FIRST FINANCIAL SERVICE CORPORATION 1998 STOCK OPTION AND INCENTIVE COMPENSATION PLAN

EXHIBIT 10 (a)-1998 STOCK OPTION AND INCENTIVE COMPENSATION PLAN

FIRST FINANCIAL SERVICE CORPORATION

1998 STOCK OPTION AND INCENTIVE COMPENSATION PLAN

                First Financial Service Corporation (the “Company”) hereby establishes a stock option and incentive plan for the benefit of its employees and the employees of its subsidiaries as set forth below.

 Section 1 —  PURPOSE

                The Company adopts this compensation program for certain key employees to (a) increase the profitability and growth of the Company; (b) provide competitive  compensation to employees while obtaining the benefits of tax deferral, (c) attract and  retain exceptional personnel and encourage excellence in the performance of individual responsibilities; and (d) motivate key employees to contribute to the Company’s success.

Section 2 —  DEFINITIONS

                For purposes of the Plan, the following terms shall have the meanings below unless the context clearly indicates otherwise:

                2.1           “Award” means an Incentive Stock Option, a Nonqualified Stock Option, a Stock Appreciation Right, a Restricted Stock Award, or a Performance Share Award granted under the Plan.

                2.2           “Award Agreement” means a written agreement between a Participant and the Company covering the specific terms and conditions of an Award.

                2.3           “Board” means the Board of Directors of the Company.

                2.4           “Change of Control” of the Company means (i) an event or series of events which have the effect of any “person” as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than any trustee or other fiduciary holding securities of the Company under any employee benefit plan of the Company, becoming the “beneficial owner” as defined in Rule 13d-3 under the Exchange Act, directly or indi­rectly, of securities of the Company repre­senting 50% or more of the combined voting power of the Company’s then outstanding stock;  (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board cease for any reason to constitute a majority thereof, unless the election, or the nomina­tion for election by the stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; (iii)  the shareholders of the Company approve a definitive agreement to merge or consolidate the Company with or into another company (other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to such transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such transaction) or to sell or otherwise ­­­­­transfer all or substantially all of the Company’s assets or to adopt a plan of liquidation.  A Change of Control shall also be deemed to occur if (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control, (ii) any person (including the Company) publicly announces an intention to take actions which upon consummation would constitute a Change of Con­trol, or (iii) the Board adopts a resolu­tion to the effect that a Change of Control for purposes of this Plan has occurred.

                2.5           “Code” means the Internal Revenue Code of 1986, as it may be amended from time to time.

2.6           “Committee” means the committee appointed by the Board pursuant to Section 4.1 to administer the Plan.

2.7           “Company” shall mean First Financial Service Corporation and its successors.

2.8           “Director” means a voting member of the board of directors of the Company, excluding any person who serves solely in an advisory capacity or as a director emeritus.

2.9           “Disability” means permanent disability within the meaning of Section 22(e)(3) of the Code.

2.10         “Effective Date” shall have the meaning set forth in Section 15.

2.11         “Employee” means a salaried employee of the Company or a Subsidiary.

2.12         “Fair Market Value” means the closing market price per share of Stock as reported on the date as of which Fair Market Value is to be determined, or, if no trades were reported on that date, the closing price on the most recent trading day immediately preceding such date for which closing price information is available.

2.13         “Grant Date” means, with respect to an Award, the date as of which the Award is granted as stated in the Award Agreement.

2.14         “Incentive Stock Option” means an option to pur­chase Stock granted under Section 6 of the Plan which is desig­nated by the Committee as an Incentive Stock Option and is intended to meet the requirements of Section 422 of the Code.

2.15    “Independent Director” means a Director who is not a current or former employee or officer of the Company or a Subsidiary and who does not receive any remuneration from the Company or any Subsidiary for service to the Company or a Subsidiary in any capacity other than as a Director.

2.16         “Nonqualified Stock Option” means an option to purchase Stock granted under Sections 6 or 11 of the Plan which is not intended to be an Incentive Stock Option.

2.17         “Option” means an Incentive Stock Option or a Nonqualified Stock Option.

2.18         “Option Period” means the period from the Grant Date of an Option to the date the period for exercise of the Option expires as stated in the Award Agreement.

2.19         “Participant” means an Employee who has been granted an Award under the Plan.

2.20         “Performance Share” means the grant of con­tingent shares of Stock under Section 10 of the Plan.

