Document:

exv10w21

 

Exhibit 10.21

PetSmart, Inc.

2006 Equity Incentive Plan

Adopted by the Board of Directors: December 15, 2005

Approved by the Stockholders: June 22, 2006

Amended by the Board of Directors: December 12, 2006

Termination Date: December 31, 2011

Introduction

     This Plan was adopted by the Board on the Adoption Date to be effective as provided in Section
16 on the Effective Date. This Plan is a complete amendment and restatement into one plan of the
Company’s 1997 Equity Incentive Plan that was originally adopted by the Board on May 22, 1997, and
has been subsequent amended, and the Company’s 2003 Equity Incentive Plan that was originally
adopted by the Board on March 25, 2003 (the “Prior Plans”). All outstanding options granted under
the Prior Plans prior to the Effective Date shall remain subject to the terms of the Prior Plans.
All Stock Awards granted subsequent to the Effective Date shall be subject to the terms of this
Plan. On December 12, 2006, the Board amended the definition of “Fair Market Value,” with such
amendment to become effective on January 29, 2007, the first day of the Company’s 2007 fiscal year.

1. Purposes.

     (a) The purpose of the Plan is to provide a means by which selected Employees and Directors of
and Consultants to the Company and its Affiliates may be given an opportunity to benefit from
increases in value of the stock of the Company through the granting of Stock Awards.

     (b) The Company, by means of the Plan, seeks to retain the services of persons who are now
Employees or Directors of or Consultants to the Company or its Affiliates, to secure and retain the
services of new Employees, Directors and Consultants, and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its Affiliates.

     (c) The Company intends that the type and amount of any Stock Awards issued under the Plan
shall be in the discretion of the Board or any Committee to which responsibility for administration
of the Plan has been delegated pursuant to subsection 3(c).

2. Definitions.

     (a) “Adoption Date” means December 15, 2005, the date the Plan was adopted by the Board.

     (b) “Affiliate” means, at the time of determination, any “parent” or “subsidiary” as such
terms are defined in Rule 405 of the Securities Act. The Board shall have the authority to
determine the time or times at which “parent” or “subsidiary” status is determined within the
foregoing definition.

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

     (d) “Code” means the Internal Revenue Code of 1986, as amended.

     (e) “Committee” means a committee appointed by the Board in accordance with subsection 3(c) of
the Plan.

     (f) “Company” means PetSmart, Inc., a Delaware corporation.

     (g) “Concurrent Stock Appreciation Right” means a right granted pursuant to subsection 8(b)(2)
of the Plan.

     (h) “Consultant” means any person, including an advisor, engaged by the Company or an
Affiliate to render consulting services and who is compensated for such services, provided that the
term “Consultant” shall not include Directors who are paid only a director’s fee by the Company or
who are not compensated by the Company for their services as Directors.

     (i) “Continuous Status as an Employee, Director, or Consultant” means the employment or
relationship as an Employee, Director or Consultant is not interrupted or terminated. The Board
(or, in the case of Participants other than Officers or Directors, by the designee of the Board),
in its sole discretion, may determine whether Continuous Status as an Employee, Director, or
Consultant shall be considered interrupted in the case of: (i) any leave of absence approved by
the Board (or such designee), including sick leave, military leave, or any other personal leave; or
(ii) transfers between locations of the Company or between the Company, Affiliates, or their
successors.

     (j) “Covered Employee” means the chief executive officer and the four (4) other highest
compensated officers of the Company for whom total compensation is required to be reported to
stockholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.

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

     (l) “Disability” means the inability of a Participant to engage in any substantially gainful
activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a continuous period
of not less than twelve (12) months, and shall be determined by the Board (or, in the case of
Participants other than Officers or Directors, by the designee of the Board) on the basis of such
medical evidence as the Board (or such designee) deems warranted under the circumstances.

     (m) “Effective Date” means the original effective date of this Plan document, which is June
22, 2006, the date that the Company’s stockholders approved this Plan at the 2006 Annual Meeting of
Stockholders.

     (n) “Employee” means any person, including Officers and Directors, employed by the Company or
any Affiliate of the Company. Neither service as a Director nor payment of a director’s fee by the
Company shall be sufficient to constitute “employment” by the Company.

