Document:

Exhibit 10.27

 

SPECIAL TERMINATION AGREEMENT

 

THIS AGREEMENT is dated as
of the 24th day of April, 2003 by and among Abington Bancorp, Inc., a
Massachusetts corporation (the “Company”), its subsidiary, Abington Savings
Bank, a Massachusetts savings bank with its main office in Abington,
Massachusetts (the “Bank”; the Company and the Bank are sometimes collectively
referred to herein as the “Employers”) and W. Cleveland Cogswell, an individual
currently employed by the Bank in the capacity of Senior Vice President,
Consumer Banking (the “Executive”).

1.   Purpose.  In order to allow the Executive to consider the prospect of a
Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services rendered and to be rendered by the Executive to
the Employers, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Employers, the Employers are
willing to provide, subject to the terms of this Agreement, certain severance
benefits to protect the Executive from the consequences of a Terminating Event
(as defined in Section 3) occurring subsequent to a Change in Control.

2.   Change in Control.  A “Change in Control” shall be deemed to
have occurred in any of the following events:

(i) if there has occurred a
change in control which the Company would be required to report in response to
Item 1 of Form 8-K promulgated under the Securities Exchange Act of 1934, as
amended (the “1934 Act”), or, if such Form is no longer in effect in its present
form, any Form or regulation promulgated by the Securities and Exchange
Commission pursuant to the 1934 Act which is intended to serve similar
purposes; or

(ii) when any “person” (as
such term is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes a
“beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the
1934 Act), directly or indirectly, of securities of the Company or the Bank
representing twenty-five percent (25%) or more of the total number of votes
that may be cast for the election of directors of the Company or the Bank; or

(iii) if during any period
of two consecutive years (not including any period prior to the execution of
this Agreement), individuals who are Continuing Directors (as herein defined)
cease for any reason to constitute at least a majority of the Board of
Directors of the Company.  For this
purpose, a “Continuing Director” shall mean (a) an individual who was a
director of the Company at the beginning of such period or (b) any new director
(other than a director designated by a person who has entered into any
agreement with the Company to effect a transaction described in clause (i) or
(ii) of this Section 2 whose election by the Board or nomination for election
by the Company’s stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved; or

(iv) the stockholders of the
Company approve a merger or consolidation of the Company with any other bank or
corporation, other than (a) a merger or consolidation which 

 

 

would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or (b) a merger or consolidation effected
to implement a recapitalization of the Company (or similar transaction) in
which no “person” (as defined above) acquires more than 30% of the combined
voting power of the Company’s then outstanding securities; or

 

(v) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of its
assets.

3.   Terminating Event.  A “Terminating Event” shall mean either of
the following:

(a)   termination by either of the Employers of
the employment of the Executive as Senior Vice President of the Bank for any
reason other than (i) death, (ii) deliberate dishonesty of the Executive with
respect to the Company or the Bank or any subsidiary or affiliate thereof, or
(iii) conviction of the Executive of a crime involving moral turpitude, or

(b)   resignation of the Executive from the
employ of the Company or the Bank, while the Executive is not receiving
payments or benefits from the Company or the Bank by reason of the Executive’s
disability, subsequent to the occurrence of any of the following events:

(i) a significant change in
the nature or scope of the Executive’s responsibilities, authorities, powers,
functions or duties from the responsibilities, authorities, powers, functions
or duties exercised by the Executive at the Company or the Bank immediately
prior to the Change in Control; or

(ii) a reasonable
determination by the Executive that, as a result of a Change in Control, he is
unable to exercise the responsibilities, authorities, powers, functions or
duties exercised by the Executive at the Company or the Bank immediately prior
to such Change in Control; or

(iii) a decrease in the
total annual compensation payable by the Company or the Bank to the Executive
other than as a result of a salary reduction similarly affecting the Executive
and all other executive officers of the Company or the Bank on the basis of the
Company’s or the Bank’s financial performance; or

(iv) the failure by the
Company or the Bank to continue in effect any material compensation, incentive,
bonus or benefit plan in which the Executive participates immediately prior to
the Change in Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan, or the
failure by the Company or the Bank to continue the Executive’s participation
therein (or in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided and the level
of the Executive’s participation relative to other participants, than the basis
when existed at the time of the Change of Control; or

 

(v) the failure of the
Company or the Bank to obtain a satisfactory agreement from any successor to
assume and agree to perform this Agreement.

4.   Severance Payment.

(a)   If a Change of Control takes place on or
after the first anniversary but before the second anniversary of the date on
which the Executive’s employment with the Bank commenced and a Terminating
Event occurs within three (3) years after such Change in Control, the Employers
shall pay to the Executive an amount equal to (x) the “base amount” (as defined
in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the
“Code”)) applicable to the Executive, less (y) One Dollar ($1.00), payable in
one lump-sum payment on the date of termination.

(b)   If a Change of Control takes place on or
after the second anniversary but before the third anniversary of the date on
which the Executive’s employment with the Bank commenced and a Terminating
Event occurs within three (3) years after such Change in Control, the Employers
shall pay to the Executive an amount equal to (x) two times such “base amount”
applicable to the Executive, less (y) One Dollar ($1.00), payable in one
lump-sum payment on the date of termination.

