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Exhibit 10.10    
    

 
 

CHANGE IN CONTROL SEVERANCE AGREEMENT    
    

        THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (this "Agreement") is between Bank Rhode Island, a financial institution organized under the laws of the State of Rhode
Island (the "Bank") and wholly owned subsidiary of Bancorp Rhode Island, Inc. (the "Company"), and William C. DeWitt (the "Executive"). 

        WHEREAS, the Executive serves as Senior Vice President of Marketing for the Bank; and 

        WHEREAS, the parties hereto seek to set forth the terms of certain severance benefits to be granted to the Executive upon a change in
control event. 

        IT IS MUTUALLY AGREED by the parties as follows: 

        1.    Purpose.    In order to allow Executive to consider the prospect
of a Change in Control (as defined in Section 2(b)) in an objective manner and in consideration of the services rendered and to be rendered by Executive to the Bank, the Bank is willing to
provide, subject to the terms of this Agreement, certain severance benefits to protect Executive from the consequences of a Terminating Event (as defined in Section 2(e)) occurring subsequent
to a Change in Control. 

        2.    Definitions.    

        (a)    "Cause"
means any of the following: 

(i)    Continuing
any arrangement, holding any position or engaging in any activities that conflict with the interest of, or that interfere with, Executive's duties owed to the Bank, after
ten (10) days prior written notice by the Bank to Executive of the same; 

(ii)    Conviction
of embezzlement or other crimes against the Bank, deliberate misappropriation of the Bank's or the Company's funds or dishonesty; 

(iii)    Material
violation of written policies of the Bank, irresponsible acts in the performance of Executive's duties or material breach of any of Executive's obligations under the terms
of this Agreement; 

(iv)    Material
non-performance of Executive's duties or material acts (or omissions) of mismanagement; and 

(v)    Refusal
to perform assigned duties when such refusal is not justified or excused either by the terms of this Agreement or by actions taken by the Bank in violation of this Agreement. 

        (b)    "Change
in Control" means: (i) a Takeover Transaction (as defined in Section 2(d)) is effectuated; or (ii) the Company commences substantive
negotiations with a third party with respect to a Takeover Transaction if within twelve (12) months of the commencement of such negotiations, the
Company enters into a definitive agreement with respect to a Takeover Transaction with any party with which negotiations were originally commenced; or (iii) any election of directors of the
Company occurs (whether by the directors then in office or by the shareholders at a meeting or by written consent) where a majority of the directors in office following such election are individuals
who were not nominated by a vote of two-thirds of the members of the board of directors immediately preceding such election; or (iv) either of the Company or the Bank effectuates a
complete liquidation. 

        (c)    "Person"
means an individual, a corporation, an association, a partnership, an estate, a trust and any other entity or organization. 

        (d)    "Takeover
Transaction" means: 

(i)    The
acquisition of voting securities of the Company by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than by the Company or its subsidiaries or any employee benefit plan 

 

(or
related trust) of the Company or its subsidiaries, which theretofore as of the date hereof did not beneficially own (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) securities representing 30% or more of the voting power of all outstanding shares of voting securities of the Company, if such acquisition results in such individual, entity or group
owning securities representing more than 30% of the voting power of all outstanding voting securities of the Company; provided, that any acquisition by a corporation with respect to which, following
such acquisition, more than 50% of the then outstanding shares of voting securities of such corporation, is then beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of the voting securities of the Company outstanding immediately prior to such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the outstanding voting securities of the Company, shall not constitute a Change in Control; or 

(ii)    The
issuance of additional shares of common stock of the Company or the Bank, as applicable, in a single transaction or a series of related transactions if the individuals and
entities who were the beneficial owners of the outstanding voting securities of the Company or the Bank, as applicable, immediately prior to such issuance do not, following such issuance, beneficially
own, directly or indirectly, securities representing more than 50% of the voting power of all then outstanding voting securities of the Company or the Bank, as applicable; or 

