionee
but will reduce the number of shares of Stock issued upon the exercise by the largest number of whole shares that have a Fair Market
Value that does not exceed the aggregate exercise price. The number of whole shares referenced in the previous sentence will be
determined by dividing the aggregate exercise price by the closing price per share of the Company’s stock on the day of the
transaction. With respect to any remaining balance of the aggregate exercise price, the Company will notify the Optionee of the
balance prior to the close of business on the date of exercise and will accept a cash payment from the Optionee for that amount.
In the case of a “cashless
exercise,” the Optionee must deliver to the Company (i) an exercise notice instructing the Company to deliver the certificates
for the shares purchased to a designated brokerage firm which shall sell the stock in the market as soon as the Option is exercised;
and (ii) a copy of irrevocable instructions delivered to the brokerage firm to sell the shares acquired upon exercise of the Option
and to deliver to the Company from the sale proceeds sufficient cash to pay the exercise price and applicable withholding taxes
arising as a result of the exercise, with the balance of the sales proceeds, if any, after payment of any broker's commission,
to be credited to the Optionee’s brokerage account. In the case of a “cashless exercise,” the Company will use
its reasonable best efforts to cause the Company’s transfer agent to issue the shares within ten (10) days of receipt of
the check from the broker representing payment for the shares.
The Company may require
any Optionee, or any person to whom an Option is transferred under Section 6(c)(ix) hereof, as a condition of exercising any such
Option, to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or otherwise distributing the stock. The requirement
of providing written assurances, and any assurances given pursuant to the requirement, shall be inoperative if (i) the shares to
be issued upon the exercise of the Option have been registered under a then currently effective registration statement under the
Securities Act of 1933, as amended, or (ii) a determination is made by counsel for the Company that such written assurances are
not required in the circumstances under the then applicable state or federal securities laws.
The number of shares
of Stock underlying an Option will decrease following the exercise of such Option to the extent of (i) shares used to pay the exercise
price of an Option under the “net exercise” feature, (ii) shares actually delivered to the Optionee or the Optionee’s
brokerage firm as a result of such exercise and (iii) shares withheld for purposes of tax withholding.
upon Disqualifying Disposition of an Incentive Stock Option. Each Optionee under the Plan shall notify the Company in writing
immediately after the date the Optionee makes a disqualifying disposition of any shares of Stock acquired pursuant to the exercise
of such Incentive Stock Option. A disqualifying disposition is any disposition (including, without limitation, any sale) of such
shares of Stock before the later of (i) two years after the Grant Date of the Incentive Stock Option or (ii) one year after the
date of exercise of the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures
established by the Committee, retain possession of any shares of Stock acquired pursuant to the exercise of an Incentive Stock
Option as agent for the applicable Optionee until the end of the period prescribed in the preceding sentence.
With Laws, etc. Notwithstanding the foregoing, in no event shall an Optionee be permitted to exercise an Option in a manner
that the Committee determines would violate the Sarbanes-Oxley Act of 2002, if applicable, or any other applicable law or the applicable
rules and regulations of the Securities and Exchange Commission or the applicable rules and regulations of any securities exchange
on which the securities of the Company are listed, traded or reported.
of Employment; Disability. Except as provided in Subsection 6(c)(i) above, if an Optionee ceases to be employed by or to serve
as a director of the Company or a subsidiary corporation for any reason other than death, disability or Cause, such Optionee’s
Option shall expire on the earlier of (a) ninety (90) days thereafter in the case of Incentive Options, and one (1) year thereafter
in the case of Nonqualified Stock Options or (b) the expiration of the term of the Option as set forth in the Award Agreement;
and during such period after such Optionee ceases to be an employee or director, such Option shall be exercisable only as to those
shares which were vested and exercisable as of the date on which the Optionee ceased to be employed by or ceased to serve as a
director of the Company or such subsidiary corporation. Except as provided in Subsections 6(c)(i) above, if an Optionee ceases
to be employed by or ceases to serve as a director of the Company or a subsidiary corporation by reason of disability (within the
meaning of Section 22(e)(3) of the Code), such Optionee’s Option shall expire on the earlier of (a) not later than one (1)
year thereafter or (b) the expiration of the term of the Option as set forth in the Award Agreement; and during such period after
such Optionee ceases to be an employee or a director such Option shall be exercisable only as to those shares which were vested
and exercisable as of the date on which the Optionee ceased to be employed by or ceased to serve as a director of the Company or
such subsidiary corporation. If, after termination, the Optionee does not exercise his or her Option within the time specified
herein or in the Award Agreement, the Option shall terminate. Notwithstanding anything in the Plan to the contrary, the Company
shall be under no obligation to notify any Optionee of the pending expiration of his or her option and shall have no liability
in the event of an expired Option.
