Document:

exv10w8

 

Exhibit 10.8

BURNHAM HILL PARTNERS

A DIVISION OF PALI CAPITAL INC.

			
	 	 	 
	590 MADISON AVENUE 

NEW YORK, NEW YORK 10022
	 	TEL 212-980-2200

FAX 212-980-9466

September 14, 2007

Mr. Harry G. Mitchell

Interim Chief Executive Officer, CFO and Treasurer

Sontra Medical Corporation

10 Forge Parkway

Franklin, MA 02038

Dear Mr. Mitchell:

This letter Agreement (the “Agreement”) confirms the engagement of Burnham Hill Partners
(“BHP”), a division of Pali Capital, Inc., by Sontra Medical Corporation (the
“Company”) to act as (i) its exclusive financial advisor in connection with a strategic
transaction with Durham Pharmaceuticals Ltd. d/b/a Echo Therapeutics, Inc. (“Echo”), which
may include an acquisition, partnership, strategic alliance, technology licensing or merger with
Echo (a “Strategic Transaction”) and (ii) its exclusive placement agent in connection with
an equity and/or debt financing through a transaction or transactions exempt from registration
under the Securities Act of 1933, as amended and in compliance with the applicable securities laws
and regulations, in connection with a Strategic Transaction (a “Financing”).

As part of BHP’s engagement, at the Company’s request, BHP will use its commercially reasonable
best efforts to:

	 	(a)	 	assist the Company in analyzing and evaluating the business, operations and
financial position of Echo;
	 
	 	(b)	 	assist the Company with its due diligence efforts related to a Strategic
Transaction;
	 
	 	(c)	 	assist the Company in structuring and negotiating a Strategic Transaction;
be available at the Company’s request to meet with its Board of Directors to discuss
a Strategic Transaction and its financial implications;
	 
	 	(d)	 	assist the Company in identifying potential sources of funding in connection
with a Strategic Transaction; and
	 
	 	(e)	 	assist the Company with ongoing financial advisory, integration and
consulting services in connection with a Strategic Transaction through the
Authorization Period (as defined below).

In connection with BHP’s engagement hereunder, the Company shall compensate BHP as set forth below:

	 	(a)	 	In connection with the closing of a Strategic Transaction, a transaction fee
shall be paid to BHP, in accordance with the following (the “Transaction Fee”):

	 	1.	 	$150,000 in cash, payable upon the completion of a Qualified
Financing (as defined below) by the Company. For the purposes of this
Agreement, “Qualified Financing” shall be defined as any equity or equity
linked financing or a combination of such financings following the first date
written above with gross proceeds to the Company totaling at least $2,500,000;
provided, however, the Qualified Financing shall be reduced by the aggregate
principal amount represented by the Senior Promissory Bridge Notes issued by
the Company prior to the completion of such Qualified Financing.
	 
	 	2.	 	Upon the closing of a Strategic Transaction, the Company shall
issue BHP and/or its designees and assignees warrants to purchase an aggregate
of 425,000 shares of the

1

 

	 	 	 	Company’s Common Stock (the “Warrants”). The Warrants shall have an
exercise price equal to the last closing sale price for the Company’s Common
Stock immediately prior to the closing of the Strategic Transaction, be
exercisable immediately after the date of issuance and expire five (5) years
after the date of issuance, unless extended by the Company. The shares
underlying the Warrants shall have standard piggyback registration rights and be
included in any registration statement covering the shares issued to Echo
stockholders in connection with a Strategic Transaction. The Warrants shall also
be exercisable pursuant to a cashless exercise provision, be non-redeemable and
include customary weighted-average anti-dilution protection, including
protection against the issuance of securities at prices (or in the case of
convertible securities, at conversion prices) below the exercise price of the
Warrants then in effect.

	 	(b)	 	In connection with the closing of a Financing, the Company shall pay BHP a fee
equal to eight percent (8%) of the gross proceeds received by the Company (the
“Placement Fee”). In addition, the Company shall issue 5-year warrants equal to ten
percent (10%) of the number of shares issued (or, in the case of convertible
securities, the number of shares issuable on an as converted basis) in such financing
to BHP and/or its designees or assignees (the “Placement Warrants”). The Placement
Warrants shall be exercisable at 110% of the purchase price of the common stock issued,
or, in the case of convertible securities, 110% of the conversion price of the
securities issued. The shares underlying the Placement Warrants shall have standard
piggyback registration rights, be exercisable pursuant to a cashless exercise
provision, be non-redeemable and be included in any registration
statement covering the shares issued pursuant to any financing activity under this Agreement.