Section 3 — STOCK SUBJECT TO THE PLAN

                3.1           Authorized Stock.  Subject to adjustment as provided in Section 3.3, the aggregate number of shares of Stock that may be issued pursuant to Awards under the Plan shall be equal to the greater of 166,000 shares or 4% of the Stock outstanding from time to time (the “Aggregate Maximum”), and shall be increased automatically upon increase of the outstanding shares of Stock, provided that the number of shares that may be issued pursuant to Incentive Stock Option Awards shall not exceed 166,000 shares.  The Aggregate Maximum shall not be decreased except pursuant to Section 3.3 or an amendment to this Plan.  To the extent that any shares of Stock subject to an Award are not delivered because the Award is settled in cash, such shares shall not be deemed to have been issued for purposes of determining the Aggregate Maximum.  Stock delivered under the Plan may consist, in whole or in part, of authorized and unissued shares or shares acquired from shareholders upon such terms as the Board deems appropriate for reserve in connection with exercise hereunder.

                3.2           Effect of Expirations.  If any Award granted under the Plan expires or terminates without exercise, the Stock no longer subject to such Award shall be available to be re-awarded under the Plan.

                3.3           Adjustments in Authorized Shares.  In the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, share combina­tion, or other change in the corporate structure of the Company affecting the number of shares of Stock or the kind of shares or securities issuable upon exercise of an Award, an appropriate and proportionate adjustment shall be made by the Committee in the number and kind of shares which may be delivered under the Plan, and in the number and kind of or price of shares subject to outstanding Awards, so that no Award shall be diluted or increased; provided that the number of shares subject to any Award shall always be a whole number.  Any adjust­ment of an Incentive Stock Option under this Section shall be made in such a manner so as not to constitute a “modification” within the meaning of Section 424(h) of the Code.  If the Company shall at any time merge, consolidate with or into another corporation or association, or enter into a statutory share exchange or any other similar transaction in which shares of Stock are converted as a matter of law into securities and/or other property, each Participant will thereafter receive, upon the exercise of an Award, the securities or property to which a holder of the number of shares of Stock then deliverable upon the exercise of such Award would have been entitled if such Award had been exercised immediately prior to such merger, consolidation, or share exchange and the Company shall take such steps in connection with such merger, consolidation or share exchange as may be necessary to assure that the provisions of this Plan shall thereafter be applicable, as nearly as is reason­ably possible, in relation to any securities or property thereafter deliverable upon the exercise of such Award.  Any restrictions applicable under a Restricted Stock Award Agreement shall apply to any

replacement shares received by a Participant under this Section 3.3 as a result of a reorganization, merger, consolidation or similar transaction.

Section 4 —  ADMINISTRATION

                4.1           Committee Governance.   This Plan shall be adminis­tered by the Committee which shall consist of two or more Independent Directors appointed by the Board.  The number of Committee members shall be determined by the Board. The Board shall add or remove members from the Committee as the Board sees fit, and vacancies shall be filled by the Board.  The Committee shall select one of its mem­bers as the chairperson of the Committee and shall hold meetings at such times and places as it may determine.  The Committee may appoint a secretary and, subject to the provisions of the Plan and to poli­cies determined by the Board, may make such rules and regulations for the conduct of its business as it shall deem advisable.  Writ­ten action of the Committee may be taken by a majority of its mem­bers, and actions so taken shall be fully effective as if taken by a vote of a majority of the members at a meeting duly called and held.  A majority of Committee members shall constitute a quorum for purposes of meeting.  The act of a majority of the members present at any meeting for which there is a quorum shall be a valid act of the Committee.

                4.2           Committee to Interpret Plan.  Subject to the provi­sions of the Plan and the approval of the Board, the Committee shall have the power to (i) construe and interpret the Plan; (ii) establish, amend or waive rules and regulations for its administration; (iii) to determine and accelerate the exercisability of any Award or the termination of any Restriction Period; (iv) to correct inconsistencies in the Plan or in any Award Agreement, or any other instrument relating to an Award; and (v) subject to the provisions of Section 11, to amend the terms and conditions of any Award to the extent such terms and conditions are within the discretion of the Committee as provided in the Plan.  Notwithstanding the foregoing, no action of the Committee may, without the consent of the person or persons entitled to exercise any outstanding Award, adversely affect the rights of such person or persons.

                4.3           Exculpation.  No member of the Board or the Committee shall be liable for actions or determinations made in good faith with respect to the Plan, or for Awards under it.

                4.4           Selection of Participants.  The Board shall have the exclusive authority to grant Awards from time to time to such Employees as may be selected by the Board or recommended by the Committee.