(c)   If a Change of Control takes place on or
after the third anniversary of the date on which the Executive’s employment
with the Bank commenced and a Terminating Event occurs
within three (3) years after such Change in Control, the Employers shall pay to
the Executive an amount equal to (x) three times such “base amount” applicable
to the Executive, less (y) One Dollar ($1.00), payable in one lump-sum payment
on the date of termination.

5.   Limitation on Benefits.

(a)   It is the intention of the Executive and of
the Employers that no payments by the Employers to or for the benefit of the
Executive under this Agreement or any other agreement or plan pursuant to which
he is entitled to receive payments or benefits shall be non-deductible to the
Employers by reason of the operation of Section 280G of the Code relating to
parachute payments.  Accordingly, and
notwithstanding any other provision of this Agreement or any such agreement or
plan, if by reason of the operation of said Section 280G, any such payments
exceed the amount which can be deducted by the Employers, such payments shall
be reduced to the maximum amount which can be deducted by the Employers.  To the extent that payments exceeding such
maximum deductible amount have been made to or for the benefit of the
Executive, such excess payments shall be refunded to the Employers with
interest thereon at the applicable Federal Rate determined under Section
1274(d) of the Code, compounded annually, or at such other rate as may be
required in order that no such payments shall be non-deductible to the
Employers by reason of the operation of said Section 280G.  To the extent that there is more than one
method of reducing the payments to bring them within the limitations of said
Section 280G, the Executive shall determine which method shall be followed,
provided that if the Executive fails to make such determination within forty-five
days after the Employers have sent her written notice of the need for such
reduction, the Employers may determine the method of such reduction in their
sole discretion.

 

 

 

(b)   If any dispute between the Employers and
the Executive as to any of the amounts to be determined under this Section 5 or
the method of calculating such amounts cannot be resolved by the Employers and
the Executive, either party after giving three days written notice to the
other, may refer the dispute to a partner in a Massachusetts office of a firm
of independent certified public accountants selected jointly by the Employers
and the Executive.  The determination of
such partner as to the amounts to be determined under Section 5(a) and the
method of calculating such amounts shall be final and binding on both the
Employers and the Executive.  The
Employers shall bear the costs of any such determination.

(c)   The Executive confirms that he is aware of
the fact that the Federal Deposit Insurance Corporation has the power to preclude
the Bank from making payments to the Executive under this Agreement under
certain circumstances.  The Executive
agrees that the Bank shall not be deemed to be in breach of this Agreement if
it is precluded from making a payment otherwise payable hereunder by reason of
regulatory requirements binding on the Bank.

6.   Employment Status.  This Agreement is not an agreement for the
employment of the Executive and shall confer no rights on the Executive except
as herein expressly provided.

7.   Term.  This Agreement shall take effect on the date first written above,
and shall terminate upon the earlier of (a) the termination by the Employers of
the employment of the Executive because of death, deliberate dishonesty of the
Executive with respect to the Company or the Bank or any subsidiary or
affiliate thereof, or conviction of the Executive of a crime involving moral
turpitude, (b) the resignation or termination of employment with the Company or
the Bank by the Executive for any reason prior to a Change in Control, or (c)
the resignation from employment of the Executive after a Change in Control for
any reason other than the occurrence of any of the events enumerated in Section
3(b) of this Agreement.

8.   Withholding.  All payments made by the Employers under this Agreement shall be
paid net of, and after deduction of, any tax or other amounts required to be
withheld by the Employers under applicable law.

9.   Assignment.  Neither the Employers nor the Executive may make any assignment
of this Agreement or any interest herein, by operation of law or otherwise,
without the prior written consent of the other party.  This Agreement shall inure to the benefit of, and be binding
upon, the Employers and the Executive, and their respective heirs, legal
representatives, successors and permitted assigns.  In the event of the Executive’s death prior to the completion by
the Employers of all payments due her under this Agreement, the Employers shall
continue such payments to the Executive’s beneficiary designated in writing to
the Employers prior to her death (or to her estate, if he fails to make such
designation).

10.   Enforceability.  If any portion or provision of this
Agreement shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as
to which it is so declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.

 

 

 

11.   Waiver.  No waiver of any provision hereof shall be
effective unless made in writing and signed by the waiving party.  The failure of either party to require the
performance of any term or obligation of this Agreement, or the waiver by
either party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.

12.   Notices.  Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient if in writing
and delivered in person or sent by registered or certified mail, postage
prepaid, to the Executive at 9 Chapin Road, Newton, MA 02459, or to such other
address as the Executive has filed in writing with the Employers or, in the
case of the Employers, at their main office, attention of the Clerk or the
Secretary.

13.   Effect on Other Agreements.  An election by the Executive to resign after
a Change in Control under the provisions of this Agreement shall not constitute
a breach by the Executive of any employment agreement between the Employers and
the Executive and shall not be deemed a voluntary termination of employment by
the Executive for the purpose of interpreting the provisions of any of the
Employer’s benefit plans, programs or policies.  Nothing in this Agreement shall be construed to limit the rights
of the Executive under any employment agreement he may then have with the
Employers.

14.   Amendment.  This Agreement may be amended or modified
only by a written instrument signed by the Executive and by a duly authorized
representative of the Executive Committee of the Board of Directors of each of
the Employers.

15.   Governing Law.  This Agreement shall be governed by, and
construed and enforced in accordance with, the substantive laws of The
Commonwealth of Massachusetts without regard for its principles of conflicts of
laws.