In connection with this Agreement, the Company will furnish BHP with all information concerning the
Company which BHP reasonably deems appropriate and will provide BHP with access to its officers,
directors, employees, accountants, counsel and other representatives (collectively, the
“Representatives”), it being understood that BHP will rely solely upon such information
supplied by the Company and its Representatives without assuming any responsibility for the
independent investigation or verification thereof. All non-public information concerning the
Company that is given to BHP will be used solely in the course of the performance of our services
hereunder and will be treated confidentially by us for so long as it remains non-public. Except as
otherwise required by law, BHP will not disclose any information to any third party without the
consent of the Company. If we are requested to render an opinion from a financial point of view
regarding any aspect of this Agreement, the nature, scope and fees associated with our analysis as
well as the form and substance of our opinion shall be such as we deem appropriate and will be
covered under a separate letter agreement.

BHP’s engagement relating to the potential Strategic Transaction and Financing shall expire on
January 31, 2008 (the “Authorization Period”). Either party may, upon ten (10) days written
notice to the other party, terminate this Agreement. BHP will continue to be entitled to its full
fees provided for herein in the event that at any time prior to the expiration of twelve (12)
months after the closing of the Qualified Financing (the “Tail Period”), the Company
completes a Strategic Transaction or Financing involving investors specifically identified on a
list prepared and mutually agreed to by the Company and BHP within ten (10) days following the
closing of the Qualified Financing.

Notice given pursuant to any of the provisions of this Agreement shall be given in writing and
shall be sent by overnight courier or personally delivered (a) if to the Company, to the Company’s
Interim Chief Executive Officer at the address listed above; and (b) if to BHP, to its offices at
590 Madison Avenue, 5th floor, New York, NY 10022, Attention: Jason Adelman, Managing Director.

No advice or opinion rendered by BHP, whether formal or informal, may be disclosed, in whole or in
part, or summarized, excerpted from or otherwise referred to without our prior written consent. In
addition, BHP may not be otherwise referred to without its prior written consent. BHP will be
acting on behalf of the Company in connection with its engagement hereunder, and has previously
entered into a separate letter agreement, dated July 25, 2007, providing for the indemnification by
the Company of BHP and certain related persons and entities, attached hereto as Exhibit A,
the provisions of which are incorporated herein by reference.

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BHP is a division of Pali Capital, Inc., a registered broker dealer. This Agreement shall remain
in full force and effect as to BHP and the Company, and shall be deemed fully assigned, in the
event that either (i) BHP becomes an independent entity or (ii) the Company completes a Strategic
Transaction. Our engagement is for the limited purposes set forth under this Agreement, and the
rights and obligations of each of BHP and the Company are herein defined. Each of BHP and the
Company agrees that the other party has no fiduciary duty to it or its stockholders, officers and
directors as a result of the engagement described in this Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York without regard to
conflicts of law principles thereof. This Agreement may not be amended or modified except in
writing signed by each of the parties hereto.

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity
or enforceability of any other provisions of this Agreement or the indemnification, which shall
remain in full force and effect.

We are delighted to accept this engagement and look forward to working with you on this assignment.
Please confirm that the foregoing is in accordance with your understanding by signing and returning
to us the enclosed duplicate of this Agreement.

	 	 	 	 	 
	 	Very truly yours,

Burnham Hill Partners

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Accepted and agreed to as of the date first written above:

Sontra Medical Corporation

	 	 	 	 	 
	By:

	 	 
	 	 
	 

	 	 	 	 
	Name:

	 	 	 	 
	Title:

	 	 	 	 

3

 

Exhibit A

	 	 	 	 	 
	TO:

	 	Burnham Hill Partners
	 	       Date: July 25, 2007
	 

	 	A division of Pali Capital Inc.	 	 
	 

	 	590 Madison Avenue	 	 
	 

	 	New York, NY 10022	 	 

          In connection with your engagement pursuant to our letter Agreement of even date herewith (the
“Engagement”), we agree to indemnify and hold harmless Burnham Hill Partners, a division of
Pali Capital Inc. (“BHP”) and its affiliates, the respective directors, officers, partners,
agents and employees of BHP and its affiliates, and each other person, if any, controlling BHP or
any of its affiliates or successor in interest (collectively, “Indemnified Persons”), from
and against, and we agree that no Indemnified Person shall have any liability to us or our owners,
parents, affiliates, security holders or creditors for, any losses, claims, damages or liabilities
(including actions or proceedings in respect thereof) (collectively “Losses”) (A) related
to or arising out of (i) our actions or failures to act (including statements or omissions made, or
information provided, by us or our agents) or (ii) actions or failures to act by an Indemnified
Person with our consent or in reliance on our actions or failures to act, or (B) otherwise related
to or arising out of the Engagement or your performance thereof, except that this clause (B) shall
not apply to any Losses that are finally judicially determined to have resulted primarily from your
bad faith or gross negligence or breach of the letter Agreement. If such indemnification is for any
reason not available or insufficient to hold you harmless, we agree to contribute to the Losses
involved in such proportion as is appropriate to reflect the relative benefits received (or
anticipated to be received) by us and by you with respect to the Engagement or, if such allocation
is judicially determined unavailable, in such proportion as is appropriate to reflect other
equitable considerations such as the relative fault of us on the one hand and of you on the other
hand; provided, however, that, to the extent permitted by applicable law, the Indemnified Persons
shall not be responsible for amounts which in the aggregate are in excess of the amount of all fees
actually received by you from us in connection with the Engagement. Relative benefits to us, on the
one hand, and you, on the other hand, with respect to the Engagement shall be deemed to be in the
same proportion as (i) the total value paid or proposed to be paid or received or proposed to be
received by us or our security holders, as the case may be, pursuant to the transaction(s), whether
or not consummated, contemplated by the Engagement bears to (ii) all fees paid or proposed to be
paid to you by us in connection with the Engagement.