                4.5           Decisions Binding.   All determinations and decisions made by the Board pursuant to the Plan, including factual determinations, shall be final, conclusive and binding on all persons, including the Company, its Subsidiaries, its shareholders, Participants and their estates and assignees.

                4.6           Award Agreements.  Each Award under the Plan shall be evidenced by an Award Agreement, which shall be signed by the Chairman or Secretary of the Committee and by the Participant and shall contain such terms and conditions as may be recommended by the Committee and approved by the Board, which need not be the same in all cases.  Any Award Agreement may be supplemented or amended in writing from time to time as recommended by the Committee and approved by the Board, provided that the terms of the Agreement as amended or supplemented, as well as the terms of the original Award Agreement, are not inconsistent with the provisions of the Plan.  An Employee who receives an Award under the Plan shall not, with respect to the Award, be deemed to have become a Participant, or to have any rights with respect to the Award, unless and until the Award Agreement has been signed by the Chairman or Secretary of the Committee and by the Employee and delivered to the Committee, and the Employee has otherwise complied with the applicable terms and conditions of the Award.  Any Award may be conditioned upon the agreement by the Participant to such confidentiality, non-competition, and non-solicitation covenants as the Committee deems appropriate.

                4.7           Limitation on Awards.   No part of any Option or SAR Award may be exercised, no Performance Share shall be issued, and no Restriction Period will lapse to the extent the exercise, issuance or lapse would cause the Participant to have compensation from the Company and its affiliated companies for any year in excess of one million dollars and which is nondeductible by the Company and its affiliated companies pursuant to Code Section 162(m).  Any portion of an Award that is not exercisable, not issued or for which a Restriction Period does not lapse because of this limitation shall continue to be exercisable or shall be issued, or the Restriction Period shall lapse, in any subsequent year in which the exercise, issuance or lapse would not cause the loss of the Company’s or its affiliated companies’ compensation tax deduction, provided such exercise or issuance occurs before the Award expires, and otherwise complies with the terms and conditions of the Plan and the Award Agreement

Section 5  —  AWARDS UNDER THE PLAN

                Subject to the limitations of the Plan, the Board may in its sole and absolute discretion grant Awards in such numbers, upon such terms and at such times as the Board shall determine, based on the recommendation of the Committee.  Employees who are expected to contribute substantially to the growth and profit­ability of the Company or a Subsidiary are eligible for selection by the Board under Section 4.4 to receive Awards.

Section 6 — STOCK OPTIONS

                6.1           Grant.  Both Incentive Stock Options and Nonqualified Stock Options may be granted under the Plan.  If an Option is designated as an Incentive Stock Option but does not qualify as such under Section 422 of the Code, the Option (or portion thereof) shall be treated as a Nonqualified Stock Option, and governed by Section 83 of the Code. All Options granted under the Plan shall be evidenced by an Award Agreement in such form as the Committee may from time to time approve.  All Options are subject to the terms and conditions of this Section 6 and such additional terms and conditions contained in the Award Agreement, which need not be the same in each case, not inconsistent with the provisions of the Plan, as the Committee finds desirable and the Board approves pursuant to Section 5.

                6.2           Exercise Price.   The exercise price per share of Stock covered by an Option shall be determined by the Committee, provided that the exercise price for an Incentive Stock Option shall not be less than 100% of the Fair Market Value of the Stock on the Grant Date, unless the Incentive Stock Option granted to a person who on the Grant Date owns (within the meaning of Sec­tion 424 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Com­pany or any Subsidiary, in which case the exercise price shall be at least 110% of the Fair Market Value of the Stock on the Grant Date.

                6.3           Option Period.  The Option Period  shall be determined by the Committee, and unless otherwise specifically provided in the Award Agreement, no Option shall be exercisable later than ten years from the Grant Date.   No Incentive Stock Option shall be exercisable later than ten years from the Grant Date, provided that in the case of an Employee who on the Grant Date owns or is deemed to own (within the meaning of Section 425(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary, the Incentive Stock Option shall not be exercisable later than five years from the Grant Date.   Options may expire prior to the end of the Option Period due to the Participant’s Termination of Employment or Termination of Service as provided in Section 8, or in accordance with any provision of the Award Agreement.  No Option may be exercised at any time unless the Option is valid and outstanding.

                6.4           Limitation on Amount of Incentive Stock Options.   The aggregate Fair Market Value (determined as of each Option Grant Date) of Stock with respect to which a Participant’s Incentive Stock Options are exercisable for the first time during any calendar year (under this and all other stock option plans of the Company and any Subsidiary) shall not exceed $100,000.