of Employment for Cause. If an Optionee’s employment by or service as a director of the Company or a subsidiary corporation
is terminated for Cause, such Optionee’s vested and unvested Option shall expire immediately and cease to be exercisable.
(xi) Death of Optionee.
Except as provided in Subsection 6(c)(i) above, if any Optionee dies while employed by or serving as a director of the Company
or a subsidiary corporation or during the 90-day or one-year periods referred to in Subsection 6(c)(vii) above, such Optionee’s
Option shall expire on the earlier of (a) one (1) year after the date of such death or (b) the expiration of the term of such Option
as set forth in the Award Agreement. After such death but before such expiration, the persons to whom the Optionee’s rights
under the Option shall have passed by will or by the applicable laws of descent and distribution shall have the right to exercise
such Option to the extent that it was vested and exercisable as of the date of the Optionee’s death. If the Option is not
exercised within the time specified herein or the Award Agreement, the Option shall terminate.
Section 7. Restricted Stock Awards
Restricted Stock Awards may be issued hereunder to Participants, for no cash consideration or for such amount as the Board or the
Committee in its discretion shall determine, either alone or in addition to other Awards granted under the Plan and the terms of
any such Awards shall be governed by the terms of the Plan and the applicable Award Agreement. The provisions of Restricted Stock
Awards need not be the same with respect to each recipient. The Committee may provide upon grant of a Restricted Stock Award that
any shares of Restricted Stock that may be purchased by the Holder in cash and are subsequently forfeited by the Holder prior to
the Vesting Date therefor shall be reacquired by the Company at the purchase price originally paid therefor by the Holder, if applicable.
(b) Issue Date
and Vesting Date. At the Restricted Stock Award Grant Date, the Board or the Committee shall establish an Issue Date or Issue
Dates and a Vesting Date or Vesting Dates with respect to such shares. The Board or the Committee may provide upon grant of a Restricted
Stock Award that different numbers or portions of the shares subject to the Award shall have different Vesting Dates; provided,
however, that in no event shall any installment of any Restricted Stock Award become vested less than one (1) year from the Grant
Date. The Board or the Committee may also provide that the Vesting Dates will be accelerated upon the subsequent occurrence of
such event (e.g., early retirement of the Holder) as the Board or the Committee may specify. The Board or the Committee also may
establish upon grant of a Restricted Stock Award that some or all of the shares subject thereto shall be subject after the Vesting
Date to additional restrictions upon transfer or sale, although not to forfeiture.
of Shares. Reasonably promptly after the Issue Date with respect to shares of Restricted Stock, the Company shall cause to
be issued a stock certificate or a statement for book entry shares, registered in the name of the Holder to whom such shares were
granted; provided, that the Company shall not cause such a stock certificate or book entry statement to be issued unless it has
received a stock power duly endorsed in blank with respect to such shares. The Company shall instruct its transfer agent to ensure
that such shares are restricted from transfer (whether by legend in the case of a stock certificate or by other means in the case
of book entry shares) in substantially the following manner:
of the shares of stock represented by this certificate or in this letter of instruction is subject to the restrictions, terms and
conditions (including forfeiture provisions and restrictions against transfer) contained in the Sierra Bancorp 2017 Stock Incentive
Plan and related Award Agreement, and such rules, regulations and interpretations as Sierra Bancorp’s Board of Directors
or Compensation Committee may adopt. Copies of the Plan, Award Agreement and rules, regulations and interpretations, if any, are
on file at the principal executive office of Sierra Bancorp, 86 North Main Street, Porterville, California 93257.”