(iii)    Consummation
by the Company or the Bank of (i) a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and
entities who were the beneficial owners of the voting securities of the Company immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, securities representing more than 50% of the voting power of the outstanding voting securities of the corporation resulting from such a
reorganization, merger or consolidation, or (ii) the sale, exchange or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of
the Company (on a consolidated basis) or the Bank to a party which is not controlled by or under common control with such entity, or (iii) the sale by the Company on one transaction or in a
series of related transactions of voting securities of the Bank such that following such transaction or transactions the Company no longer beneficially owns, directly or indirectly, securities
representing more than 50% of the voting power of the then outstanding voting securities of the Bank. 

        (e)    "Terminating
Event" means either: 

(i)    Termination
by the Bank of Executive's employment for any reason other than (i) Executive's death or disability or (ii) for "Cause" (as such term is defined in
Section 2(a) hereof); or 

(ii)    Executive's
resignation as an employee of the Bank, other than for reasons of disability, following (i) a significant reduction in the nature or scope of Executive's duties,
responsibilities, authority and powers from the duties, responsibilities, authority and powers exercised by Executive immediately prior to the Change in Control; or (ii) a greater than 10%
reduction in Executive's annual base salary or fringe benefits as in effect on the date of the Change in Control; or (iii) any requirement by the Company or the Bank or of any Person in control
of the Bank that the location at which Executive performs the principal duties of the Bank be outside a radius of 50 miles from the location at which Executive performed such duties immediately prior
to the Change in Control; or (iv) the failure of any successor of the Company or the Bank to agree in writing upon terms and conditions of employment with Executive which are substantially
similar to those of Executive's employment immediately prior to the Change in Control and which are reasonably satisfactory to Executive within ninety (90) days following a Change in Control. 

        3.    Payment in Connection With Terminating Event.    If a
Terminating Event occurs within one (1) year after a Change in Control (which one (1) year period shall be calculated from the effective 

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date
of the Takeover Transaction if the Terminating Event occurs after a Takeover Transaction), the Bank will pay to Executive an amount (the "Severance Payment") equal to Executive's annual base
salary in effect at the time of the Change in Control, which Severance Payment shall be payable in one lump sum within thirty (30) days of the date of termination of Executive's employment, or
if such Change in Control is governed by clause (ii) of Section 2(b) and the Terminating Event occurs prior to entering into a definitive agreement, upon the entering into of a
definitive agreement by the Company. No Severance Payment will be made to Executive under this Section 3 if Executive's employment with the Company terminates for any reason prior to a Change
in Control (except as may be provided below), or if Executive's employment with the Company terminates after a Change in Control but such termination or resignation is not a Terminating Event. In
addition, no Severance Payment will be made to Executive under this Section 3 with respect to a Terminating Event which occurs more than one (1) year after a Change in Control (which one
(1) year period shall be calculated from the effective date of the Takeover Transaction if the Terminating Event occurs after a Takeover Transaction). 

        4.    Applicability of Change in Control Provisions.    The provisions
of Section 3 shall terminate upon the earliest of (i) the termination by the Bank of Executive's employment for any reason prior to a Change in Control, (ii) the termination of
Executive's employment by the Bank after a Change in Control because of death or disability or for Cause, (iii) Executive's resignation or termination of employment with the Bank prior to a
Change in Control for any reason other than one that constitutes a Terminating Event under Section 2(e), and (iv) Executive's resignation or termination of employment after a Change in
Control on or after the first anniversary of the Takeover Transaction or events specified in Sections 2(b)(iii) or (iv). 