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

     (p) “Fair Market Value” means, as of any date, the value of the common stock of the Company
determined as follows:

          (1) If the common stock is listed on any established stock exchange or a national market
system, the Fair Market Value of a share of common stock shall be the closing sales price for such
stock as quoted on such system or exchange (or the exchange with the greatest volume of trading in
common stock) on the day of determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable;

          (2) If there is no closing sales price for the common stock on the day of determination, then
the Fair Market Value shall be the closing sales price on the last preceding day for which such
quotation exists; or

          (3) In the absence of an established market for the common stock, the Fair Market Value shall
be determined in good faith by the Board.

     (q) “Incentive Stock Option” means an Option that qualifies as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

     (r) “Independent Stock Appreciation Right” means a right granted pursuant to subsection
8(b)(3) of the Plan.

     (s) “Non-Employee Director” means a Director who satisfies the requirements of Rule
16b-3(b)(3) of the Exchange Act or any other applicable rules, regulations or interpretations of
the Securities and Exchange Commission.

     (t) “Nonstatutory Stock Option” means an Option that does not qualify as an Incentive Stock
Option.

     (u) “Officer” means a person who is an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated thereunder.

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

     (w) “Option Agreement” means a written agreement between the Company and an Optionee
evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan. References in the Plan to an Option Agreement
shall include the agreements issued in connection with the Plan as well as the relevant provisions,
if any, of any individually negotiated employment contract, agreement, or any other written plan
covering the Participant.

     (x) “Optionee” means an Employee, Director, or Consultant who holds an outstanding Option or,
if applicable, such other person who holds an outstanding Option.

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     (y) “Outside Director” means a Director who is considered an “outside director” for purposes
of Section 162(m) of the Code and the regulations promulgated thereunder.

     (z) “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Stock Award.

     (aa) “Plan” means this PetSmart, Inc. 2006 Equity Incentive Plan.

     (bb) “Prior Plans” mean the Company’s 1997 Equity Incentive Plan and the Company’s 2003 Equity
Incentive Plan in effect immediately prior to the Effective Date.

     (cc) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in
effect when discretion is being exercised with respect to the Plan.

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

     (ee) “Stock Appreciation Right” means any of the various types of rights which may be granted
under Section 8 of the Plan.

     (ff) “Stock Award” means any right granted under the Plan, including any Option, any stock
bonus, any right to purchase restricted stock, and any Stock Appreciation Right.

     (gg) “Stock Award Agreement” means a written agreement between the Company and a holder of a
Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock
Award Agreement shall be subject to the terms and conditions of the Plan. References in the Plan
to a Stock Award Agreement shall include the agreements issued in connection with the Plan as well
as the relevant provisions, if any, of any individually negotiated employment contract, agreement,
or any other written plan covering the Participant.

     (hh) “Tandem Stock Appreciation Right” means a right granted pursuant to subsection 8(b)(1) of
the Plan.

3. Administration.

     (a) The Plan shall be administered by the Board unless and until the Board delegates
administration to a Committee, as provided in subsection 3(c).

     (b) The Board shall have the power, subject to, and within the limitations of, the express
provisions of the Plan:

          (1) To determine from time to time which of the persons eligible under the Plan shall be
granted Stock Awards; when and how each Stock Award shall be granted; which form of Stock Award
shall be granted; the provisions of each Stock Award granted (which need not be identical),
including the time or times when a person shall be permitted to receive stock pursuant to a Stock
Award; whether a person shall be permitted to receive stock upon exercise of a Stock Appreciation
Right; and the number of shares with respect to which a Stock Award shall be granted to each such
person;

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          (2) To construe and interpret the Plan and Stock Awards granted under it, and to establish,
amend and revoke rules and regulations for its administration. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective;

          (3) To amend the Plan or a Stock Award as provided in Section 14; and

          (4) Generally, to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company.

     (c) The Board may delegate administration of the Plan to a committee composed of not fewer
than two (2) members, all of the members of which Committee shall be Non-Employee Directors and may
also be, in the discretion of the Board, Outside Directors. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board (and references in this Plan to the Board shall thereafter be to
the Committee), subject, however, to such resolutions, not inconsistent with the provisions of the
Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any
time and revest in the Board the administration of the Plan. To the extent permitted by applicable
law, the Board may delegate to one or more Officers the authority to do one or both of the
following: (i) designate Employees who are not Officers to be recipients of Stock Awards and the
terms thereof, and (ii) determine the number of shares of the Company’s common stock to be subject
to such Stock Awards granted to such Employees; provided, however, that the Board resolutions
regarding such delegation shall specify the total number of shares of the Company’s common stock
that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant
a Stock Award to himself or herself. Furthermore, the Board may not delegate to an Officer
authority to determine the Fair Market Value of the Company’s common stock pursuant to subsection
2(p)(3).