                6.5           Nontransferability of Options.  Except as otherwise provided in this Section 6.5, no Option shall be transferable by a Participant otherwise than by will or the laws of descent and distribution, and an Option shall be exer­cisable, during the Participant’s lifetime, only by the Participant (or, in the event of the Participant’s legal incapacity or incompetency, the Participant’s guardian or legal representative).  The Committee may in an Award Agreement allow a Participant, subject to any restrictions under Section 16(b) of the Exchange Act, to transfer all or part of a Nonqualified Stock Option to (i) the Participant’s spouse or lineal descendants (“Immediate Family Members”), (ii) trusts for the exclusive benefit of the Participant and/or his Immediate Family Members, or (iii) a partnership or limited liability company in which the Participant and/or his Immediate Family Members are the only partners or members, as applicable.  Such transfer may be made by a Participant only if there is no consideration for the transfer, and subsequent transfers of any Option shall be prohibited other than in accordance with this Section 6.5 and by will or the laws of descent and distribution.  Following a transfer of an Option, the Option shall continue to be subject to the same terms and conditions as were applicable immediately before the transfer, and Termination of Employment or Service, Retirement, Disability, satisfaction of service requirements or performance objectives, and other conditions to exercise of an Option shall be applied with respect to the original Participant.  However, for purposes of exercising the Option, the term Participant shall refer to the transferee.  In addition, for purposes of the death benefit provisions of Section 8, the Participant’s Representative shall be deemed to refer to

the transferee, the personal representative of the transferee’s estate, or after final settlement of the transferee’s estate, the successor or successors entitled thereto by law.

                6.6           Exercise.   An Option may be exercised, so long as it is valid and outstanding, from time to time in part or as a whole, subject to any limitations with respect to the number of shares for which the Option may be exercised at a particular time and to such other conditions (e.g., exercise could be condi­tioned on performance) as the Committee in its discretion may specify upon granting the Option or as otherwise provided in this Section 6.

                6.7           Method of Exercise.  To exercise an Option, the Participant or the other person(s) entitled to exercise the Option shall deliver to the Committee (i) a written notice of exercise in such form as the Committee may prescribe, specifying the number of full shares to be purchased; (ii) payment in full of the exercise price in accordance with Section 6.8; and (iii) in the case of Nonqualified Stock Options, any required withholding taxes as provided in Section 13.  No shares of Stock shall be issued unless the Participant has fully complied with the provisions of this Section 6.7.

                6.8           Payment of Exercise Price.    To the extent provided in the Award Agreement for an Option and subject to the rules of Section 16 of the Exchange Act and any exchange on which the Stock is traded at any relevant time, payment of the exercise price may be made (i) in cash; (ii) in shares of Stock (based on the Fair Market Value of the Stock on the date the Option is exercised) acceptable to the Committee and owned by the Participant (or jointly by the Participant and his spouse) for at least six months evidenced by negotiable certificates or by a written attestation of ownership and consent to issuance, in satisfaction of the Option or portion thereof being exercised, of only the net shares of Stock (those equal in value to the difference between the exercise price and the then Fair Market Value); (iii) by a written election to have the Company retain that number of shares of Stock subject to the Option having an aggregate Fair Market Value equal to the aggregate exercise price of the Option, provided that for Incentive Stock Options, this right must be granted by the Committee at the time the Option is granted and may not be added in any modification of the Award Agreement; or (iv) by any combination thereof.  If permitted in the Award Agreement, Restricted Stock (valued as if it were not subject to restrictions on transfer or possibilities of forfeiture) issued to the Participant may be tendered as payment of the exercise price of an Option.  If Restricted Stock is tendered as the exercise price of an Option, a number of shares of Stock issued on exercise of such Option, equal to the number of shares of Restricted Stock tendered as consideration thereof, shall be subject to the same restrictions as the Restricted Stock so tendered and shall be held by the secretary of the Company pursuant to Section 9.1.

Section 7 —  STOCK APPRECIATION RIGHTS

                7.1           Grant.  All Stock Appreciation Rights (“SAR’s”) granted under the Plan shall be evidenced by an Award Agreement in such form as the Committee may from time to time approve.  All SARs are subject to the terms and conditions of this Section 7 and such additional terms and conditions contained in the Award Agreement, which need not be the same in each case, not inconsistent with the Plan, as the Committee finds desirable and the Board shall approve pursuant to Section 5.