        5.    Notices.    All notices, requests, demands and other
communications required or permitted to be given or made under this Agreement shall be in writing and shall be deemed to have been given if delivered by hand, sent by generally recognized overnight
courier service, telex or telecopy, or certified mail, return receipt requested: 

	(a)
	to
the Bank at:

One
Turks Head Place

Providence, Rhode Island 02903

Attn: Merrill W. Sherman, President and CEO 

	(b)
	to
Executive at:

4
Old Forge Road

Barrington, Rhode Island 02806 

        Any
such notice or other communication will be considered to have been given (i) on the date of the delivery in person, (ii) on the third day after mailing by certified
mail, provided that receipt of delivery is confirmed in writing, (iii) on the first business day following delivery to a commercial overnight courier, or (iv) on the date of facsimile
transmission (telecopy) provided that the giver of the notice obtains telephone confirmation of receipt. 

        6.    Successors and Assigns.    This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their successors and permitted assigns. For the avoidance of doubt, in the case of the Company, the successors and permitted assigns hereunder shall
include, without limitation, any successor-in-interest of the Company (whether by merger, liquidation (including successive mergers or liquidations) or otherwise); provided,
however, that no such assignment of this Agreement by the Company shall serve to relieve the Company from any liability to Executive hereunder. This Agreement or any right or interest hereunder may
not be assigned by Executive. Nothing in this Agreement, expressed or implied, is intended or shall be construed to confer upon any person other than the parties and successors and assigns permitted
by this Section 7 any right, remedy or claim under or by reason of this Agreement. 

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        7.    Governing Law/Jurisdiction.    This Agreement shall be governed
by and interpreted in accordance with the laws of the State of Rhode Island. The parties agree that this Agreement was made and entered into in Rhode Island and each party hereby consents to the
jurisdiction of a competent court in Rhode Island to hear any dispute arising out of this Agreement. 

        8.    Right to Employment.    This Agreement does not constitute any
entitlement to employment by, nor confer on Executive any right to continue in the employ of, the Bank or an affiliate of the Bank nor interfere in any way with the right of the Bank to determine the
terms of, or terminate, Executive's employment. 

        9.    Entire Agreement.    This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof and supersedes any and all previous agreements, written or oral, regarding the subject matter hereof between the parties
hereto. This Agreement shall not be changed, altered, modified or amended, except by a written agreement signed by both parties hereto. 

        10.    Severability.    If any term or provision of this Agreement, or
the application thereof to any person or under any circumstance, shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such terms to the persons or
under circumstances other than those as to which it is invalid or unenforceable, shall be considered severable and shall not be affected thereby, and each term of this Agreement shall be valid and
enforceable to the fullest extent permitted by law. The invalid or unenforceable provisions shall, to the extent permitted by law, be deemed amended and given such interpretation as to achieve the
economic intent of this Agreement. 

        11.    Counterparts.    This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. 

[Signatures Appear on Following Page]

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        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the 18th day of October, 2006. 

	 
	 	 
	 	 

	 	 	BANK RHODE ISLAND
	

 	
 	

By:	
 	

/s/  MERRILL W. SHERMAN      
 Merrill W. Sherman
 President and Chief Executive Officer
	

 	
 	

EXECUTIVE
	

 	
 	

 	
 	

/s/  WILLIAM C. DEWITT      
 William C. DeWitt

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Exhibit 10.10

CHANGE IN CONTROL SEVERANCE AGREEMENTEXHIBIT
10.2

 

GRANITE
CITY FOOD & BREWERY LTD.

 

1997
DIRECTOR STOCK OPTION PLAN

AMENDED AND RESTATED EFFECTIVE NOVEMBER 27, 2007

 

1.             PURPOSE

 

The purpose of this Granite City Food & Brewery Ltd. 1997
Director Stock Option Plan (the “Plan”) is to attract and retain the best
available individuals to serve as directors of the Company, to provide
additional incentive to such persons and to encourage continued service by such
persons on the Board.

 

The Company intends that the options granted hereunder shall not
constitute incentive stock options within the meaning of Section 422 of
the Code, as amended.

 

2.             DEFINITIONS

 

As used
herein, the following definitions shall apply:

 

(a)           “Act” means
the Securities Act of 1933, as amended.