          We will reimburse each Indemnified Person for all expenses (including reasonable fees and
disbursements of counsel) as they are incurred by such Indemnified Person in connection with
investigating, preparing for or defending any action, claim, investigation, inquiry, arbitration or
other proceeding (“Action”) referred to above (or enforcing this Agreement or any related
engagement Agreement), whether or not in connection with pending or threatened litigation in which
any Indemnified Person is a party, and whether or not such Action is initiated or brought by you.
We further agree that we will not settle or compromise or consent to the entry of any judgment in
any pending or threatened Action in respect of which indemnification may be sought hereunder
(whether or not an Indemnified Person is a party therein) unless we have given you reasonable prior
written notice thereof and used all reasonable efforts, after consultation with you, to obtain an
unconditional release of each Indemnified Person from all liability arising therefrom. In the event
we are considering entering into one or a series of transactions involving a merger or other
business combination or a dissolution or liquidation of all or a significant portion of our assets,
we shall promptly notify you in writing. If requested by BHP, we shall then establish alternative
means of providing for our obligations set forth herein on terms and conditions reasonably
satisfactory to BHP.

          If multiple claims are brought against you in any Action with respect to at least one of which
indemnification is permitted under applicable law and provided for under this Agreement, we agree
that any judgment, arbitration award or other monetary award shall be conclusively deemed to be
based on claims as to which indemnification is permitted and provided for. In the event that you
are called or subpoenaed to give testimony in a court of law, we agree to pay your expenses related
thereto and for every day or part thereof that we are required to be there or in preparation
thereof. Our obligations hereunder shall be in addition to any rights that any Indemnified Person
may have at common law or otherwise. Solely for the purpose of enforcing this Agreement, we hereby
consent to personal jurisdiction and to service and venue in any court in which any claim which is
subject to this Agreement is brought by or against any Indemnified Person. We acknowledge that in
connection with the Engagement you are acting as an independent contractor with duties owing solely
to us. YOU HEREBY AGREE, AND WE HEREBY AGREE ON OUR OWN BEHALF AND, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ON BEHALF OF OUR SECURITY HOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT
TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF THE ENGAGEMENT, YOUR PERFORMANCE THEREOF OR
THIS AGREEMENT.

          The provisions of this Agreement shall apply to the Engagement (including related activities
prior to the date hereof) and any modification thereof and shall remain in full force and effect
regardless of the completion or termination of the Engagement. This Agreement and any other
Agreements relating to the Engagement shall be governed by and construed in accordance with the
laws of the state of New York, without regard to conflicts of law principles thereof.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Very truly yours,
	Accepted and Agreed:	 	 	 	 
	 
	 	 	 	 	 	 
	Burnham Hill Partners	 	 	 	Sontra Medical Corporation
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 

	 	Name:
	 	 	 	Name:
	 

	 	Title: Managing Director
	 	 	 	Title: Interim Chief
Executive Officer, CFO
and Treasurer

4lin_8k0918ex101.htm

    Exhibit
      10.1

     

    UNFUNDED
      DEFERRED COMPENSATION PLAN

    FOR
      THE DIRECTORS OF

    LINCOLN
      BANK

    (AS
      AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2005)

     

     

    
      	
              1.

            	
              This
                Plan shall be unfunded so that the Lincoln Bank (hereinafter known
                as the
                “Bank”) is under a mere contractual duty to make payments when due under
                the Plan.  The promise to pay shall not be represented by notes
                and shall not be secured by a pledge of assets or in any other
                way.  This Plan and action taken pursuant to it shall not be
                deemed or construed to establish a trust or fiduciary relationship
                of any
                kind between or among the Bank, any Director, or any other
                person.  Neither a Director nor any beneficiary of a Director
                shall have the power to transfer, assign, anticipate, or otherwise
                encumber in advance any of the payments that may become due hereunder,
                nor
                shall any of such payments be subject to attachment, garnishment,
                or
                execution or be transferable by operation of law in the event of
                bankruptcy, insolvency, or
                otherwise.