                7.2           Exercise Price.  The exercise price per share of Stock subject to a SAR shall be determined by the Committee at the time of grant and specified in the Award Agreement.

                7.3           Exercise Period.   The exercise period shall be determined by the Committee, and unless otherwise specified in the Award Agreement, no SAR shall be exercisable later than ten years from the Grant Date.  No SAR may be exercised at any time unless such SAR is valid and outstanding as provided in this Section 7.

                7.4           Nontransferability.  No SAR shall  be transferable other than by will or by the laws of descent and distribution, and SAR’s shall be exer­cisable, during the Participant’s lifetime, only by the Participant (or, in the event of the Participant’s legal incapacity or incompetency, the Participant’s guardian or legal representative).

                7.5           Exercise.  An SAR may be exercised, so long as it, is valid and outstanding, from time to time in part or as a whole, subject to any limitations with respect to the number of shares for which the SAR may be exercised at a particular time and to such other conditions (e.g., exercise could be condi­tioned on performance) as the Committee in its discretion may specify upon granting the SAR or as otherwise provided in this Section 7.

                7.6           Method of Exercise.  To exercise an SAR, the Participant or the other person(s) entitled to exercise the SAR shall give written notice of exercise to the Committee, specifying the number of full shares with respect to which the

SAR is being exercised, and, if the Award Agreement provides that the Participant may elect the method of payment, whether the SAR is to be paid in cash or Stock.

                7.7           Payment Upon Exercise.  Upon the exercise of an SAR, a Participant shall be entitled to receive an amount, in cash or whole shares of Stock (or a com­bination thereof) as provided in the Award Agreement, equal to the amount by which the then Fair Market Value of one share of Stock exceeds the exercise price per share specified in the Award Agreement, multiplied by the number of shares with respect to which the SAR is exercised. The number of shares of Stock to be delivered to the Participant upon exercise of an SAR shall be based on the Fair Market Value of the Stock on the date of exercise.  Payment of an SAR shall be made in cash, shares of Stock, or a combination of cash and shares of Stock, as provided in the Award Agreement, which may provide the Participant a choice regarding the form of payment.  A certificate or certificates for shares of Stock acquired upon exercise of an SAR shall be issued in the name of the Participant and distributed to the Participant as soon as practicable following exercise, subject to Section 12.3.  No fractional shares of Stock will be issuable upon exercise of an SAR and, unless otherwise provided in the Award Agreement, the Participant will receive cash in lieu of fractional shares.

Section 8 — LIMITATIONS ON EXERCISE OF OPTIONS AND SARs

AFTER TERMINATION OF EMPLOYMENT OR SERVICE

                8.1           Exercise After Termination.  After a Participant’s Termination of Employment, an Option or SAR may be exercised, subject to adjustment as provided in Section 3.3, only to the extent that the Option or SAR was exercisable immediately before the Termination of Employment, but in no event after the expiration date of the Option or SAR as specified in the Award Agreement. Except to the extent that shorter or longer periods are provided in the Award Agreement, a Participant’s right to exercise an Option or SAR upon Termi­nation of Employment shall terminate:

                                                (i)            At the expiration of three months (Incen­tive Stock Options) or one year (Nonqualified Stock Options and SARs) after the Participant’s Retirement; provided, however, if an Incentive Stock Option is not exercised after three months, it will remain exercisable as if it were a Nonqualified Stock Option and will be a Nonqualified Stock Option when exercised; or

                                                (ii)           At the expiration of one year in the event of Disability of the Participant; or

                                                (iii)          At the expiration of one year after the Participant’s death if the Participant’s Termination of Employment occurs by reason of death; any Option or SAR exercised under this subparagraph (iii) may be exercised by the legal representative of the estate of the Participant or by the person or persons who acquire the right to exercise such Option or SAR by bequest or inheritance; or

                                                (iv)          No later than three months after the Participant’s Termination of Employment for any reason other than those described in (i) through (iii) above or termination for “Cause” as described in Section 8.2.

                8.2           Termination for Cause.  In the event the Committee determines that an Employee’s employment has been terminated for Cause, the Employee shall forfeit any and all unexercised Option and Stock Appreciation Rights Awards immediately upon the Termination of Employment.  For purposes of this Plan, “Cause” shall mean the Employee’s (i) willful failure to substantially perform such Employee’s reasonably assigned duties, (ii) repeated gross negligence in performing such Employee’s duties, (iii) illegal conduct in performing such Employee’s duties, (iv) willful actions contrary to the Company’s interest, (v) repeated refusal to comply with the reasonable and lawful instructions of management of the Company or a Subsidiary, or (vi) violation of the obligations imposed on the Employee under any confidentiality or solicitation covenants to which the Employee is bound under the terms of the Stock Option Agreement or otherwise.