 

(b)           “Board” means
the Board of Directors of the Company.

 

(c)           “Code” means
the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

 

(d)           “Committee”
means the Committee of the Board appointed by the Board to administer the Plan
pursuant to Section 6.

 

(e)           “Common Stock”
means the Common Stock, $.01 par value per share, of the Company.

 

(f)            “Company”
means Granite City Food & Brewery Ltd., a Minnesota corporation.

 

(g)           “Continuous
Service as a Director” means the absence of any interruption or termination
of service as a Director. Continuous Service as a Director shall not be
considered interrupted in the case of sick leave, military leave or any other
leave of absence approved by the Board or Committee.

 

(h)           “Director”
means a member of the Board.

 

(i)            “Employee”
means any person, including officers and Directors, employed by the Company or
any Parent or Subsidiary of the Company. The payment of fees to a Director
shall not be sufficient in and of itself to constitute “employment” by the
Company.

 

(j)            “Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

 

(k)           “Non-Employee
Director” means a Director who is not an Employee, including an officer who
is not employed on a full-time basis by the Company.

 

(l)            “Option”
means a stock option granted pursuant to the Plan.

 

(m)          “Optioned Stock”
means the Common Stock subject to an Option.

 

(n)           “Optionee”
means a Non-Employee Director who receives an option.

 

(o)           “Parent”
means a “parent corporation,” whether now or hereafter existing, as defined in
Section 424(e) of the Code.

 

(p)           “Plan” means
this 1997 Director Stock Option Plan, as amended and restated effective
November 27, 2007.

 

(q)           “Share” means
a share of Common Stock, as adjusted in accordance with Section 12 of the
Plan.

 

(r)            “Subsidiary”
means a “subsidiary corporation,” whether now or hereafter existing, as defined
in Section 424(f) of the Internal Revenue Code of 1986, as amended.

 

3.             SHARES
SUBJECT TO THE PLAN

 

Subject to the provisions of Section 12 of the Plan, the maximum
aggregate number of Shares which may be optioned and sold under the Plan is 590,000
shares of Common Stock.  The Shares may
be authorized, but unissued, or reacquired Common Stock.

 

If an Option expires or becomes unexercisable for any reason without
having been exercised in full, the unexercised Shares which were subject
thereto shall, unless the Plan has been terminated, become available for future
grant under the Plan.  If Shares which
were acquired upon exercise of an Option are subsequently repurchased by the
Company, such Shares shall not become available for future grant under the
Plan.

 

4.             AUTOMATIC
GRANTS OF OPTIONS

 

All grants of Options hereunder shall be automatic and
non-discretionary and shall be made strictly in accordance with the following
provisions:

 

(a)           No person shall have any
discretion to select which Non-Employee Directors shall be granted Options or
to determine the number of Shares to be covered by Options granted to
Non-Employee Directors.

 

(b)           Each Non-Employee Director,
including persons who are Non-Employee Directors on the date of adoption of the
Plan, shall be automatically granted an option to purchase 15,000 Shares (the “First Option”)
upon the later to occur of (i) the effective date of the Plan, as
determined in accordance with Section 8 hereof, or (ii) the date on
which such person first becomes a Non-Employee Director, whether through
election by the shareholders of the Company or appointment by the Board to fill
a vacancy.

 

2

 

(c)           After the grant of the First
Option, each Non-Employee Director shall thereafter be automatically granted an
Option to purchase 15,000 Shares
(each a “Subsequent Option”) on the first and each successive anniversary of
the grant of the First Option.

 

(d)           In the event that a grant
would cause the number of Shares subject to outstanding Options to Non-Employee
Directors plus Shares previously purchased upon exercise of Options by
Non-Employee Directors to exceed the maximum aggregate number of Shares which
may be optioned and sold under the Plan, then each such automatic grant shall
be for that number of Shares determined by dividing the total number of Shares
remaining available for grant by the number of Non-Employee Directors on the
automatic grant date.  Any further grants
shall then be deferred until such time, if any, as additional Shares become
available for grant under the Plan through action of the Company’s shareholders
to increase the number of Shares which may be issued under the Plan or through
cancellation or expiration of Options previously granted hereunder.