     (d) Any requirement that an administrator of the Plan be a Non-Employee Director shall not
apply if the Board or the Committee expressly declares that such requirement shall not apply.

4. Shares Subject to the Plan.

     (a) Subject to the provisions of Section 13 relating to adjustments upon changes in stock, the
aggregate number of shares of common stock of the Company that may be issued pursuant to Stock
Awards after the Effective Date shall not exceed twenty million two hundred forty-two thousand
eight hundred eighty (20,242,880) shares. For clarity, the limitation in this subsection 4(a) is a
limitation in the number of shares of the Company’s common stock that may be issued pursuant to the
Plan. Accordingly, this subsection 4(a) does not limit the granting of Stock Awards except as
provided in subsection 10(a). Furthermore, if a Stock Award (i) expires or otherwise terminates
without having been exercised in full or (ii) is settled in cash (i.e., the holder of the Stock
Award receives cash rather than stock), such expiration, termination or settlement shall not reduce
(or otherwise offset) the number of shares of the Company’s common stock that may be issued
pursuant to the Plan.

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     (b) If any shares of common stock issued pursuant to a Stock Award are forfeited back to the
Company because of the failure to meet a contingency or condition required to vest such shares in
the Participant, then the shares which are forfeited shall revert to and again become available for
issuance under the Plan. Also, any shares reacquired by the Company pursuant to subsection 12(e)
or as consideration for the exercise of an Option shall again become available for issuance under
the Plan. Notwithstanding the provisions of this subsection 4(b), any such shares shall not be
subsequently issued pursuant to the exercise of Incentive Stock Options.

     (c) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the
market or otherwise.

5. Eligibility.

     (a) Incentive Stock Options (with or without Stock Appreciation Rights appurtenant thereto)
may be granted only to Employees. Stock Awards other than Incentive Stock Options may be granted
only to Employees, Directors, or Consultants.

     (b) A Director shall in no event be eligible for the benefits of the Plan unless at the time
discretion is exercised in the selection of the Director as a person to whom Stock Awards may be
granted, or in the determination of the number of shares which may be covered by Stock Awards
granted to the Director: (i) the Board has delegated its discretionary authority over the Plan to
a Committee which consists solely of Non-Employee Directors and the manner of the exercise of such
discretion and the terms of the Plan comply with Rule 16b-3; or (ii) the Plan otherwise complies
with the requirements of Rule 16b-3. This subsection 5(b) shall not apply if the Board or
Committee expressly declares that it shall not apply.

     (c) No person shall be eligible for the grant of an Option if, at the time of grant, such
person owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of the Company, or of
any of its Affiliates unless the exercise price of such Option is at least one hundred ten percent
(110%) of the Fair Market Value of such stock at the date of grant and the Option is not
exercisable after the expiration of five (5) years from the date of grant.

     (d) Subject to the provisions of Section 13 relating to adjustments upon changes in stock, no
person shall be eligible to be granted Options and Stock Appreciation Rights covering more than one
million nine hundred fifty thousand (1,950,000) shares of the Company’s common stock in any
calendar year.

6. Option Provisions.

     Each Option shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The provisions of separate Options need not be identical, but each Option
shall include (through incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:

     (a) Term. No Option shall be exercisable after the expiration of ten (10) years from the date
it was granted.

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     (b) Price. The exercise price of each Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the stock subject to the Option on the date the Option is
granted other than for an Option granted in a manner consistent with the provisions of Section
424(a) of the Code (whether or not such an Option is an Incentive Stock Option).

     (c) Consideration. The purchase price of stock acquired pursuant to an Option shall be paid,
to the extent permitted by applicable law and as determined by the Board in its sole discretion, by
any combination of the methods of payment set forth below. The Board shall have the authority to
grant Options that do not permit all of the following methods of payment (or otherwise restrict the
ability to use certain methods) and to grant Options that require the consent of the Company to
utilize a particular method of payment. The methods of payment permitted by this subsection 6(c)
are:

          (1) by cash or check;

          (2) bank draft or money order payable to the Company;

          (3) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of the stock subject to the Option, results in either the receipt
of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds;

          (4) by delivery to the Company (either by actual delivery or attestation) of shares of the
Company’s common stock; or

          (5) in any other form of legal consideration that may be acceptable to the Board.