Such legend shall not
be removed until such shares vest pursuant to the terms hereof.
Each certificate issued
pursuant to this Section 7(c), together with the stock powers relating to the shares of Restricted Stock evidenced by such certificate,
shall be held by the Company unless the Board or the Committee determines otherwise.
of Vesting. Upon the vesting of a share of Restricted Stock pursuant to the terms of the Plan and the applicable Award Agreement,
the restrictions on transfer described in Section 7(c) shall cease to apply to such share. In the case of certificated shares,
reasonably promptly after a Restricted Stock Award becomes fully vested, the Company shall cause to be delivered to the Holder
to whom such shares were granted, a certificate evidencing such share, free of the legend set forth in Section 7(c). If a Restricted
Stock Award is partially vested, the Company may continue to hold the originally issued certificate until fully vested unless the
Holder specifically requests the issuance of a certificate for just the vested shares. Reasonably promptly after any such request,
the Company shall cause the certificates to be issued separately for the restricted and unrestricted shares, and shall deliver
the unrestricted certificate to the Holder. In the case of book entry shares, reasonably promptly after a share of Restricted Stock
vests, the Company shall inform the Company’s transfer agent that the restrictions on such shares have been removed, and
shall also notify the Holder that this has been done. Notwithstanding the foregoing, such shares still may be subject to restrictions
on transfer as a result of applicable securities laws.
If and to the extent the Board or the Committee so specifies upon grant, the Holder of shares of Restricted Stock shall be entitled
to accrue, after the Grant Date and until the Vesting Date, any cash dividends or other distributions with respect to the shares
identical or comparable in financial value to the dividends and other distributions that would have been received by the Holder
had the shares not been subject to the restrictions on Restricted Stock imposed under the Plan. No such dividends or distributions
shall be paid until the Vesting Date, and the Holder shall not be entitled to any such distributions to the Company in the event
of forfeiture of the Restricted Stock. Any dividends or distributions payable to the Holder that constitute Stock or other equity
securities of the Company shall be issued in the same manner and subject to the same restrictions and conditions as apply to the
shares of Restricted Stock as to which such dividends and distributions are paid.
(f) Voting Rights.
If and to the extent the Board or the Committee so specifies upon grant, the Holder of shares of Restricted Stock shall be entitled
to vote or direct the voting of such shares after the Grant Date and until the Vesting Date.
of Election Under Section 83(b) of the Code. If any Holder shall, in connection with the acquisition of shares of Restricted
Stock under the Plan, make the election permitted under Section 83(b) of the Code (i.e., an election to include in gross income
in the year of transfer the amounts specified in Section 83(b)), such Holder shall notify the Company of such election within ten
days of filing notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant
to regulations issued under the authority of Section 83(b).
Except to the extent otherwise provided in the Award Agreement and pursuant to this section, in the event of a Termination of employment
or directorship during the Restriction Period, all shares still subject to restriction shall be forfeited by the Holder. If the
recipient has paid cash for the Award, the stock will be repurchased at the same price originally paid by the Holder. In the event
that the Company requires such a return of shares, it also shall have the right to require the return of all dividends paid on
such shares, whether by termination of any escrow arrangement under which such dividends are held or otherwise, unless otherwise
specified in the applicable Award Agreement.
Section 8. Performance Compensation
The Committee shall have the authority, at the time of grant of any Award, to designate such Award as a Performance Compensation
Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code. The Committee
shall also have the authority to make an award of a cash bonus to any Participant and designate such cash bonus as a Performance
Compensation Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code.
of Committee with Respect to Performance Compensation Awards. With regard to a particular Performance Period, the Committee
shall have sole discretion to select the length of such Performance Period, the type(s) of Performance Compensation Awards to be
issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance
Goals(s) that is (are) to apply and the Performance Formula. Within the first 90 days of a Performance Period (or, if longer or
shorter, within the maximum period allowed under Section 162(m) of the Code, if applicable), the Committee shall, with regard
to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of
the matters enumerated in the immediately preceding sentence and record the same in writing.