 

(e)           Shareholder
approval of the Plan shall also constitute shareholder approval of the options
which have been granted to Non-Employee Directors pursuant to Section 4
hereof from November 26, 1999, the date the Plan was last amended and
restated, through November 27, 2007, the date of the most recent amendment
and restatement.

 

5.             OPTION
TERMS AND CONDITIONS

 

The terms and conditions of an Option granted hereunder shall be as
follows:

 

(a)           the term of each Option
shall be five (5) years, subject to Sections 12, 13 and 14 hereof.

 

(b)           the First Option shall
become exercisable in full beginning on the later of (i) the first
anniversary of the grant of the Option, or (ii) twelve (12) months after
the date on which the Plan is first approved by the shareholders of the Company
in accordance with Rule 16b-3 promulgated under the Exchange Act and each
subsequent Option shall become exercisable in full beginning on the first
anniversary of the grant of such Option, provided in each case that the
Non-Employee Director shall have maintained Continuous Service as a Director
throughout such 12-month period.

 

(c)           the Option shall be
exercisable only while the Non-Employee Director serves as a Non-Employee
Director of the Company, and for a period of twelve (12) months after ceasing
to be a Non-Employee Director pursuant to Section 10(b) hereof.

 

(d)           the exercise price per Share
shall be 100% of the fair market value per Share on the date of grant of the
Option, as determined in accordance with Section 9(a) hereof.

 

3

 

6.            ADMINISTRATION

 

(a)           Administration.  Except as otherwise required herein, the Plan
shall be administered by the Board or a Committee.

 

(b)           Powers of the Board or
Committee.  Subject to
the provisions and restrictions of the Plan, the Board or Committee shall have
the authority, in its discretion: (i) to determine, upon review of
relevant information and in accordance with Section 9(a) hereof, the
fair market value of the Common Stock; (ii) to interpret the Plan; (iii) subject
to Section 14 hereof, to amend or modify the Plan, or to prescribe, amend
and rescind rules and regulations relating to the Plan; (iv) to
authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option hereunder; and (v) to make
all other determinations deemed necessary or advisable for the administration
of the Plan.  On a case by case basis,
the Board or Committee, in its sole discretion, may: (i) accelerate the
schedule of the time or times when an Option granted under the Plan may be
exercised; and (ii) extend the duration of any Option granted under the
Plan.

 

(c)           Effect of Board or Committee
Decision.  All decisions,
determinations and interpretations of the Board or Committee shall be final and
binding on all Optionees and any other holders of any Options granted under the
Plan.

 

(d)           Suspension or Termination of
Option.  If the Board or Committee
reasonably believes that an Optionee has committed an act of misconduct, it may
suspend the Optionee’s right to exercise any Option pending a determination by
the Board or Committee (excluding the Non-Employee Director accused of such
misconduct).  If the Board or Committee
(excluding the Non-Employee Director accused of such misconduct) determines
that an Optionee has committed an act of embezzlement, fraud, dishonesty,
nonpayment of an obligation owed to the Company, breach of fiduciary duty or
deliberate disregard of the Company’s rules resulting in loss, damage or
injury to the Company, or if an Optionee makes an unauthorized disclosure of
any Company trade secret or confidential information, engages in any conduct
constituting unfair competition with respect to the Company, or induces any
party to breach a contract with the Company, neither the Optionee nor the
Optionee’s estate shall be entitled to exercise any Option whatsoever.  In making such determination, the Board or
Committee (excluding the Non-Employee Director accused of such misconduct)
shall act fairly and shall give the Optionee an opportunity to appear and
present evidence on the Optionee’s behalf at a hearing before the Board or
Committee.