*
* * *

 

 

 

IN WITNESS WHEREOF, this
Agreement has been executed as a sealed instrument by the Company and the Bank,
by their duly authorized officers, and by the Executive, as of the date first
above written.

 

	
  ATTEST:

  	
   

  	
   

  	
  ABINGTON BANCORP, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Joanne Strondak

  	
   

  	
   

  	
  By:

  	
  /s/ Kevin M. Tierney, Sr.

  
	
  Joanne Strondak, Clerk

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [Seal]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  	
  ABINGTON SAVINGS BANK

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Joanne Strondak

  	
   

  	
   

  	
  By:

  	
  /s/ Kevin M. Tierney, Sr.

  
	
  Joanne Strondak, Clerk

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Executive Vice President
  &

  
	
   

  	
   

  	
   

  	
   

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [Seal]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Renée R. Czajkowski

  	
   

  	
   

  	
  /s/ W. Cleveland Cogswell

  
	
  Renée R. Czajkowski

  	
   

  	
   

  	
  W. Cleveland CogswellEXHIBIT 10.1

 

TOM BROWN, INC.

 

2003 STOCK OPTION PLAN

 

I.                                         PURPOSE

 

The purpose of

the TOM BROWN,

INC. 2003 STOCK OPTION PLAN (the “Plan”) is to provide a

means through which TOM BROWN, INC.,

a Delaware corporation (the “Company”), and its Affiliates may attract able

persons to serve as Directors or Consultants or to enter the employ of the

Company and its Affiliates and to provide a means whereby those individuals

upon whom the responsibilities of the successful administration and management

of the Company and its Affiliates rest, and whose present and potential

contributions to the Company and its Affiliates are of importance, can acquire

and maintain stock ownership, thereby strengthening their concern for the

welfare of the Company and its Affiliates. 

A further purpose of the Plan is to provide such individuals with

additional incentive and reward opportunities designed to enhance the

profitable growth of the Company and its Affiliates.  Accordingly, the Plan provides for granting Incentive Stock

Options, options that do not constitute Incentive Stock Options, or any

combination of the foregoing, as is best suited to the circumstances of the

particular Employee, Consultant or Director as provided herein.

 

II.                                     DEFINITIONS

 

The following

definitions shall be applicable throughout the Plan unless specifically

modified by any paragraph:

 

(a)                                  “Affiliate”

means any corporation, partnership, limited liability company or partnership,

association, trust or other organization which, directly or indirectly,

controls, is controlled by, or is under common control with, the Company.  For purposes of the preceding sentence,

“control” (including, with correlative meanings, the terms “controlled by” and

“under common control with”), as used with respect to any entity or organization,

shall mean the possession, directly or indirectly, of the power (i) to vote

more than 50% of the securities having ordinary voting power for the election

of directors of the controlled entity or organization, or (ii) to direct or

cause the direction of the management and policies of the controlled entity or

organization, whether through the ownership of voting securities or by contract

or otherwise.

 

(b)                                 “Board”

means the Board of Directors of the Company.

 

(c)                                  “Code”

means the Internal Revenue Code of 1986, as amended.  Reference in the Plan to any section of the Code shall be deemed

to include any amendments or successor provisions to such section and any

regulations under such section.

 

(d)                                 “Committee”

means a committee of the Board that is selected by the Board as provided in

Paragraph IV(a).

 

(e)                                  “Common Stock”

means the common stock, par value $0.10 per share, of the Company, or any

security into which such common stock may be changed by reason of any

transaction or event of the type described in Paragraph VIII.

 

(f)                                    “Company”

means Tom Brown, Inc., a Delaware corporation.

 

(g)                                 “Consultant”

means any person who is not an Employee or a Director and who is providing

advisory or consulting services to the Company or any Affiliate.

 

(h)                                 “Director”

means an individual elected to the Board by the stockholders of the Company or

by the Board under applicable corporate law who is serving on the Board on the

date the Plan is adopted by the Board or is elected to the Board after such

date.

 

1

 

(i)                                     An

“Employee”

means any person (including a Director) in an employment relationship with the

Company or any Affiliate.

 

(j)                                     “Immediate Family”

means, with respect to a Participant, the Participant’s spouse, children, or

grandchildren (including adopted and stepchildren and grandchildren).

 

(k)                                  “Incentive Stock Option”

means an incentive stock option within the meaning of Section 422 of the Code.

 

(l)                                     “Market Value”

means, as of any specified date, the mean of the high and low sales prices of

the Common Stock reported on the stock exchange composite tape on that date,

or, if no prices are reported on that date, on the last preceding date on which

such prices of the Common Stock are so reported.  In the event Common Stock is not publicly traded at the time a

determination of its value is required to be made hereunder, the determination

of its fair market value shall be made by the Committee in such manner as it

deems appropriate.

 

(m)                               “1934 Act”

means the Securities Exchange Act of 1934, as amended.

 

(n)                                 “Option”

means an award granted under Paragraph VII of the Plan and includes both

Incentive Stock Options to purchase Common Stock and Options that do not

constitute Incentive Stock Options to purchase Common Stock.

 

(o)                                 “Option Agreement”

means a written agreement between the Company and a Participant with respect to

an Option.

 

(p)                                 “Participant”

means an Employee, Consultant, or Director who has been granted an Option.

 

(q)                                 “Plan”

means the Tom Brown, Inc. 2003 Stock Option Plan, as amended from time to time.