            

    

     

     

    
      	
              2.

            	
              Each
                Director may elect to have any portion or all of his or her calendar
                year
                fees deferred by filing a written election with the Secretary of
                the Bank
                prior to January 1st of the calendar year for which the deferral
                is
                made.  The election may not be modified or revoked after the
                beginning of such calendar year.  Elections may be modified or
                revoked as of the close of any calendar year, but any such modification
                or
                revocation shall be effective only as to fees for subsequent calendar
                years.  The deferral election shall be made on an election form
                (“Election Form”) in the form attached hereto as Exhibit A, and the
                deferral election shall continue from time to time until revoked
                or
                modified by the Director.  A person who becomes a Director after
                January 1st of a calendar year may elect to have any portion or all
                of his
                or her fees for such calendar year deferred by filing a written election
                with the Secretary of the Bank within 30 days after becoming a Director;
                provided, however, that such election will only cover fees paid for
                services rendered after the date on which the election is received
                by the
                Bank.  If he or she does not file such an Election Form by such
                date, the Director will be deemed to have elected not to defer fees
                herein.  As used herein, “fees” means any retainer fees or
                meeting fees which an individual receives or is entitled to receive
                as a
                Director, including fees that accrue on account of service on any
                committee of Directors and fees that are payable for services over
                and
                above those normally expected of Directors and performed at the request
                of
                the Chairman of the Bank.

            

    

     

     

    
      	
              3.

            	
              A
                Director’s election to defer fees shall continue from calendar year to
                calendar year unless the Director revokes or modifies it in writing
                as
                provided in paragraph 2 hereof.

            

    

     

     

    
      	
              4.

            	
              The
                Bank shall maintain a memorandum account for each Director participating
                in the Plan with respect to deferred fees and shall credit such account
                quarterly with interest.  The rate of interest for a quarter
                will be the highest, rate offered by the Bank to the general public
                for
                any period of seven consecutive calendar days during such quarter
                on new
                insured savings accounts, regardless of term.  Interest will be
                compounded quarterly and credited to the accounts as of the last
                day of
                each quarter.  The daily balance method will be used to
                calculate interest on the accounts.  Interest will be based on
                an actual 365 day basis.

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
              5.

            	
              Amounts
                which are deferred under the Plan, together with accumulated interest,
                shall be paid in accordance with the Director’s applicable Election Form
                and the requirements set forth in paragraph 6; provided, however,
                that
                payment must commence or be made not later than the first day of
                the first
                calendar year which begins on or after the later of (i) the date
                on which
                the Director incurs a Separation from Service or (ii) the date on
                which
                the Director attains the age specified by the retirement income test
                of
                the Social Security Act [Section 203(f))3), as amended, or the
                corresponding provision then in effect]; provided further, that payment
                may commence or be made only as of the first day of a calendar year
                and
                installment payments may be made only as of the first day of a calendar
                month.  Amounts which are held pending distribution shall
                continue to accrue interest at the stated interest rate.  In the
                case of amounts payable in monthly or annual installments, each
                installment shall be equal to the aggregate amount in the Director’s
                account as of the end of the month prior to the installment payment
                date,
                multiplied by a fraction whose numerator is one (1) and whose denominator
                is the number of installments (including the installment that becomes
                payable as of such date) remaining.

            

    

     

    The
      term
“Separation from Service” means with respect to a Director who is not also an
      employee of the Bank or Holding Company the good faith and complete termination
      of such Director’s relationship with the Bank as a member of its board of
      directors (and his relationship with the Holding Company as a member of its
      board of directors, if applicable).  A Director who is also an
      employee of the Bank or Holding Company shall incur a “Separation from Service”
only if he both incurs a good faith and complete termination of his relationship
      with the Bank as a member of its board of directors (and his relationship with
      the Holding Company as a member of its board of directors, if applicable) and
      has a “termination of employment;” provided, however, that the Director shall
      not be required to have a “termination of employment” if this Plan is not
      required to be aggregated with any other nonqualified deferred compensation
      plan
      of the Bank or Holding Company in which the Director participates as an employee
      under Section 409A of the Code.  For purposes of this section, a
“termination of employment” means the termination of the individual’s employment
      with the Bank or Holding Company for reasons other than death or
      disability.  Whether a “termination of employment” takes place as
      determined based on the facts and circumstances surrounding the termination
      of
      the individual’s employment.  A “termination of employment” will be
      considered to have occurred if it is reasonably anticipated that:  (a)
      the individual will not perform any services for the Bank or Holding Company
      after the termination of employment, or (b) the individual will continue to
      provide services to the Bank or Holding Company at an annual rate that is less
      than fifty percent (50%) of the bona fide services rendered during the
      immediately preceding twelve months of employment.