 

(e)           Date of Grant of Options.  The date of grant of an Option shall, for all
purposes, be the date determined in accordance with Section 4 hereof,
notwithstanding the fact that an Optionee may not have entered into an option
agreement with the Company on such date. 
Notice of the grant of an Option shall be given to the Optionee within a
reasonable time after the date of such grant.

 

4

 

7.             ELIGIBLE
PARTICIPANTS

 

Options may be granted only to Non-Employee Directors.  All options shall be automatically granted in
accordance with the terms set forth in Section 4 hereof.  The Plan shall not confer upon any Optionee
any right with respect to continuation of service as a Director or nomination
to serve as a Director, nor shall it interfere in any way with any rights which
a Director or the Company may have to terminate such Director’s directorship at
any time.

 

8.             TERMINATION
OF PLAN

 

The effective date of this Plan is July 29, 1997, the date upon
which it was adopted by the Board.  The
Plan shall continue in effect for a term of ten (10) years unless
terminated sooner under Section 14 hereof.

 

9.             FAIR
MARKET VALUE AND FORM OF CONSIDERATION

 

(a)           Fair Market Value.  The fair market value per share shall be
determined as of the date of grant of an Option as follows:

 

(i)            if the Common Stock of the
Company is listed or admitted to unlisted trading privileges on a national
securities exchange, the fair market value on any given day shall be the
closing sale price for the Common Stock, or if no sale is made on such day, the
closing bid price for such day on such exchange;

 

(ii)           if the Common Stock is not
listed or admitted to unlisted trading privileges on a national securities
exchange, the fair market value on any given day shall be the closing sale
price for the Common Stock as reported on the Nasdaq Stock Market on such day,
or if no sale is made on such day, the closing bid price for such day as
entered by a market maker for the Common Stock;

 

(iii)          if the Common Stock is not
listed on a national securities exchange, is not admitted to unlisted trading
privileges on any such exchange, and is not eligible for inclusion on the
Nasdaq Stock Market, the fair market value on any given day shall be the
average of the closing representative bid and ask prices as reported by the
National Quotation Bureau, Inc. or, if the Common Stock is not quoted on
the National Association of Securities Dealers Automated Quotations System,
then as reported in any publicly available compilation of the bid and asked
prices of the Common Stock in any over-the-counter market on which the Common
Stock is traded; or

 

(iv)          if there exists no public
trading market for the Common Stock, the fair market value on any given day
shall be an amount determined in good faith by the Board in such manner as it
may reasonably determine in its discretion, provided that such amount shall not
be less than the book value per share as reasonably determined by the Board as
of the date of determination nor less than the par value of the Common Stock.

 

5

 

(b)           Form of Consideration.  The consideration to be paid for the Shares
to be issued upon exercise of an Option shall consist entirely of cash or such
other form of consideration as the Board or Committee may determine, in its
sole discretion, to be appropriate for payment, including but not limited to
other shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which the
Option is exercised, or any combination of such methods of payment.

 

10.           EXERCISE
OF OPTIONS

 

(a)           Procedure for
Exercise; Rights as a Shareholder.  Any Option granted hereunder shall be
exercisable at such times as are set forth in Section 5 hereof.  An Option may not be exercised for a fraction
of a Share.

 

An Option shall be deemed to
be exercised when written notice of such exercise has been given to the Company
in accordance with the terms of the Option by the person entitled to exercise
the Option and full payment for the Shares with respect to which the Option may
be exercised has been received by the Company. 
Full payment may consist of any consideration and method of payment
allowable under Section 9(b) hereof. 
Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option.  A certificate for the number of Shares so
acquired shall be issued to the Optionee as soon as practicable after exercise
of the Option.  No adjustment will be
made for a dividend or other right for which the record date is prior to the date
the certificate is issued, except as provided in Section 12 hereof.

 

Exercise of an Option in any
manner shall result in a decrease in the number of Shares which thereafter may
be available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option was exercised.