 

(r)                                    “Rule 16b-3”

means SEC Rule 16b-3 promulgated under the 1934 Act, as such may be amended

from time to time, and any successor rule, regulation or statute fulfilling the

same or a similar function.

 

(s)                                  “Stock Appreciation Right”

shall have the meaning assigned to such term in Paragraph VII(d) of the Plan.

 

III.                                 EFFECTIVE DATE AND DURATION OF THE PLAN

 

The Plan shall

become effective upon the date of its adoption by the Board, provided the Plan

is approved by the stockholders of the Company within 12 months thereafter.

Notwithstanding any provision in the Plan or in any Option Agreement, no Option

shall be exercisable prior to such stockholder approval.  No further Options may be granted under the

Plan after 10 years from the date the Plan is adopted by the Board.  The Plan shall remain in effect until all

Options granted under the Plan have been satisfied or expired.

 

IV.                                ADMINISTRATION

 

(a)                                  Composition of Committee.  The Plan shall be administered by a committee

of, and appointed by, the Board that shall be comprised solely of two or more

outside Directors (within the meaning of the term “outside directors” as used

in Section 162(m) of the Code and applicable interpretive authority thereunder

and within the meaning of the term “Non-Employee Director” as defined in Rule

16b-3).

 

(b)                                 Powers.  Subject to the express provisions of the

Plan, the Committee shall have authority, in its discretion, to determine which

Employees, Consultants, or Directors shall receive an Option, the time or times

when such Option shall be granted, whether an Incentive Stock Option or

nonqualified Option shall be granted, and the number of shares to be subject to

each Option.  In making such determinations,

the Committee shall take into account the nature of the services rendered by

the respective Employees, Consultants, or Directors, their present and

 

2

 

potential contribution to the

Company’s success and such other factors as the Committee in its discretion

shall deem relevant.  All decisions and

determinations of the Committee shall be made by a majority of its members.

 

(c)                                  Additional Powers.  The Committee shall have such additional

powers as are delegated to it by the other provisions of the Plan.  Subject to the express provisions of the

Plan, this shall include the power to construe the Plan and the respective

Option Agreements executed hereunder, to prescribe rules and regulations

relating to the Plan, and to determine the terms, restrictions and provisions

of each Option Agreement, including such terms, restrictions and provisions as

shall be requisite in the judgment of the Committee to cause designated Options

to qualify as Incentive Stock Options, and to make all other determinations

necessary or advisable for administering the Plan.  The Committee may correct any defect or supply any omission or

reconcile any inconsistency in the Plan or in any Option Agreement in the

manner and to the extent it shall deem expedient to carry it into effect.  The determinations of the Committee on the

matters referred to in this Paragraph IV shall be conclusive.

 

V.                                    SHARES SUBJECT TO THE PLAN; OPTION LIMITS;

GRANT OF OPTIONS

 

(a)                                  Shares Subject to the Plan and Option Limits.  Subject to adjustment in the same manner as

provided in Paragraph VIII with respect to shares of Common Stock subject to

Options then outstanding, the aggregate number of shares of Common Stock that

may be issued under the Plan shall not exceed 1,800,000 shares.  Shares shall be deemed to have been issued

under the Plan only (i) to the extent actually issued and delivered pursuant to

exercise of an Option or (ii) to the extent an Option is settled in cash.  To the extent that an Option lapses or the

rights of its holder terminate, any shares of Common Stock subject to such

Option shall again be available for the grant of an Option under the Plan.  Notwithstanding any provision in the Plan to

the contrary, the maximum number of shares of Common Stock that may be subject

to Options granted to any one individual during any calendar year may not

exceed 1,800,000 shares of Common Stock (as adjusted from time to time in

accordance with the provisions of the Plan). 

The limitation set forth in the preceding sentence shall be applied in a

manner that will permit compensation generated under the Plan to constitute

“performance-based” compensation for purposes of Section 162(m) of the Code,

including, without limitation, counting against such maximum number of shares,

to the extent required under Section 162(m) of the Code and applicable

interpretive authority thereunder, any shares subject to Options that are

canceled or repriced.

 

(b)                                 Grant of Options. The

Committee may from time to time grant Options to one or more Employees,

Consultants, or Directors determined by it to be eligible for participation in

the Plan in accordance with the terms of the Plan.

 

(c)                                  Stock Offered.  Subject to the limitations set forth in

Paragraph V(a), the stock to be offered pursuant to the grant of an Option may

be authorized but unissued Common Stock or Common Stock previously issued and

outstanding and reacquired by the Company. 

Any of such shares which remain unissued and which are not subject to

outstanding Options at the termination of the Plan shall cease to be subject to

the Plan but, until termination of the Plan, the Company shall at all times

make available a sufficient number of shares to meet the requirements of the

Plan.

 

VI.                                ELIGIBILITY

 

Options may be

granted only to persons who, at the time of grant, are Employees, Consultants,

or Directors.  An Option may be granted

on more than one occasion to the same person, and, subject to the limitations

set forth in the Plan, an award under the Plan may include an Incentive Stock

Option, an Option that is not an Incentive Stock Option, or any combination

thereof.

 

VII.                            OPTION TERMS

 

(a)                                  Option Period.  The term of each Option shall be as

specified by the Committee at the date of grant, but in no event shall an

Option be exercisable after the expiration of 10 years from the date of grant.