Criteria. The Performance Criteria that will be used to establish the Performance Goal(s) shall be based on the attainment
of specific levels of performance of the Company (and/or one or more subsidiaries, divisions, reportable segments or operational
units, or any combination of the foregoing) and shall include one or more of the following: (i) net earnings or net income (before
or after taxes); (ii) basic or diluted earnings per share (before or after taxes); (iii) net revenue or revenue growth; (iv) gross
profit or gross profit growth; (v) return measures (including, but not limited to, return on assets or equity); (vi) net interest
margin; (vii) overhead efficiency or operating expense ratios; (viii) share price (including, but not limited to, growth measures
and total shareholder return (absolute or relative)); (ix) performance relative to budget; or (x) objective measures of personal
targets, goals or completion of projects. Any one or more of the Performance Criteria may be used on an absolute or relative basis
to measure the performance of a Participant and the Company (and/or one or more subsidiaries, divisions, reportable segments or
operational units, and any combination of the foregoing), as the Committee may deem appropriate, or any of the above Performance
Criteria may be compared to the performance of a selected group of comparison companies or a published or special index that the
Committee, in its sole discretion, deems appropriate, or as compared to various stock market indices. To the extent required under
Section 162(m) of the Code, the Committee shall, within the first ninety (90) days of a Performance Period (or, if shorter,
within the maximum period allowed under Section 162(m) of the Code), define in an objective fashion the manner of calculating
the Performance Criteria it selects to use for such Performance Period for any Participant and thereafter promptly communicate
such Performance Criteria to such Participant.
of Performance Criteria/Goal(s). In the event that applicable tax and/or securities laws change to permit Committee discretion
to alter the governing Performance Criteria without obtaining shareholder approval of such alterations, the Committee shall have
sole discretion to make such alterations without obtaining shareholder approval. The Committee may adjust or modify the calculation
of a Performance Goal for a Performance Period, based on and in order to appropriately reflect the following events: (i) asset
write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles,
or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring programs; (v) items
as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing
in the Company’s Annual Report in the Company’s Form 10-K for the applicable year; (vi) acquisitions or divestitures;
(vii) any other specific unusual or nonrecurring events, or objectively determinable category thereof; and (viii) a change
in the Company’s fiscal year.
(e) Payment of
Performance Compensation Awards.
to Receipt of Payment. Unless otherwise provided in the applicable Award Agreement or as otherwise determined by the Committee,
a Participant must be employed by the Company or a subsidiary of the Company on the date of payment with respect to a Performance
Period to be eligible to receive such payment in respect of a Performance Compensation Award for the preceding Performance Period.
A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that: (A) the
Performance Goals for such period are achieved; and (B) all or some of the portion of such Participant’s Performance
Compensation Award has been earned for the Performance Period based on the application of the Performance Formula to such achieved
Following the completion of a Performance Period, the Committee shall review and certify in writing whether, and to what extent,
the Performance Goals for the Performance Period have been achieved and calculate and certify in writing that amount of the Performance
Compensation Awards earned for the period based upon the Performance Formula. The Committee shall then determine the amount of
each Participant’s Performance Compensation Award actually payable for the Performance Period and, in so doing, may apply
(iv) Use of Negative
Discretion. In determining the actual amount of an individual Participant’s Performance Compensation Award for a Performance
Period, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned under the Performance Formula
in the Performance Period through the use of Negative Discretion if, in its sole judgment, such reduction or elimination is appropriate.
(f) Timing of Award
Payments. Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon as administratively
practicable following completion of the certifications required by this Section 8, but in no event later than two-and-one-half
months following the end of the fiscal year during which the Performance Period is completed; provided, however, that such Performance
Compensation Awards may be deferred and paid after such date so long deferrals are made in accordance with Section 409A of the
Code and applicable guidance thereunder.