 

(b)           Termination of
Status as a Non-Employee Director.  If an Optionee ceases to serve as a
Non-Employee Director, the Optionee may, but only within twelve (12) months
after the date the Optionee ceases to be a Non-Employee Director of the
Company, exercise his or her Option to the extent the Optionee was entitled to
exercise it at the date of such termination. 
To the extent that the Optionee was not entitled to exercise an Option
at the date of such termination, or if the Optionee does not exercise such
Option within the time specified herein, the Option shall terminate.

 

(c)           Death of
Optionee.  In the
event of the death of an Optionee occurring:

 

(i)            during the term of the
Option, and provided that the Optionee was at the time of death a Director of
the Company and had been in Continuous Service as a Director since the date of
grant of the Option, the Option may be exercised, at any time within twelve
(12) months following the date of death, by the Optionee’s estate or by a
person who acquired the right to exercise the Option 

 

6

 

by
bequest or inheritance, but only to the extent of the right to exercise that
would have accrued had the Optionee continued living and remained in Continuous
Service a Director for twelve (12) months after the date of death; or

 

(ii)           within thirty (30) days
after the termination of Continuous Service as a Director, the Option may be
exercised, at any time within six (6) months following the date of death,
by the Optionee’s estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise that had accrued at the date of termination of Continuous Service as a
Director.

 

11.          TRANSFERABILITY OF OPTIONS

 

Except as provided by rule adopted by the Committee, (i) no
Option may be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or by the laws of descent and distribution
or pursuant to a qualified domestic relations order and (ii) an Option may
be exercised during the lifetime of the Optionee only by the Optionee.

 

12.          ADJUSTMENTS UPON CHANGES IN
CAPITALIZATION

 

The number of Shares of Common Stock covered by each outstanding
Option, and the number of Shares of Common Stock which have been authorized for
issuance under the Plan but as to which Options have not yet been granted or
which have been returned to the Plan upon cancellation or expiration of an Option,
as well as the price per Share of Common Stock covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in the
number of issued and outstanding Shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive.  Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, or options or rights to purchase
shares of stock of any class shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an Option.

 

13.          CHANGE IN CONTROL PROVISIONS

 

(a)           Notwithstanding
any other provision of the Plan to the contrary, in the event of a Change in
Control (as defined in Section 13(b)), any Options outstanding as of the
date such Change in Control is determined to have occurred and not then
exercisable and vested shall become fully exercisable and vested in the fullest
extent of the original grant.

 

(b)           For purposes of
the Plan, a “Change in Control” means the happening of any of the following
events:

 

7

 

(i)            The acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act (collectively, a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of thirty percent (30%) or more of either (1) the then outstanding
shares of Common Stock of the Company or (2) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors; provided, however, that the following
acquisitions shall not constitute a Change in Control: (A) any acquisition
directly from the Company; (B) any acquisition by the Company; (C) any
acquisition by a Person including the participant or with whom or with which
the participant is affiliated; (D) any acquisition by a Person or Persons,
one or more of which is a member of the Board or an officer of the Company or
an affiliate of any of the foregoing on the effective date of the Change in
Control, (E) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company; or (F) any acquisition by any corporation pursuant to a
transaction described in clauses (1), (2) and (3) of paragraph (iii) of
this Section 13(b); or

 

(ii)           During any period of
twenty-four (24) consecutive months, individuals who, as of the beginning of
such period, constituted the entire Board cease for any reason to constitute at
least a majority of the Board, unless the election, or nomination for election,
by the Company’s shareholders of each new director was approved by a vote of at
least two-thirds (2/3rds) of the Continuing Directors, as hereinafter defined,
in office on the date of such election or nomination for election for the new
director.  For purposes hereof, “Continuing
Director” means:

 

(a)           any member of the Board at the close of business on the
effective date of the Change in Control; or

 

(b)           any
member of the Board who succeeded any Continuing Director described in clause (a) above
if such successor’s election, or nomination for election, by the Company’s
shareholders, was approved by a vote of at least two-thirds (2/3rds) of the
Continuing Directors then still in office. 
The term “Continuing Director” shall not, however, include any
individual whose initial assumption to office occurs as a result of either an
actual or threatened election contest (as such term is used in Rule 14a-11
of Regulation 14A of the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board.