Section 9 — RESTRICTED STOCK AWARDS

                9.1           Grant.  All Restricted Stock Awards granted under the Plan shall be evidenced by an Award Agreement in such form as the Committee may from time to time approve. All Restricted Stock Awards are subject to the terms and conditions in this Section 9, and such additional terms and conditions contained in the Award Agreement, which need not be the same in each case, not inconsistent with the provisions of the Plan, as the Committee finds desirable and the Board approves pursuant to Section 5.   The Company shall issue, in the name of each Participant who is granted a Restricted Stock Award, a certificate for the shares of Stock granted in the Award (subject to Section 13.3), as soon as practicable after the

Grant Date.  The Secretary of the Company shall hold such certificates for the Participant’s benefit until the Restriction Period lapses or the Restricted Stock is forfeited to the Company in accordance with the Award Agreement.

                9.2           Restriction Period.  The Restriction Period shall be determined by the Committee, and shall commence on the Grant Date and expire at the time spec­ified in the Award Agreement.  The Committee may provide in an Award Agreement that a Restriction Period that has not otherwise expired will expire immediately upon the Retirement, death or Disability of the Participant.   Unless otherwise provided in the Award Agreement, in the event of a Participant’s Termination of Employment during the Restriction Period for any reason, the Par­ticipant’s rights to the Stock subject to the Restricted Stock Award shall be forfeited and all such Stock shall immediately be surrendered to the Company.

                9.3           Rights of Participant.  During the Restriction Period, the Participant may not sell, transfer, pledge, assign or otherwise dispose of shares of Restricted Stock.  Any attempt by a Participant to sell, transfer, pledge, assign or otherwise dispose of Restricted Stock shall cause immediate forfeiture of the Award.  Except as provided in the previous sentence and as otherwise provided in the Award Agreement, a Participant shall have, with respect to Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the shares and the right to receive all dividends and other distributions with respect to such shares, provided that the Participant has become the holder of record of the Stock.  The Committee may provide in an Award Agreement that dividends paid on Restricted Stock must be reinvested in shares of Stock, which may or may not be subject to the same Restriction Period applicable to the original Restricted Stock Award.  In the event of any adjustment as provided in Section 3.3 or if any securities are received as a dividend on Restricted Stock, new or additional shares or securities shall be subject to the same terms and conditions as the original Restricted Stock.

                9.4           Expiration of Restriction Period.  At the expiration of the Restriction Period, the restrictions contained in Section 9.3 and in the Award Agreement shall, except as otherwise specifically provided in the Award Agreement, expire, and the Company shall, subject to the provi­sions of Section 12.3 and the Award Agreement, deliver to the Participant a certificate evidencing the Participant’s ownership of the Stock free of the restrictions.

                9.5           Nontransferability.   No Restricted Stock Award shall be transferable other than by will or the laws of descent and distribution until any restrictions applicable to such Award have lapsed and a certificate evidencing the Participant’s ownership of the stock free of restrictions has been issued.

Section 10 — PERFORMANCE SHARE AWARDS

10.1                         Grant.   All Performance Share Awards granted under the Plan shall be evidenced by an Award Agreement in such form as the Committee may from time to time approve.  All Performance Share Awards are subject to the terms and conditions of this Section 10 and such additional terms and conditions contained in the Award Agreement, which terms and conditions need not be the same in each case, not inconsistent with the Plan, as the Committee finds desirable and the Board approves pursuant to Section 5.

                10.2         Performance Criteria.  The performance criteria for each Performance Share Award shall be determined by the Committee, and shall consist of service requirements and any measures of performance of the Com­pany or any Subsidiary or such other criteria as the Committee specifies.   At the times specified in the Award Agreement, the Committee shall evaluate actual performance during such performance period com­pared to the performance criteria established for the Award, and shall determine the extent to which a cash or stock payment is to be made pursuant to the Performance Share Award.  The Committee may provide in an Award Agreement that one or more performance criteria under an Award will be deemed to have been met upon the Retirement, death or Disability of the Participant.   Unless otherwise provided in the Award Agreement, in the event of a Participant’s Termination of Employ­ment or Termination of Service for any reason before performance criteria have been met, the Par­ticipant’s rights to payment of a Performance Share Award shall be forfeited.