 

3

 

(b)                                 Limitations on Exercise of Option.  An Option shall be exercisable in whole or

in such installments and at such times as determined by the Committee.

 

(c)                                  Special Limitations on Incentive Stock

Options.  An

Incentive Stock Option may be granted only to an individual who is employed by

the Company or any parent or subsidiary corporation (as defined in Section 424

of the Code) of the Company at the time the Option is granted. To the extent

that the aggregate Market Value (determined at the time the respective

Incentive Stock Option is granted) of Common Stock with respect to which

Incentive Stock Options are exercisable for the first time by an individual

during any calendar year under all incentive stock option plans of the Company

and its parent and subsidiary corporations exceeds $100,000, such Incentive

Stock Options shall be treated as Options which do not constitute Incentive

Stock Options. The Committee shall determine, in accordance with applicable

provisions of the Code, Treasury Regulations and other administrative

pronouncements, which of a Participant’s Incentive Stock Options will not

constitute Incentive Stock Options because of such limitation and shall notify

the Participant of such determination as soon as practicable after such

determination.  No Incentive Stock

Option shall be granted to an individual if, at the time the Option is granted,

such individual owns stock possessing more than 10% of the total combined

voting power of all classes of stock of the Company or of its parent or

subsidiary corporation, within the meaning of Section 422(b)(6) of the Code,

unless (i) at the time such Option is granted the option price is at least 110%

of the Market Value of the Common Stock subject to the Option and (ii) such

Option by its terms is not exercisable after the expiration of five years from

the date of grant.  An Incentive Stock

Option shall be exercisable during the Participant’s lifetime only by such

Participant or the Participant’s guardian or legal representative.

 

(d)                                 Option Agreement.  Each Option shall be evidenced by an Option

Agreement in such form and containing such provisions not inconsistent with the

provisions of the Plan as the Committee from time to time shall approve,

including, without limitation, provisions to qualify an Incentive Stock Option

under Section 422 of the Code.  Each

Option Agreement shall specify the effect of termination of (i) employment,

(ii) the consulting or advisory relationship, or (iii) membership on the Board,

as applicable, on the exercisability of the Option.  An Option Agreement may provide for the payment of the option

price, in whole or in part, by the delivery of a number of shares of Common

Stock (plus cash if necessary) having a Market Value equal to such option

price.  Moreover, an Option Agreement

may provide for a “cashless exercise” of the Option by establishing procedures

satisfactory to the Committee with respect thereto.  Further, an Option Agreement may provide for the surrender of the

right to purchase shares under the Option in return for a payment in cash or

shares of Common Stock or a combination of cash and shares of Common Stock

equal in value to the excess of the Market Value of the shares with respect to

which the right to purchase is surrendered over the option price therefor

(“Stock Appreciation Rights”), on such terms and conditions as the Committee in

its sole discretion may prescribe.  In

the case of any such Stock Appreciation Right that is granted in connection

with an Incentive Stock Option, such right shall be exercisable only when the

Market Value of the Common Stock exceeds the price specified therefor in the

Option or the portion thereof to be surrendered.  Finally, the Committee (concurrently with the grant of an Option

or subsequent to such grant) may, in its sole discretion, provide in an Option

Agreement respecting an Option that, if the Participant pays the Option

exercise price in shares of Common Stock, upon the date of such payment a new option

shall be granted under this Plan or under another available plan and the number

of shares of Common Stock subject to such new option shall be equal to the

number of shares of Common Stock tendered in payment (plus the number of any

shares of Common Stock respecting the exercised Option retained (not in excess

of the minimum required) to satisfy any tax withholding obligations); provided

that such new option shall not be exercisable in any event after the original

term of the exercised Option.  The terms

and conditions of the respective Option Agreements need not be identical.  Subject to the consent of the Participant

and the provisions of subparagraph (f) below, the Committee may, in its sole

discretion, amend an outstanding Option Agreement from time to time in any

manner that is not inconsistent with the provisions of the Plan (including,

without limitation, an amendment that accelerates the time at which the Option,

or a portion thereof, may be exercisable).

 

(e)                                  Option Price and Payment.  The price at which a share of Common Stock

may be purchased upon exercise of an Option shall be determined by the

Committee but, subject to adjustment as provided in Paragraph VIII, such

purchase price shall not be less than the Market Value of a share of Common Stock

on the date such Option is granted.  The

Option or portion thereof may be exercised by delivery of an irrevocable notice

of exercise to the Company, as specified by the Committee.  The purchase price of the Option or portion

thereof shall be paid in full in the manner prescribed by the Committee.  Separate stock certificates shall be issued

by the

 

4

 

Company for those shares

acquired pursuant to the exercise of an Incentive Stock Option and for those

shares acquired pursuant to the exercise of any Option that does not constitute

an Incentive Stock Option.

 

(f)                                    Restrictions on Repricing of Options.  Except as provided in Paragraph VIII, the

Committee may not, without approval of the stockholders of the Company, amend

any outstanding Option Agreement to lower the option price or cancel and

replace any outstanding Option Agreement with Option Agreements having a lower

option price unless the cancellation occurs in connection with a merger,

acquisition or other similar corporate transaction.

 

(g)                                 Stockholder Rights and Privileges.  The Participant shall be entitled to all the

privileges and rights of a stockholder only with respect to such shares of

Common Stock as have been purchased under the Option and for which certificates

of stock have been registered in the Participant’s name.