     (d) Transferability. An Incentive Stock Option shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable during the lifetime of the Optionee
only by the Optionee. A Nonstatutory Stock Option shall be transferable to the extent provided in
the Option Agreement. If the Option Agreement does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionee only by the Optionee.
Notwithstanding the foregoing, the Optionee may, by delivering written notice to the Company, in a
form satisfactory to the Company, designate a third party who, in the event of the death of the
Optionee, shall thereafter be entitled to exercise the Option.

     (e) Vesting. The total number of shares of stock subject to an Option may, but need not, be
allotted in periodic installments (which may, but need not, be equal). The Option Agreement may
provide that from time to time during each of such installment periods, the Option may become
exercisable (“vest”) with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period and/or any prior period
as to which the Option became vested but was not fully exercised. The Option may be subject to
such other terms and conditions on the time or times when it may be exercised (which may be based
on performance or other criteria) as the Board may deem appropriate. The vesting provisions of
individual Options may vary.

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     (f) Termination of Employment or Relationship as a Director or Consultant. In the event an
Optionee’s Continuous Status as an Employee, Director, or Consultant terminates (other than upon
the Optionee’s death or Disability), the Optionee may exercise his or her Option (to the extent
that the Optionee was entitled to exercise it at the date of termination) but only within such
period of time ending on the earlier of: (i) the date three (3) months after the termination of the
Optionee’s Continuous Status as an Employee, Director or Consultant (or such longer or shorter
period specified in the Option Agreement); or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionee does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for issuance under the
Plan.

     (g) Extension of Termination Date. In the event that exercise of an Option following
termination of an Optionee’s Continuous Status as an Employee, Director, or Consultant would be
prohibited solely because the issuance of shares of the Company’s common stock would violate the
registration requirements under the Securities Act, then the Option shall terminate on the earlier
of: (i) the expiration of the period that commences on the termination of the Optionee’s Continuous
Status as an Employee, Director or Consultant and ends when there have been at least ninety-one
(91) days (or such greater or lesser number of days specified in the Option Agreement), whether or
not such days are consecutive, on which the exercise of the Option would not be in violation of
such registration requirements; or (ii) the expiration of the term of the Option as set forth in
the Option Agreement.

     (h) Disability of Optionee. In the event an Optionee’s Continuous Status as an Employee,
Director or Consultant terminates as a result of the Optionee’s Disability, the Optionee may
exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date
of termination), but only within such period of time ending on the earlier of: (i) the date twelve
(12) months following such termination (or such longer or shorter period specified in the Option
Agreement); or (ii) the expiration of the term of the Option as set forth in the Option Agreement.
If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option,
the shares covered by the unexercisable portion of the Option shall revert to and again become
available for issuance under the Plan. If, after termination, the Optionee does not exercise his
or her Option within the time specified herein, the Option shall terminate, and the shares covered
by such Option shall revert to and again become available for issuance under the Plan.

     (i) Death of Optionee. In the event of the death of an Optionee during, or within a period,
if any, specified in the Option after the termination of, the Optionee’s Continuous Status as an
Employee, Director, or Consultant, the Option may be exercised (to the extent the Optionee was
entitled to exercise the Option at the date of death) by the Optionee’s estate, by a person who
acquired the right to exercise the Option by bequest or inheritance, or by a person designated to
exercise the option upon the Optionee’s death pursuant to subsection 6(d), but only within the
period ending on the earlier of: (i) the date eighteen (18) months following the date of death (or
such longer or shorter period specified in the Option Agreement); or (ii) the expiration of the
term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionee
was not entitled to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance under

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the Plan. If, after death, the Option is not exercised within the time specified herein, the
Option shall terminate, and the shares covered by such Option shall revert to and again become
available for issuance under the Plan.

     (j) Early Exercise. The Option may, but need not, include a provision whereby the Optionee
may elect at any time while an Employee, Director, or Consultant to exercise the Option as to any
part or all of the shares subject to the Option prior to the full vesting of the Option. Any
unvested shares so purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate.