     

     

    
      	
              6.

            	
              The
                manner and date in which a Director’s deferred fees are to be distributed
                to that Director shall be designated by that Director in the Election
                Form
                executed by that Director.  The distribution options available
                to a Director shall include:

            

    

     

    
      	
               

            	
              (i)

            	
              lump
                sum, or

            

    

     

    
      	
               

            	
              (ii)

            	
              monthly
                or annual installments over a period between 5 and 10
                years

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    Subject
      to paragraph 5, the Director shall designate in the Election Form the year
      in
      which distribution is to be made or begin.  Notwithstanding anything
      contained in this paragraph to the contrary, the following special rules shall
      govern distributions made under this Plan;

     

    
      	
               

            	
              (iii)

            	
              A
                Director shall be permitted to change the manner in which the deferred
                fees are to be distributed by completing a new Election Form which
                provides for a change in the manner of payment which is effective
                no
                earlier than 12 months after the Election Form is completed and is
                effective at least two (2) calendar years before the calendar year
                during
                which occurs the earlier of the date on which the person ceases to
                be a
                Director or the date on which distribution of the Director’s deferred fees
                would have been made but for the change in election; provided, however,
                that no change in the manner in which the deferred fees are to be
                distributed shall be permitted if it accelerates the time or schedule
                of
                any distribution, and provided further that, except in the case of
                death
                or disability, the first payment with respect to which such change
                is made
                must be deferred for a period of not less than 5 years from the date
                such
                payment would have been made but for the change in
                election.  Any completed Election Form which does not meet the
                timing requirements of this subparagraph (iii) or Section 409A of the
                Internal Revenue Code of 1986, as amended (the “Code”), shall be null and
                void.

            

    

     

    
      	
               

            	
              (iv)

            	
              If
                a Director fails to complete an Election Form, amounts credited to
                his or
                her account shall automatically be distributed in a single lump sum
                as
                soon as practicable (but no later than 21⁄2 months) after the January 1
                immediately following the date on which the Director incurs a Separation
                from Service.

            

    

     

    
      	
              7.

            	
              If
                any former Director becomes a director, proprietor, officer, partner,
                or
                employee of, or otherwise becomes affiliated with, any bank or savings
                institution in the State of Indiana that competes with the Bank,
                or if a
                former Director shall refuse a reasonable request of the Bank to
                perform
                consulting services for it after he or she retires from the Bank’s Board
                of Directors, any deferred fees and interest remaining payable to
                such
                person under the Plan shall be payable immediately at the option
                of the
                Bank (but only to the extent such acceleration of payment is permitted
                in
                accordance with Treasury Regulations issued with respect to
                Section 409A of the Code).

            

    

     

    
      	
              8.

            	
              Each
                Director may file with the Bank a written designation of one or more
                persons as the beneficiaries who shall be entitled to receive any
                amounts
                remaining payable under the Plan after his or her death.  The
                election shall be made in the form attached hereto as Exhibit B.
                A
                Director from time to time may revoke or change his or her beneficiary
                designation without the consent of any prior beneficiary by filing
                a new
                designation with the Bank.  The last such designation received
                by the Bank shall be controlling; provided, however, that no designation,
                or change or revocation thereof, shall be effective unless received
                by the
                Bank prior to the Director’s death.  If any amount payable under
                the Plan at or after the death of the Director cannot be paid to
                the
                Director’s designated beneficiary, either because the Director failed
                validly to designate a beneficiary or because the beneficiary designated
                by the Director is not living at the time the amount becomes payable,
                the
                legal representative of such deceased Director shall receive the
                payments.  A Director may make a time and method of payment
                election regarding

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    amounts
      that become payable during his or her lifetime and different time and method
      of
      payment election with respect to amounts becoming payable after his or her
      death, assuming those elections are made at the times permitted by this Plan
      and
      otherwise comply with the conditions for such elections provided in the
      Plan.  Unless a Director elects otherwise, all amounts becoming
      payable with respect to a Director after his or her death shall be paid in
      one
      lump sum within 21⁄2 months of the January 1 coinciding with or next following
      such death.

     

    
      	
              9.

            	
              Each
                person receiving a payment under this Plan shall be responsible for
                the
                Federal, state and local income tax consequences of such
                payment.  Where applicable, the Bank shall withhold taxes from
                each distribution.

            

    

     

    
      	
              10.

            	
              This
                Plan shall not be deemed to constitute a contract of employment between
                the parties hereto, nor shall any provisions hereof restrict the
                right of
                the Bank to discharge the recipient, or restrict the right of a recipient
                to terminate his or her employment or status as a
                Director.

            

    

     

    
      	
              11.