Section 9. Terminating Events
(a) Impact of
Event. In the event of a “Terminating Event” as defined in Section 2(r), any surviving corporation or entity or
acquiring corporation or entity, or affiliate of such corporation or entity, may assume any Options or Restricted Stock Awards
outstanding under the Plan or may substitute similar awards for those outstanding under the Plan. In the event any surviving corporation
or entity or acquiring corporation or entity in a Terminating Event does not assume such Options or other Awards or does not substitute
similar Options or other Awards for those outstanding under the Plan, then (i) the vesting of such Options or other Awards outstanding
under the Plan shall be accelerated and made fully exercisable and all restrictions thereon shall lapse at such date as may be
established by the Board or the Committee in connection with the Terminating Event; and (ii) upon the closing of the Terminating
Event, any Options outstanding under the Plan shall be terminated if not exercised prior to the closing, unless the Board in its
sole discretion determines prior to the effective date of the Terminating Event that all outstanding Options and the Plan itself
should continue in full force and effect. In the case of such a determination by the Board, or in the event that any pending Terminating
Event does not occur, the Plan and all outstanding Options and other Awards thereunder shall continue in force with all original
vesting schedules in effect. With respect to Performance Compensation Awards, in the event of a Termination Event, all incomplete
Performance Periods in respect of such Award in effect on the date the Change in Control occurs shall end on the date of such change
and the Committee shall (i) determine the extent to which Performance Goals with respect to each such Performance Period have been
met based upon such audited or unaudited financial information then available as it deems relevant and (ii) cause to be paid to
the applicable Participant partial or full Awards with respect to Performance Goals for each such Performance Period based upon
the Committee's determination of the degree of attainment of Performance Goals or, if not determinable, assuming that the applicable
"target" levels of performance have been attained.
(b) Notice to
Participants of Terminating Event. In connection with any Terminating Event, the Board or the Committee shall notify each Participant
of the pendency of the Terminating Event in such manner and at such time as the Board, in its sole discretion, shall deem appropriate
in connection with such Terminating Event. With respect to Holders of Restricted Stock, the notice shall simply inform such Participants
of the pendency of the Terminating Event and of the fact that the restrictions on their Restricted Stock will lapse. In the case
of Optionees, the notice shall inform such Optionees that their Options shall, notwithstanding the provisions of Sections 5(c)(iv)
hereof, become exercisable in full and not only as to those shares with respect to which installments, if any, have then accrued,
subject, however, to earlier expiration or termination as provided elsewhere in the Plan, and further subject to the condition
that the Terminating Event in fact occurs. Optionees shall then be entitled to exercise any Options or portions thereof at such
times as may be specified by the Board or the Committee in connection with the Terminating Event.
Section 10. Acceleration of Options
or other Awards.
provisions of Sections 6(c)(iv) or 7(b) hereof or any provision to the contrary contained in any Award Agreement, the Board or
the Committee, in its sole discretion, may accelerate the vesting of all or any Award then outstanding. The decision by the Board
or the Committee to accelerate an Award or to decline to accelerate an Award shall be final. In the event of the acceleration of
Options as the result of a decision by the Board or the Committee pursuant to this Section 9, each outstanding Option so accelerated
shall be exercisable for a period from and after the date of such acceleration and upon such other terms and conditions as the
Board or the Committee may determine in its sole discretion, provided that such terms and conditions (other than terms and conditions
relating solely to the acceleration of exercisability and the related termination of an Option) may not adversely affect the rights
of any Optionee without the consent of the Optionee so adversely affected. Any outstanding Option which has not been exercised
by the holder at the end of such period shall terminate automatically at that time. In addition, in connection with the grant of
any Award hereunder, the Board or the Committee may specify that the holder of such Award may be entitled to acceleration of the
Award under specified circumstances (such as early retirement), and the right to such acceleration shall be specified in the appropriate
Section 11. General Provisions
(a) Award Grants.
Any Award may be granted either alone or in addition to other Awards granted under the Plan. Subject to the terms and restrictions
set forth elsewhere in the Plan, the Board or the Committee shall determine the consideration, if any, payable by the Participant
for any Award and, in addition to those set forth in the Plan, any other terms and conditions of the Awards. The Board or the Committee
may condition the grant or payment of any Award upon the attainment of specified performance goals or such other factors or criteria,
including vesting based on continued service on the Board or employment, as the Board or the Committee shall determine. Performance
objectives may vary from Participant to Participant and among groups of Participants. The other provisions of Awards also need
not be the same with respect to each recipient. Unless specified otherwise in the Plan or by the Board or the Committee, the Grant
Date of an Award shall be the date of action by the Board or the Committee to grant the Award, provided that Participants do not
have the ability to further negotiate the terms of their awards, and provided further that the awards will be communicated to Participants
within a relatively short period of time following the Board’s or the Committee’s action.