                10.3         Payment.  Performance Share Awards will be paid only after the Committee determines, in its sole discretion, that the performance criteria established under Section 10.2  have been achieved, subject to such other terms and conditions as may be included in the Award Agreement and to the Committee’s right to waive any performance criteria in its discretion.  Payment shall be made, as provided in the Award Agreement (which may provide the Participant a choice regarding the form of payment), in cash or whole shares of Stock (or a combination thereof) having a Fair Market Value equal to the number of shares of Stock represented by the Performance Share Award.  A certificate or certificates for shares of Stock to be issued pursuant to a Performance Share Award shall be issued in the name of the Participant and distributed to

the Participant as soon as practicable following the Committee’s determination that performance criteria have been met, subject to Section 12.3.  No fractional shares of Stock will be issued in connection with a Performance Share Award and, unless otherwise provided in the Award Agreement, the Participant will receive cash in lieu of fractional shares.

                10.4         Rights of Participant.  A Participant shall not, with respect to a Performance Share Award or any Stock that may in the future be issued under it, have any rights as a stockholder of the Company, such as the right to vote the shares or the right to receive dividends and other distributions, at any time before the Participant has become the holder of record of the Stock.

                10.5         Nontransferability.  No Performance Share Award shall  be transferable other than by will or by the laws of descent and distribution.

Section 11 — AMENDMENTS AND TERMINATION

                11.1         Amendments and Termination. The Committee or the Board may terminate, suspend, amend or alter the Plan, but no action of the Committee or the Board may:

                                (a)           Impair or adversely affect the rights of a Participant under an outstanding Award thereto­fore granted, without the Participant’s consent, other than as provided in Section 12.3; or,

                                (b)           Without the approval of the stockholders:

(i)            Increase the total amount of Stock which may be delivered under the Plan pursuant to Incentive Stock Options, except as is provided in Section 3.3 of the Plan;

(ii)           Decrease the exercise price of any Incentive Stock Option to less than the exercise price on the date the Option was granted;

(iii)          Change the class of Employees eligible to receive Incentive Stock Option Awards under the Plan; or

(iv)                              Extend the period during which Incentive Stock Option Awards may be granted, as specified in Section 15.

                11.2         Conditions on Awards.  Subject to the approval of the Board, in granting an Award, the Com­mittee may establish any conditions that it determines are con­sistent with the purposes and provisions of the Plan, including, without limitation, a condition that the granting of an Award is subject to the surrender for cancellation of any or all outstand­ing Awards held by the Participant. Any new Award made under this Section may contain such terms and conditions as the Commit­tee may determine, including an exercise price that is lower than that of any surrendered Award.

                11.3         Selective Amendments.  Any amendment or alteration of the Plan may be limited to, or may exclude from its effect, par­ticular classes of Participants.

Section 12 —  GENERAL PROVISIONS

                12.1         Unfunded Status of Plan. The Plan is intended to constitute an “unfunded” plan for incentive compensation, and the Plan is not intended to constitute a plan subject to the provi­sions of the Employee Retirement Income Security Act of 1974, as amended, and shall not extend, with respect to any payments not yet made to a Participant, any rights that are greater than those of a general creditor of the Company.

                12.2         Transfers, Leaves of Absence and Other Changes in Employment Status.  For purposes of the Plan (i) a transfer of an Employee from the Company to a Subsidiary or vice versa, or from one Subsidiary to another, or (ii) a leave of absence not in excess of 90 days duly authorized in writing by the Company or a Subsidiary for mili­tary service, sickness or any other purpose approved by the Company or a Subsidiary, shall not be Termination of Employment. The Committee, in its sole discretion subject to the terms of the Award Agreement, shall determine the disposition of all Awards made under the Plan in all cases involving any substantial change in employment status other than an event described in this Section 12.2.

                12.3         Restrictions on Distribution of Stock.  The Committee may require Participants receiving Stock pursuant to any Award under the Plan to represent to and agree with the Com­pany in writing that the Participant is acquiring the Stock for investment without a view to distribution thereof. No Stock shall be issued or transferred pursuant to an Award unless the Committee determines, in its sole discretion, that such issuance or transfer complies with all relevant provisions of law, including but not limited to, the (i) limitations, if any, imposed in the state of issuance or transfer, (ii) restrictions, if any, imposed by the Securities Act of 1933, as amended, the Exchange Act, and the rules and regulations promulgated thereunder, and (iii) requirements of any stock exchange upon which the Stock may then be listed. The certificates for Stock issued pursuant to an Award may include any legend that the Committee deems appropriate to reflect any restrictions on transfer.  The Company shall not be obligated to register any securities covered hereby or to take any affirmative action in order to cause the issuance of Stock pursuant to an Award to comply with any law or regulation of any governmental authority.