            	
              The
                President of the Bank shall be empowered to place the Plan in effect
                under
                such additional conditions and terms as shall not be inconsistent
                with the
                terms stated above and as shall not jeopardize the status of the
                Plan as a
                deferred compensation plan allowing a Director of the Bank not to
                include
                the deferred amount, including interest, in gross income under the
                Federal
                income tax law until the taxable year or years such amounts are actually
                paid.

            

    

     

    
      	
              12.

            	
              If
                a Change in Control occurs prior to the date a Director’s benefits
                hereunder commence (or after commencement of benefits but before
                all
                amounts due to Director under this Plan have been paid), Director
                shall be
                paid the unpaid balance of the amounts he has deferred hereunder,
                together
                with accumulated interest hereunder, in a single lump sum payment
                within
                30 days following the Change in Control.  For purposes of this
                paragraph 12, “Change in Control” shall
                mean:

            

    

     

    
      	
               

            	
              (i)

            	
              a
                change in the ownership of the Bank or Lincoln Bancorp (the “Holding
                Company”), which shall occur on the date that any one person, or more than
                one person acting as a group, acquires ownership of stock of the
                Bank or
                the Holding Company that, together with stock held by such person
                or
                group, constitutes more than fifty percent (50%) of the total fair
                market
                value or total voting power of the stock of the Bank or the Holding
                Company.  Such acquisition may occur as a result of a merger of
                the Holding Company or the Bank into another entity which pays
                consideration for the shares of capital stock of the Holding Company
                or
                the Bank in the merger.  However, if any one person, or more
                than one person acting as a group, is considered to own more than
                fifty
                percent (50%) of the total fair market value or total voting power
                of the
                stock of the Bank or the Holding Company, the acquisition of additional
                stock by the same person or persons is not considered to cause a
                change in
                the ownership of the Bank or the Holding Company (or to cause a change
                in
                the effective control of the Bank or the Holding Company (within
                the
                meaning of subsection (ii)). An increase in the percentage of stock
                owned
                by any one person, or persons acting as a group, as a result of a
                transaction in which the Bank or the Holding Company acquires its
                stock
                in

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    exchange
      for property will be treated as an acquisition of stock for purposes of this
      subsection. This subsection applies only when there is a transfer of stock
      of
      the Bank or the Holding Company (or issuance of stock of the Bank or the Holding
      Company) and stock in the Bank or the Holding Company remains outstanding after
      the transaction.

     

    
      	
               

            	
              (ii)

            	
              a
                change in the effective control of the Bank or the Holding Company,
                which
                shall occur only on either of the following
                dates:

            

    

     

    
      	
               

            	
              (a)

            	
              the
                date any one person, or more than one person acting as a group acquires
                (or has acquired during the 12-month period ending on the date of
                the most
                recent acquisition by such person or persons) ownership of stock
                of the
                Bank or the Holding Company possessing thirty percent (30%) or more
                of the
                total voting power of the stock of the Bank or the Holding
                Company.

            

    

     

    
      	
               

            	
              (b)

            	
              the
                date a majority of members of the Holding Company’s board of directors is
                replaced during any 12-month period by directors whose appointment
                or
                election is not endorsed by a majority of the members of the Holding
                Company’s board of directors before the date of the appointment or
                election; provided, however, that this provision shall not apply
                if
                another corporation is a majority shareholder of the Holding
                Company.

            

    

     

    If
      any
      one person, or more than one person acting as a group, is considered to
      effectively control the Bank or the Holding Company, the acquisition of
      additional control of the Bank or the Holding Company by the same person or
      persons is not considered to cause a change in the effective control of the
      Bank
      or the Holding Company (or to cause a change in the ownership of the Bank or
      the
      Holding Company within the meaning of subsection (i) of this
      section).

     

    
      	
               

            	
              (iii)

            	
              a
                change in the ownership of a substantial portion of the Bank’s assets,
                which shall occur on the date that any one person, or more than one
                person
                acting as a group, acquires (or has acquired during the 12-month
                period
                ending on the date of the most recent acquisition by such person
                or
                persons) assets from the Bank that have a total gross fair market
                value
                equal to or more than forty percent (40%) of the total gross fair
                market
                value of all of the assets of the Bank immediately before such acquisition
                or acquisitions. For this purpose, gross fair market value means
                the value
                of the assets of the Bank, or the value of the assets being disposed
                of,
                determined without regard to any liabilities associated with such
                assets.
                No change in control event occurs under this subsection (iii) when
                there
                is a transfer to an entity that is controlled by the shareholders
                of the
                Bank immediately after the transfer. A transfer of assets by the
                Bank is
                not treated as a change in the ownership of such assets if the assets
                are
                transferred to -

            

    

     

    
      	
               

            	
              (a)

            	
              a
                shareholder of the Bank (immediately before the asset transfer) in
                exchange for or with respect to its
                stock;

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (b)

            	
              an
                entity, 50 percent or more of the total value or voting power of
                which is
                owned, directly or indirectly, by the
                Bank.