(b) Award Agreement.
As soon as practicable after the date of an Award grant, the Company and the Participant shall enter into a written Award Agreement
identifying the Grant Date, and specifying the terms and conditions of the Award. Options are not exercisable until after execution
of the Award Agreement by the Company and the Participant, but a delay in execution of the Award Agreement shall not affect the
validity of the Option grant.
Restrictions. All shares of Stock or other securities delivered under the Plan shall be subject to such stock transfer orders,
legends and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the SEC,
any market in which the Stock is then traded and any applicable federal, state or foreign securities laws.
(d) Tax Withholding.
Whenever shares of Stock are issued or to be issued pursuant to Awards, the Company shall have the right to require the Participant
to remit to the Company an amount sufficient to satisfy federal, state, local or other withholding tax requirements if, when, and
to the extent required by law (whether so required to secure for the Company an otherwise available tax deduction or otherwise)
prior to the delivery of any shares. The obligations of the Company under the Plan shall be conditional on satisfaction of all
such withholding obligations and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from
any payment of any kind otherwise due to the Participant. With the approval of the Board or the Committee, which it shall have
sole discretion to grant, the Participant may elect to satisfy an applicable withholding requirement, in whole or in part, by having
the Company withhold from delivery shares of Stock having a value equal to the amount of tax to be withheld. Such shares shall
be valued at their Fair Market Value on the date as of which the amount of tax to be withheld is determined. Notwithstanding anything
herein to the contrary, the amount withheld shall not exceed the maximum statutory tax rates in the Participant’s applicable
jurisdictions. The maximum statutory tax rates are based on the applicable rates of the relevant tax authorities (for example,
federal, state, and local), including the Participant’s share of payroll or similar taxes, as provided in tax law, regulations
or the authority’s administrative practices, not to exceed the highest statutory rate in that jurisdiction (even if that
rate exceeds the highest rate that may be applicable to the Participant) and that does not result in adverse accounting consequences.
Fractional share amounts shall be settled in cash.
No Incentive Option shall be assignable or otherwise transferable by the Participant other than by will or by the laws of descent
and distribution. During the life of a Participant, an Award shall be exercisable, and any elections with respect to an Award may
be made, only by the Participant or the Participant's guardian or legal representative.
of Awards Other than Incentive Options. Except as otherwise provided in this Section 11(f), Awards shall not be transferable,
and no Award or interest therein may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than
by will or by the laws of descent and distribution. All of a Participant’s rights in any Award may be exercised during the
life of the Participant only by the Participant or the Participant’s legal representative. However, the Board may, at or
after the grant of a Nonqualified Option or a Restricted Stock Award, provide that such Award may be transferred by the Participant
through a gift or domestic relations order in settlement of marital property rights to any of the following donees or transferees
and may be reacquired by the Participant from any of such donors or transferees (each a “Permitted Transferee”):
|·||any “family member,” which includes any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or sister-in-law, including adoptive relationships and any individual sharing the Participant’s household (other than a tenant
|·||a trust in which family members have more than 50% of the beneficial interest;|
|·||a foundation in which family members (or the Participant) control the management of assets; or|
|·||any other entity in which family members (or the Participant) own more than 50% of the voting interests,|
provided, that (x) any such transfer is
without payment of any value whatsoever and that no transfer shall be valid unless first approved by the Board, acting in its sole
discretion; (y) the Award Agreement pursuant to which such Awards are granted, and any amendments thereto, must be approved by
the Board and must expressly provide for transferability in a manner consistent with this Section 11(f); and (z) subsequent transfers
of transferred Awards shall be prohibited except in accordance with this Section 11(f). Following transfer, any such Awards and
any securities issued pursuant thereto shall continue to be subject to the same terms and conditions as were applicable immediately
prior to transfer, provided that the term of the Plan and the Award Agreement shall continue to be applied with respect to the
original Participant, and any Awards shall be exercisable by the transferee only to the extent and for the periods specified in
the Award Agreement or Section 6(c), as applicable.