 

(h)                                 Options and Rights in Substitution for

Options Granted by Other Employers.  Options and Stock Appreciation Rights may be

granted under the Plan from time to time in substitution for options held by

individuals providing services to corporations or other entities who become

Employees, Consultants, or Directors as a result of a merger or consolidation

or other business transaction with the Company or any Affiliate.

 

VIII.                        RECAPITALIZATION OR REORGANIZATION

 

(a)                                  No Effect on Right or Power.  The existence of the Plan and the Options

granted hereunder shall not affect in any way the right or power of the Board

or the stockholders of the Company to make or authorize any adjustment, recapitalization,

reorganization or other change in the Company’s or any Affiliate’s capital

structure or its business, any merger or consolidation of the Company or any

Affiliate, any issue of debt or equity securities ahead of or affecting Common

Stock or the rights thereof, the dissolution or liquidation of the Company or

any Affiliate or any sale, lease, exchange or other disposition of all or any

part of its assets or business or any other corporate act or proceeding.

 

(b)                                 Subdivision or Consolidation of Shares; Stock

Dividends.  The

shares with respect to which Options may be granted are shares of Common Stock

as presently constituted, but if, and whenever, prior to the expiration of an

Option theretofore granted, the Company shall effect a subdivision or

consolidation of shares of Common Stock or the payment of a stock dividend on

Common Stock without receipt of consideration by the Company, the number of

shares of Common Stock with respect to which such Option may thereafter be

exercised (i) in the event of an increase in the number of outstanding shares

shall be proportionately increased, and the purchase price per share shall be

proportionately reduced, and (ii) in the event of a reduction in the number of

outstanding shares shall be proportionately reduced, and the purchase price per

share shall be proportionately increased. 

Any fractional share resulting from such adjustment shall be rounded up

to the next whole share.

 

(c)                                  Recapitalizations and Corporate Changes.  If the Company recapitalizes, reclassifies

its capital stock, or otherwise changes its capital structure (a

“recapitalization”), the number and class of shares of Common Stock covered by

an Option theretofore granted shall be adjusted so that such Option shall

thereafter cover the number and class of shares of stock and securities to

which the Participant would have been entitled pursuant to the terms of the

recapitalization if, immediately prior to the recapitalization, the Participant

had been the holder of record of the number of shares of Common Stock then

covered by such Option.  Notwithstanding

any provision in an Option Agreement or the Plan to the contrary, upon the

occurrence of a Change in Control (as defined in clause (i), (ii),  (iii) or (iv) below), each Option then

outstanding that is held by an individual who is an Employee, Consultant or

Director immediately prior to such Change in Control shall become fully vested

and exercisable in full immediately prior to such Change in Control (or at such

earlier time as may be specified by the Committee).  Moreover, effective as of a date (selected by the Committee)

within ten days after the approval by the stockholders of the Company of a

Change in Control (as defined in clause (ii), (iii) or (iv) below), or within

thirty days of a Change in Control (as defined in clause (i) below), the

Committee, acting in its sole discretion without the consent or approval of any

Participant, may effect one or more of the following alternatives with respect

to the then outstanding Options held by Employees, Consultants or Directors

which may vary among individual Participants and which may vary among Options

held by any individual Participant: (1) accelerate the time at which such

Options may be exercised or adjust the time period during which such Options

may be exercised so that such Options may be exercised for a period of time on

or before a specified date (before or after such Change in Control)

 

5

 

fixed by the Committee, after

which specified date all unexercised Options and all rights of Participants

thereunder shall terminate, (2) require the mandatory surrender to the Company

by Participants of some or all of such Options (irrespective of whether such

Options are then exercisable under the provisions of the Plan) as of a date,

before or after such Change in Control, specified by the Committee, in which

event the Committee shall thereupon cancel such Options and pay (or cause to be

paid) to each Participant an amount of cash per share equal to the excess of

the amount calculated in Subparagraph (d) below (the “Change in Control Value”)

of the shares subject to such Option over the exercise price(s) under such

Options for such shares, (3) make such adjustments to such Options as the

Committee deems appropriate to reflect such Change in Control (provided,

however, that the Committee may determine in its sole discretion that no

adjustment is necessary to such Options) or (4) provide that, upon any exercise

of an Option theretofore granted, the Participant shall be entitled to purchase

under such Option, in lieu of the number of shares of Common Stock as to which

such Option shall then be exercisable, the number and class of shares of stock

or other securities or property (including, without limitation, cash) to which

the Participant would have been entitled pursuant to the terms of the agreement

effecting such Change in Control if, immediately prior to such Change in

Control the Participant had been the holder of record of the number of shares

of Common Stock as to which such Option is then exercisable.  For purposes of Subparagraphs VIII(c) and