            

    

     

    
      	
               

            	
              (c)

            	
              a
                person, or more than one person acting as a group, that owns, directly
                or
                indirectly, 50 percent or more of the total value or voting power
                of all
                the outstanding stock of the Bank;
                or

            

    

     

    
      	
               

            	
              (d)

            	
              an
                entity, at least 50 percent of the total value or voting power of
                which is
                owned, directly or indirectly, by a person described in paragraph
                (c)

            

    

     

    For
      purposes of this subsection (iii) and except as otherwise provided in paragraph
      (a) above, a person’s status is determined immediately after the transfer of the
      assets.

     

    
      	
               

            	
              (iv)

            	
              For
                purposes of this section, persons will not be considered to be acting
                as a
                group solely because they purchase or own stock of the same corporation
                at
                the same time, or as a result of the same public offering. Persons
                will be
                considered to be acting as a group if they are owners of a corporation
                that enters into a merger, consolidation, purchase or acquisition
                of
                stock, or similar business transaction with the Bank or the Holding
                Company; provided, however, that they will not be considered to be
                acting
                as a group if they are owners of an entity that merges into the Bank
                or
                the Holding Company where the Bank or the Holding Company is the
                surviving
                corporation.

            

    

     

     

    
      	
              13.

            	
              Notwithstanding
                any provision of this Plan to the contrary, if a Director is considered
                a
                Specified Employee at Separation from Service in accordance with
                Section
                409A of the Code, benefit distributions that are made upon Separation
                from
                Service may not commence earlier than six (6) months after the date
                of
                such Separation from Service; provided, however, that the six (6)
                month
                delay required under this paragraph 13 shall not apply to the portion
                of
                any payment resulting from the Director’s “involuntary separation from
                service” (as defined in Treas. Reg. § 1.409A 1(n) and including a
                “separation from service for good reason,” as defined in Treas. Reg. §
                1.409A 1(n)(2)) that (a) is payable no later than the last day of
                the
                second year following the year in which the Separation from Service
                occurs, and (b) does not exceed two times the lesser of (i) the Director’s
                annualized compensation for the year prior to the year in which the
                Separation from Service occurs, or (ii) the dollar limit described
                in
                Section 401(a)(17) of the Code.  In the event this paragraph 13
                is applicable to a Director, any distribution which would otherwise
                be
                paid to the Director within the first six months following the Separation
                from Service shall be accumulated and paid to the Director in a lump
                sum
                on the first day of the seventh month following the Separation from
                Service.  All subsequent distributions shall be paid in the
                manner specified in this Plan. For purposes of clarification, the
                restrictions in this paragraph 13 do not apply to any distribution
                required under paragraph 12 hereof.  The term “Specified
                Employee” means a key employee (as defined in Section 416(i) of the Code
                without regard to paragraph 5 thereof) of the Bank or Holding Company
                if
                any stock of the Bank or Holding Company or any entity required to
                be
                aggregated with the Bank or Holding Company under Section 414(b)
                or 414(c)
                of the Code is publicly traded on an established securities market
                or
                otherwise.

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    LINCOLN
      BANK

    DIRECTORS
      DEFERRED FEE PLAN

    

    Election
      to Defer Receipt of Fees

    

    Pursuant
      to the Unfunded Deferred Compensation Plan for the Directors of Lincoln Bank
      (the “Plan”), the undersigned Director hereby elects to defer receipt of the
      following compensation to be earned as a Director:

    

    My
      election shall take effect as follows:

    

    
      	
              £ 
                

            	
              beginning
                January 1 of the year following this
                election.

            

    

    

    
      	
              £ 
                

            	
              beginning
                immediately as to all fees not yet earned. (Note: This may be elected
                only if the Plan did not exist or the Director was not a Director
                on
                January 1 of the Year of this
                election.)

            

    

    

    Distributions
      from the Plan shall be made according to the following method:

    

    
      	
              £ 
                

            	
              lump
                sum payment.

            

    

    

    
      	
              £ 
                

            	
              monthly
                installments (number of installments not to be less than 60 nor exceed
                120).

            

    

    

    
      	
              £ 
                

            	
              annual
                installments (number of installments not to be less than 5 nor exceed
                10).

            

    

    

    Distributions
      from the Plan to me shall be made or commence as of the January 1 coinciding
      with or next following:

    

    
      	
              £ 
                

            	
              the
                date on which I have a Separation from
                Service.

            

    

    

    
      	
              £ 
                

            	
              the
                date on which I attain my Social Security retirement
                age.

            

    

    

    
      	
              £ 
                

            	
              the
                earlier of the foregoing dates.