of Awards; Waivers. The Board or the Committee may adjust the performance goals and measurements applicable to Awards (i) to
take into account changes in law and accounting and tax rules, (ii) to make such adjustments as the Board or the Committee deems
necessary or appropriate to reflect the inclusion or exclusion of the impact of extraordinary or unusual items, events or circumstances
in order to avoid windfalls or hardships, and (iii) to make such adjustments as the Board or the Committee deems necessary or appropriate
to reflect any material changes in business conditions. In the event of hardship or other special circumstances of a Participant
and otherwise in its discretion, the Board or the Committee may waive in whole or in part any or all restrictions, conditions,
vesting, or forfeiture with respect to any Award granted to such Participant.
(h) Award as
Deferred Compensation. To the extent applicable and notwithstanding any other provision of the Plan, the Plan and Award agreements
hereunder shall be administered, operated and interpreted in accordance with Code Section 409A, including any regulations or other
guidance that may be issued after the date on which the Board approves the Plan, provided, however, that in the event that the
Committee determines that any amounts payable hereunder may be taxable to a Participant under Code Section 409A prior to the payment
and/or delivery to such Participant of such amount, the Company may (a) adopt such amendments to the Plan and related Award, and
appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary
or appropriate to preserve the intended tax treatment of the benefits provided by the Plan and Awards hereunder; and/or (b) take
such other actions as the Committee determines necessary or appropriate to comply with or exempt the Plan and/or Awards from the
requirements of Code Section 409A. The Company and its subsidiaries make no guarantees to any Person regarding the tax treatment
of Awards or payments made under the Plan, and, notwithstanding the above provisions and any agreement or understanding to the
contrary, if any Award, payments or other amounts due to a Participant (or his or her beneficiaries, as applicable) results in,
or causes in any manner, the application of any adverse tax consequence under Code Section 409A or otherwise to be imposed, then
the Participant (or his or her Beneficiaries, as applicable) shall be solely liable for the payment of, and the Company and its
subsidiaries shall have no obligation or liability to pay or reimburse (either directly or otherwise) the Participant (or his or
her beneficiaries, as applicable) for, any such adverse tax consequences. If any Deferred Compensation Award is payable to a “specified
employee” (within the meaning of Treasury Regulations Section 1.409A-1(i)), then such payment, to the extent payable due
to the Participant’s Termination of Service and not otherwise exempt from Section 409A of the Code, shall not be paid before
the date that is six (6) months after the date of such Termination of Service (or, if earlier, the date of such Participant’s
The Board or the Committee may condition its discretionary waiver of a forfeiture, the acceleration of vesting at the time of Termination
of a Participant holding any unexercised or unearned Award, the waiver of restrictions on any Award, or the extension of the expiration
period to a period not longer than that provided by the Plan upon such Participant's agreement (and compliance with such agreement)
(i) not to engage in any business or activity competitive with any business or activity conducted by the Company and (ii) to be
available for consultations at the request of the Company's management, all on such terms and conditions (including conditions
in addition to (i) and (ii)) as the Board or the Committee may determine.
Compliance. Each Award under the Plan shall be subject to the condition that, if at any time the Board or the Committee shall
determine that (i) the listing, registration or qualification of the shares of Stock upon any securities exchange or for trading
in any securities market or under any state or federal law, (ii) the consent or approval of any government or regulatory body or
(iii) an agreement by the Participant with respect thereto, is necessary or desirable, then such Award shall not be consummated
in whole or in part unless such listing, registration, qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Board or the Committee.
(k) Rights as
Shareholder. Unless the Plan, the Board or the Committee expressly specifies otherwise, an Optionee shall have no rights as
a shareholder with respect to any shares covered by an Option until the stock certificates representing the shares are actually
delivered to the Optionee. Except as specified in Section 4(b), no adjustment shall be made for dividends or other rights for which
the record date is prior to the date the shares are issued. The rights of Holders shall be as specified in their Award Agreements,
as determined by the Board or the Committee in accordance with Section 7 hereof.