VIII(d), a “Change in Control”

shall mean: (i) the acquisition, directly or indirectly, by any individual,

entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934

Act (a “Person”), except for an underwriter or group of underwriters in

connection with a public offering of common stock, of beneficial ownership

(within the meaning of Rule 13d—3 promulgated under the 1934 Act) of 50% or

more of either (x) the then-outstanding shares of Common Stock of the Company

calculated in accordance with Rule 13d-3 (the “Outstanding Common Stock”) or

(y) the combined voting power of the then outstanding voting securities of the

Company entitled to vote generally in the election of directors (the

“Outstanding Voting Securities”), in each case other than acquisitions of

beneficial ownership by (I) the Company and its subsidiaries, (II) any employee

benefit plan sponsored or maintained by the Company or any Person organized,

established or appointed pursuant to the terms of any such employee benefit

plan or (III) any acquisition by any Person pursuant to a transaction that

complies with items (x), (y) and (z) of clause (ii) below; (ii) consummation of

a merger of the Company with another entity, a consolidation involving the

Company, a share exchange involving the Company, or the sale, lease or exchange

of all or substantially all of the assets of the Company (each a “Business

Combination”) unless, in any such case, immediately following such Business

Combination, (x) the Persons who were the beneficial owners, respectively, of

the Outstanding Common Stock and Outstanding Voting Securities immediately

prior to such Business Combination beneficially own, directly or indirectly,

more than 50%, respectively, of the then outstanding equity securities and 50%

of the combined voting power of the then outstanding voting securities entitled

to vote generally in the election of directors (or comparable governing body),

as the case may be, of the Resulting Person (as defined below) of such Business

Combination in substantially the same proportions as their beneficial ownership

immediately prior to such Business Combination; provided, however,

that for purposes of this item (x), any shares of equity securities or voting

securities of the Resulting Person received or otherwise owned by such

beneficial owners in such Business Combination other than as a result of such

beneficial ownership of Outstanding Common Stock or Outstanding Voting

Securities immediately prior to such Business Combination shall not be

considered to be owned by such beneficial owners for the purposes of

calculating their percentage of ownership of the outstanding equity securities

and voting power of the Resulting Person, (y) no Person (excluding any

Resulting Person from such Business Combination or any employee benefit plan

sponsored or maintained by the Company or such Resulting Person or any Person

organized, established or appointed pursuant to the terms of any such employee

benefit plan) beneficially owns, directly or indirectly, 30% or more,

respectively, of the then-outstanding equity securities of the Resulting Person

or the combined voting power of the then-outstanding voting securities of the

Resulting Person unless such ownership existed immediately prior to the

Business Combination and (z) immediately following such Business Combination at

least a majority of the members of the Board of Directors (or comparable

governing body) of the Resulting Person were members of the Incumbent Board (as

defined in clause (iii) below) at the time of the execution of the initial

agreement or other action by the Board providing for such Business Combination;

(iii) as a result of or in connection with a contested election of the Board,

individuals who constituted the Board before such event (the “Incumbent Board”)

(provided that any individual becoming a director subsequent to such date whose

appointment or whose nomination for election by the Company’s stockholders was

approved by a vote of at least a majority of the directors then comprising the

Incumbent Board shall be considered as though such individual were a member of

the Incumbent Board), shall cease for any reason to constitute at least a

majority of the Board; or (iv) approval by the stockholders of the Company of a

complete liquidation or dissolution of the Company pursuant to the corporation

laws of its jurisdiction of incorporation. 

For purposes of the preceding sentence, “Resulting Person” in the

context of a Business Combination that is a merger or consolidation shall mean

the surviving Person unless the surviving

 

6

 

Person is or shall become a

subsidiary of another Person and the holders of Outstanding Common Stock or

Outstanding Voting Securities receive securities of such other Person in such

Business Combination, in which event the Resulting Person shall be such other

Person.

 

(d)                                 Change in Control Value.  For the purposes of clause (2) in

Subparagraph (c) above, the “Change in Control Value” shall equal the amount

determined in clause (i), (ii) or (iii), whichever is applicable, as follows:

(i) the per share price offered to stockholders of the Company in any merger,

consolidation, share exchange or sale, lease or exchange of all or

substantially all of the assets of the Company, complete liquidation or

dissolution of the Company, (ii) the price per share offered to stockholders of

the Company in any tender offer or exchange offer whereby a Change in Control takes

place, or (iii) if such Change in Control occurs other than pursuant to a

tender or exchange offer, the fair market value per share of the shares into

which such Options being surrendered are exercisable, as determined by the

Committee as of the date determined by the Committee to be the date of

cancellation and surrender of such Options. 

In the event that the consideration offered to stockholders of the

Company in any transaction described in this Subparagraph (d) or Subparagraph

(c) above consists of anything other than cash, the Committee shall determine

the fair cash equivalent of the portion of the consideration offered which is

other than cash.

 

(e)                                  Other Changes in the Common Stock.  In the event of changes in the outstanding

Common Stock by reason of recapitalizations, reorganizations, mergers,

consolidations, combinations, split-ups, split-offs, spin-offs, exchanges or

other relevant changes in capitalization or distributions to the holders of

Common Stock occurring after the date of the grant of any Option and not

otherwise provided for by this Paragraph VIII, such Option and the related

Option Agreement shall be subject to adjustment by the Committee at its

discretion as to the number and price of shares of Common Stock or other

consideration subject to such Option. 

In the event of any such change in the outstanding Common Stock or

distribution to the holders of Common Stock, or upon the occurrence of any

other event described in this Paragraph VIII, the aggregate number of shares

available under the Plan and the maximum number of shares that may be subject

to Options granted to any one individual shall be appropriately adjusted to the

extent, if any, determined by the Committee, whose determination shall be

conclusive.

 

(f)                                    Stockholder Action.  Any adjustment provided for in the above

Subparagraphs shall be subject to any required stockholder action with respect

to the event causing the adjustment.