            

    

    

    
      	
              £ 
                

            	
              the
                later of such foregoing dates;

            

    

    

    provided,
      however, that the distribution of benefits hereunder is subject to the
      provisions of paragraph 13 of the Plan.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    Distributions
      from the Plan after my death shall be made according to the following method
      and
      at the following times:

    

    
      	
              £ 
                

            	
              lump
                sum payment

            

    

    

    
      	
              £ 
                

            	
              monthly
                installments commencing as of the January 1 coinciding with or next
                following such death (number of installments not to exceed 120). 
                (Note: If installment payments commence before the Director’s death,
                Payment to the Director’s beneficiary or legal representative will
                commence as of the next date after such death as of which an installment
                would have been payable to the Director but for such death, and the
                number
                of months specified will be reduced by the number of monthly installments
                that become payable before such death and the monthly equivalent
                of the
                number of annual installments that became payable before such
                death.)

            

    

    

    
      	
              £ 
                

            	
              annual
                installments commencing as of the January 1 coinciding with or next
                following my death (number of installments not to exceed 10). 
                (Note: If installment payments commence before the Director’s
                death, the number of years specified will be reduced by the number
                of
                annual installments that became payable before such death and the
                annual
                equivalent of the number of monthly installments that became payable
                before such death.)

            

    

    

    All
      changes in the manner and dates of payment of benefits under the Plan are
      subject to the restrictions in Section 6(iii) of the Plan.

     

    

    
      	
              DATED:

            	 	 	 	 
	 	 	 	 	
              Director’s
                Signature

            

    

    

    

    

    Lincoln
      Bank hereby acknowledges receipt of the foregoing Election to Defer
      Receipt of Fees.

    

    
      	 	 	 	
              LINCOLN
                BANK

            
	 	 	 	 	 
	 	 	 	 	 
	
              DATED:

            	 	 	
              By:

            	 

    

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    LINCOLN
      BANK

    DIRECTORS
      DEFERRED FEE PLAN

    

    DESIGNATION
      OF BENEFICIARY

    

    In
      accordance with the provisions of the Lincoln Bank Directors Deferred Fee Plan
      (the “Plan”), and subject to the conditions on the next page hereof, the
      undersigned Director hereby designates the following as the beneficiary or
      beneficiaries of any amounts payable under the Plan upon or after his or her
      death, and hereby revokes all prior beneficiary designations, if any, made
      by
      him or her:

    

    
      	
              PRIMARY
                BENEFICIARIES:

            	
              [List
                name, relationship to Participant, mailing address and (if available)
                Social Security Number of each]

            
	 	 
	 	 
	
               

               

            	 
	
               

               

            	 
	
               

               

            	 
	
              CONTINGENT
                BENEFICIARIES:

            	
              [List
                name, relationship to Participant, mailing address and (if available)
                Social Security Number of each]

            
	 	 
	 	 
	
               

               

            	 
	
               

               

            	 

    

     

    
 

    
      	
              DATE:

            	 	 	 
	 	 	 	
              Director’s
                Signature

            
	 	 	 	 
	 	 	 	 
	
              Signature
                of Witness

            	 	 
	
              (Someone
                Other Than Director)

            	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
              Address
                of Witness

            	 	 
	 	 	 	 
	 	
               

               

            	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    CONDITIONS

    

    1.           Unless
      otherwise provided on the preceding page of this designation, each payment
      to be
      made pursuant to this designation shall be paid in equal shares to those primary
      beneficiaries who survive the Director and are living at the time such payment
      becomes due or, if no primary beneficiaries survive the Director and are then
      living, in equal shares to those contingent beneficiaries who survive the
      Director and are then living.

    

    2.           Unless
      otherwise provided on the preceding page of this designation, this designation
      shall automatically be revoked and be of no further force or effect in the
      event
      of either of the following contingencies occurring subsequent to the date
      hereof.

    

    
      	
               

            	
              (a)

            	
              The
                marriage of the Director, unless the marriage is to the sole primary
                beneficiary designated by this designation;
                or

            

    

    

    
      	
               

            	
              (b)

            	
              The
                termination of the Director’s marriage, by dissolution, divorce or
                annulment, unless (i) the former spouse is not designated by this
                designation as a primary beneficiary or contingent beneficiary and
                (ii) no
                trust of which the former spouse is a beneficiary is designated by
                this
                designation as a primary beneficiary or contingent
                beneficiary.

            

    

    

    3.           The
      right to change this designation without the consent of any primary or
      contingent beneficiary is reserved.

    

    
      
        

      

    

    Lincoln
      Bank hereby acknowledges receipt of this Designation of
      Beneficiary.

    

    

    
      	 	 	 	
              LINCOLN
                BANK

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
              DATE:

            	 	 	
              By:

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