 

(iii)          Approval by the shareholders
of the Company of a reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or consolidation, (1) more
than sixty percent (60%) of the then outstanding securities having the right to
vote in the election of directors of the corporation resulting from such
reorganization, merger or consolidation is then beneficially owned, directly or
indirectly, by all or substantially all of the 

 

8

 

individuals
and entities who were the beneficial owners of the outstanding securities
having the right to vote in the election of Directors of the Company
immediately prior to such reorganization, merger or consolidation, (2) no
Person (excluding the Company, any employee benefit plan (or related trust) of
the Company or such corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, thirty percent
(30%) or more of the then outstanding securities having the right to vote in
the election of Directors of the Company) beneficially owns, directly or
indirectly, thirty percent (30%) or more of the then outstanding securities
having the right to vote in the election of the directors of the corporation
resulting from such reorganization, merger or consolidation, and (3) at
least a majority of the members of the Board of the corporation resulting from
such reorganization, merger or consolidation are Continuing Directors at the
time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or

 

(iv)          Approval by the shareholders
of the Company of (1) a complete liquidation or dissolution of the
Company, or (2) the sale or other disposition of all or substantially all
of the assets of the Company, other than to a corporation, with respect to
which following such sale or other disposition, (A) more than sixty
percent (60%) of the then outstanding securities having the right to vote in the
election of directors of such corporation is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners of the outstanding securities having the right to
vote in the election of Directors of the Company immediately prior to such sale
or other disposition of such outstanding securities, (B) no Person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, thirty percent
(30%) or more of the outstanding securities having the right to vote in the
election of Directors of the Company) beneficially owns, directly or indirectly,
thirty percent (30%) or more of the then outstanding securities having the
right to vote in the election of directors of such corporation and (C) at
least a majority of the members of the board of directors of such corporation
are Continuing Directors at the time of the execution of the initial agreement
or action of the Board providing for such sale or other disposition of assets
of the Company.

 

14.           AMENDMENT
AND TERMINATION OF THE PLAN

 

The Board may at any time amend, modify or terminate the Plan as it
deems proper and in the best interests of the Company; provided, however, that
no amendment or modification may provide that an Option may be granted after
the Plan is terminated.

 

If any amendment to the Plan requires approval by the shareholders of
the Company for continued applicability of Rule 16b-3 promulgated under
the Exchange Act, or for initial or continued listing of the Common Stock or
other securities of the Company upon any stock 

 

9

 

exchange or NASDAQ, then
such amendment shall be approved by the holders of a majority of the Company’s Common Stock present in person or represented
by proxy at the meeting during which shareholder approval of the amendment is
sought.

 

15.          CONDITIONS UPON ISSUANCE OF
SHARES

 

Shares shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Act, the Exchange Act, the rules and regulations
promulgated thereunder, state securities laws, and the requirements of the
FINRA or any stock exchange upon which the Shares may then be listed, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance.

 

As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law. 
Such Shares may also be issued with appropriate legends on stock
certificates representing such Shares, and the Company may place stop transfer
orders with respect to such Shares.

 

Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

 

16.          RESERVATION OF SHARES

 

The Company, during the term of this Plan, will at all times reserve
and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

 

17.          OPTION AGREEMENT

 

Options shall be evidenced by written option agreements in such form as
the Board or Committee shall approve.

 

18.          INFORMATION TO OPTIONEES

 

The Company shall provide to each Optionee, during the period for which
such Optionee has one or more Options outstanding, copies of all annual reports
and other information which are provided to all shareholders of the Company.

 

10

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