 

(g)                                 No Adjustments unless Otherwise Provided.  Except as hereinbefore expressly provided,

the issuance by the Company of shares of stock of any class or securities

convertible into shares of stock of any class, for cash, property, labor or

services, upon direct sale, upon the exercise of rights or warrants to

subscribe therefor, or upon conversion of shares or obligations of the Company

convertible into such shares or other securities, and in any case whether or

not for fair value, shall not affect, and no adjustment by reason thereof shall

be made with respect to, the number of shares of Common Stock subject to

Options theretofore granted or the purchase price per share.

 

IX.                                AMENDMENT AND TERMINATION OF THE PLAN

 

The Board in

its discretion may terminate the Plan at any time with respect to any shares of

Common Stock for which Options have not theretofore been granted.  The Board shall have the right to alter or

amend the Plan or any part thereof from time to time; provided that no change

in the Plan may be made that would impair the rights of a Participant with

respect to an Option theretofore granted without the consent of the

Participant, and provided, further, that the Board may not, without approval of

the stockholders of the Company, (a) amend the Plan to increase the maximum

aggregate number of shares that may be issued under the Plan or change the

class of individuals eligible to receive Options under the Plan, or (b) amend

or delete Paragraph VII(f).

 

X.                                    MISCELLANEOUS

 

(a)                                  No Right To An Option.  Neither the adoption of the Plan nor any

action of the Board or of the Committee shall be deemed to give an Employee,

Consultant, or Director any right to be granted an Option or any other rights

hereunder except as may be evidenced by an Option Agreement duly executed on

behalf of the Company, and then only to the extent and on the terms and

conditions expressly set forth therein. 

The Plan shall be unfunded.  The

Company shall not be required to establish any special or separate fund or to

make any other segregation of funds or assets to assure the performance of its

obligations under any Option Agreement.

 

7

 

(b)                                 No Employment/Membership Rights Conferred.  Nothing contained in the Plan shall (i)

confer upon any Employee or Consultant any right with respect to continuation

of employment or of a consulting or advisory relationship with the Company or

any Affiliate or (ii) interfere in any way with the right of the Company or any

Affiliate to terminate his or her employment or consulting or advisory

relationship at any time.  Nothing

contained in the Plan shall confer upon any Director any right with respect to

continuation of membership on the Board.

 

(c)                                  Other Laws; Withholding.  The Company shall not be obligated to issue

any Common Stock pursuant to any Option granted under the Plan at any time when

the shares covered by such Option have not been registered under the Securities

Act of 1933, as amended, and such other state and federal laws, rules and

regulations as the Company or the Committee deems applicable and, in the

opinion of legal counsel for the Company, there is no exemption from the

registration requirements of such laws, rules and regulations available for the

issuance and sale of such shares.  No

fractional shares of Common Stock shall be delivered, nor shall any cash in

lieu of fractional shares be paid.  The

Company shall have the right to deduct in connection with all Options any taxes

required by law to be withheld and to require any payments required to enable

it to satisfy its withholding obligations. 

The Committee may determine the manner in which such tax withholding may

be satisfied, and may permit shares of Common Stock (together with cash, as

appropriate) to be used to satisfy required tax withholding based on the Market

Value per Share of any such shares of Common Stock, as of the date of delivery

of shares in satisfaction of the applicable Option; provided that election by

any participant who is subject to Section 16 of the Exchange Act may only be

made during the permissible trading period pursuant to applicable Company

policy.

 

(d)                                 No Restriction on Corporate Action.  Nothing contained in the Plan shall be

construed to prevent the Company or any Affiliate from taking any action which

is deemed by the Company or such Affiliate to be appropriate or in its best

interest, whether or not such action would have an adverse effect on the Plan

or any Option.  No Participant,

beneficiary or other person shall have any claim against the Company or any

Affiliate as a result of any such action.

 

(e)                                  Restrictions on Transfer.  An Incentive Stock Option shall not be

transferable otherwise than by will or the laws of descent and

distribution.  An Option that does not

constitute an Incentive Stock Option shall not be transferable otherwise than

(i) by will or the laws of descent and distribution, (ii) pursuant to a

qualified domestic relations order as defined by the Code or Title I of the

Employee Retirement Income Security Act of 1974, as amended, or the rules

thereunder, (iii) with respect to Options other than Incentive Stock Options,

if such transfer is permitted in the sole discretion of the Committee, by

transfer by a Participant to a member of the Participant’s Immediate Family, to

a trust solely for the benefit of the Participant and the Participant’s

Immediate Family, or to a partnership or limited liability company whose only

partners or shareholders are the Participant and members of the Participant’s

Immediate Family, with the consent of the Committee, or (iv) with the consent

of the Committee.

 

(f)                                    Section 162(m).  It is intended that the Plan comply fully

with and meet all the requirements of Section 162(m) of the Code so that

Options granted hereunder shall constitute ‘‘performance-based’’ compensation

within the meaning of such section.  If

any provision of the Plan would disqualify the Plan or would not otherwise

permit the Plan to comply with Section 162(m) as so intended, such provision

shall be construed or deemed amended to conform to the requirements or

provisions of Section 162(m); provided that no such construction or amendment

shall have an adverse effect on the economic value to a Participant of any

Option previously granted hereunder.

 

(g)                                 Governing Law.  The Plan shall be governed by,

and construed in accordance with, the laws of the State of Delaware, without

regard to conflicts of law principles thereof.

 

8

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