Designation. The Board or the Committee, in its discretion, may establish procedures for a Participant to designate a beneficiary
to whom any amounts payable in the event of the Participant's death are to be paid.
Plans. Nothing contained in the Plan shall prevent the Company or a subsidiary from adopting other or additional compensation
arrangements for its directors and employees.
(n) No Employment
Rights; No Right to Directorship. Neither the adoption of this Plan nor the grant of any Award hereunder shall (i) confer upon
any employee any right to continued employment nor shall it interfere in any way with the right of the Company or a subsidiary
to terminate the employment of any employee at any time; or (ii) confer upon any Participant any right with respect to continuation
of the Participant's membership on the Board or interfere in any way with provisions in the Company’s Articles of Incorporation
and Bylaws relating to the election, appointment, terms of office, and removal of members of the Board.
(o) Rule 16b-3.
With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with the
applicable conditions of Rule 16b-3. To the extent any provision of this Plan or action by the Board or the Committee fails to
so comply, it shall be adjusted to comply with Rule 16b-3, to the extent permitted by law and deemed advisable by the Board or
the Committee. It shall be the responsibility of persons subject to Section 16 of the Exchange Act, not of the Company, the Board
or the Committee, to comply with the requirements of Section 16 of the Exchange Act; and neither the Company nor the Committee
shall be liable if this Plan or any transaction under this Plan fails to comply with the applicable conditions of Rule 16b-3, or
if any such person incurs any liability under Section 16 of the Exchange Act.
Law. The Plan and all Awards shall be governed by and construed in accordance with the laws of the State of California.
(q) Use of Proceeds.
All cash proceeds to the Company under the Plan shall constitute general funds of the Company.
by Successor. The obligations of the Company under the Plan and under any outstanding Award may be assumed by any successor
corporation, which for purposes of the Plan shall be included within the meaning of “Company.”
Section 12. Amendments and Termination
The Board may amend,
alter or discontinue the Plan or any Award, but no amendment, alteration or discontinuance shall be made which would impair the
rights of a Participant under an outstanding Award without the Participant's consent unless required by law. No amendment, alteration
or discontinuance shall require shareholder approval unless it:
(a) increases the
total number of shares reserved for issuance pursuant to Awards under the Plan;
(b) changes the
minimum option price for Options;
(c) increases the
maximum term of Awards provided for herein;
(d) expands the
types of awards which may be issued under the Plan;
(e) expands the
class of eligible Participants; or
necessary to comply with any tax or regulatory requirement applicable to the Plan or any Award (including as necessary to comply
with any rules or requirements of any securities exchange on which the Stock may be listed or quoted or to prevent the Company
from being denied a tax deduction under Section 162(m) of the Code).
Any amendment or modification
requiring shareholder approval shall be deemed adopted as of the date of the action of the Board effecting such amendment or modification
and shall be effective immediately, unless otherwise provided therein, subject to approval thereof within twelve (12) months before
or after the effective date by (i) a majority of the shares of the Company’s stock represented and voting in person or by
proxy at a duly held shareholders’ meeting; or (ii) the written consent of the holders of a majority of the Company’s
outstanding shares. Unless the Company determines to submit the definition of "Performance Goal" and "Performance
Criteria" to the Company's shareholders at the first shareholder meeting that occurs in the fifth year following the year
in which the Plan was last approved by shareholders (or any earlier meeting designated by the Board), in accordance with the requirements
of Section 162(m) of the Code, and such shareholder approval is obtained, then no further Performance Compensation Awards shall
be made to Covered Employees under Section 8 after the date of such annual meeting, but the Plan may continue in effect for Awards
to Participants not in accordance with Section 162(m) of the Code.
Section 14. Effective Date of Plan
The effective date
of the Plan is May 24, 2017 but no Award may be granted unless and until the Plan has been approved by the shareholders of
the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board.
Section 15. Term of Plan
No Award shall be granted
on or after May 24, 2027, but Awards granted prior to May 24, 2027 may extend beyond that date.