                12.4         Assignment Prohibited.  Subject to the provisions of the Plan and the Award Agreement, no Award shall be assigned, transferred, pledged or otherwise encumbered by the Participant otherwise than by will or by the laws of descent and distribu­tion, and an Award shall be exercisable, during the Partici­pant’s lifetime, only by the Participant.  Awards shall not be pledged or hypothecated in any way, and shall not be subject to any execution, attachment, or similar process.  Any attempted transfer, assignment, pledge, hypothecation or other disposition of an Award contrary to the provisions of the Plan, or the levy of any process upon an Award, shall be null, void and without effect.

                12.5         Other Compensation Plans.  Nothing contained in the Plan shall prevent the Company from adopting other compensation arrangements, subject to stockholder approval if such approval is required.

12.6       Limitation of Authority.  No person shall at any time have any right to receive an Award hereunder and no per­son other than a duly authorized member of the Committee shall have authority to enter into an agreement on behalf of the Company for the granting of an Award or to make any represen­tation or warranty with respect thereto.  Participants shall have no rights in respect to any Award except as set forth in the Plan and the applicable Award Agreement.

                12.7         No Right to Employment.  Neither the action of the Company in establishing the Plan, nor any action taken by it or by the Board or the Committee under the Plan or any Award Agreement, nor any provision of the Plan, shall be con­strued as giving to any person the right to be retained in the employ or service of the Company or any other entity as an employee, director or independent contractor or to interfere in any way with the right of the Company or any other entity to terminate any person’s service or employment at any time.

                12.8         Change of Control.  In the event of a Change of Control, (i) Awards of Options and SARs under the Plan shall become exercisable in full whether or not otherwise exercisable at such time, and any such Option or SAR shall remain exercisable in full thereafter until it expires pursuant to its terms; and (ii) the Restriction Period for Restricted Stock Awards shall lapse.

                12.9         Pooling.  Notwithstanding anything in the Plan to the contrary, if any right under or feature of the Plan would cause to be ineligible for the pooling of interests accounting method a transaction that would, but for the right or feature hereunder, be eligible for such accounting method, the Board, upon  recommendation of the Committee, may modify or adjust the right or feature so that the transaction will be eligible for pooling of interest accounting.  Such modification or adjustment may include payment of cash or issuance to a Participant of Stock having a Fair Market Value equal to the cash value of such right or feature.

                12.10       Not a Shareholder.  The person or persons entitled to exercise, or who have exercised, an Option or SAR shall not be entitled to any rights as a shareholder of the Company with respect to any Stock to be issued upon such exercise  until such persons or persons shall have become the holder of record of such Stock.

                12.11       Severability.  If any provision of this Plan is found to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.

                12.12       Headings.  The headings in this Plan have been inserted solely for convenience of reference and shall not be considered in the interpretation or construction of this Plan.

                12.13       Governing Law.  The validity, interpretation, construction and administration of this Plan shall be governed by the laws of the Company’s state of incorporation, as it may change from time to time.

Section 13 —  TAXES

                13.1         Tax Withholding.  All Participants shall make arrangements sat­isfactory to the Committee to pay to the Company or a Subsidiary, any federal, state or local taxes required to be withheld with respect to an Award issued under the Plan at the time such taxes are required to be withheld.  If a Participant fails to make such tax payments, the Company and its Sub­sidiary 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, including a payment related to any Award under the Plan.

                13.2         Share Withholding.  If permitted by the Committee in an Award Agreement, a tax withholding obligation may be satisfied by the Company retaining shares of Stock with a fair market value equal to the amount required to be withheld.  Any Stock so withheld will not be counted against the number of shares available for issuance under Section 3.1 of the Plan.

Section 14 —  EFFECTIVE DATE OF PLAN

                The Plan shall be effective on the date (the “Effective Date”) when the Board adopts the Plan, subject to approval of the Plan by a majority of the total votes eligible to be cast at a meeting of shareholders following by Effective Date, which vote shall be taken within 12 months of the Effective Date.  Awards may be granted before obtaining shareholder approval of the Plan, but any such Awards shall be contingent upon such shareholder approval being obtained and may not be exercised before such approval.

 Section 15 —  TERM OF PLAN

                The Plan has no termination date, provided that no Incentive Stock Option may be issued on or after the tenth anniversary of the Effective Date as defined in Section 14.