7. Terms of Stock Bonuses and Acquisitions of Restricted Stock.

     Each stock bonus agreement or restricted stock agreement shall be in such form and shall
contain such terms and conditions as the Board shall deem appropriate. Stock issued pursuant to
this Section 7 may be issued in conjunction with other plans or programs adopted by the Company.
For example, except as otherwise determined by the Board, common stock of the Company issued in
conjunction with the PetSmart, Inc. Executive Short-Term Incentive Plan shall be deemed issued
pursuant to this Plan. For clarity, this Section 7 permits the issuance of common stock of the
Company subject to vesting conditions (commonly referred to as “restricted stock”) and the issuance
of rights to a delayed issuance of common stock of the Company where such rights are subject to
vesting conditions (commonly referred to as “restricted stock units”). The terms and conditions of
stock bonus agreements or restricted stock agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each stock bonus agreement or
restricted stock agreement shall include (through incorporation of provisions hereof by reference
in the agreement or otherwise) the substance of each of the following provisions as appropriate:

     (a) Purchase Price. The purchase price, if any, under each stock bonus agreement or
restricted stock agreement shall be such amount as the Board shall determine and designate in such
agreement.

     (b) Transferability. Rights to acquire shares under Stock Awards granted pursuant to this
Section 7 shall be transferable only upon such terms and conditions as are set forth in the
applicable Stock Award Agreement, as the Board shall determine in its discretion, so long as such
Stock Award remains subject to the terms of such Stock Award Agreement.

     (c) Consideration. The purchase price, if any, of stock acquired pursuant to a stock bonus
agreement or restricted stock agreement shall be paid either: (i) in cash at the time of purchase;
(ii) at the discretion of the Board, according to a deferred payment or other arrangement with the
person to whom the stock is sold; or (iii) in any other form of legal consideration, including past
or future services actually or to be rendered to the Company or for its benefit, that may be
acceptable to the Board in its discretion.

     (d) Vesting. Shares of stock sold or awarded under this Section 7 may, but need not, be
subject to a forfeiture provision or a reacquisition or repurchase option in favor of the Company
in accordance with a vesting schedule to be determined by the Board.

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     (e) Termination of Employment or Relationship as a Director or Consultant. In the event a
Participant’s Continuous Status as an Employee, Director, or Consultant terminates, the Company may
repurchase or otherwise reacquire any or all of the shares of stock held by that person which have
not vested as of the date of termination under the terms of the stock bonus agreement or restricted
stock agreement between the Company and such person.

8. Stock Appreciation Rights.

     (a) The Board shall have full power and authority, exercisable in its sole discretion, to
grant Stock Appreciation Rights under the Plan to Employees or Directors of or Consultants to, the
Company or its Affiliates. To exercise any outstanding Stock Appreciation Right, the holder must
provide written notice of exercise to the Company in compliance with the provisions of the Stock
Award Agreement evidencing such right. If a Stock Appreciation Right is granted to an individual
who is at the time subject to Section 16(b) of the Exchange Act (a “Section 16(b) Insider”), the
Stock Award Agreement of grant shall incorporate all the terms and conditions at the time necessary
to assure that the subsequent exercise of such right shall qualify for the safe-harbor exemption
from short-swing profit liability provided by Rule 16b-3 (or any successor rule or regulation).
Except as provided in subsection 5(d), no limitation shall exist on the aggregate amount of cash
payments the Company may make under the Plan in connection with the exercise of Stock Appreciation
Rights.

     (b) Three types of Stock Appreciation Rights shall be authorized for issuance under the Plan:

          (1) Tandem Stock Appreciation Rights. Tandem Stock Appreciation Rights may be granted
appurtenant to an Option, and shall, except as specifically set forth in this Section 8, be subject
to the same terms and conditions applicable to the particular Option grant to which it pertains.
Tandem Stock Appreciation Rights will require the holder to elect between (i) the exercise of the
underlying Option for shares of stock, and (ii) the surrender, in whole or in part, of such Option
for an appreciation distribution.

          (2) Concurrent Stock Appreciation Rights. Concurrent Stock Appreciation Rights may be granted
appurtenant to an Option and may apply to all or any portion of the shares of stock subject to the
underlying Option and shall, except as specifically set forth in this Section 8, be subject to the
same terms and conditions applicable to the particular Option grant to which it pertains. A
Concurrent Stock Appreciation Right shall be exercised automatically at the same time the
underlying Option is exercised with respect to the particular shares of stock to which the
Concurrent Stock Appreciation Right pertains.

          (3) Independent Stock Appreciation Rights. Independent Stock Appreciation Rights may be
granted independently of any Option.

     (c) General. Stock Appreciation Rights shall be denominated in Company common stock
equivalents. The appreciation distribution payable upon the exercise of a Stock Appreciation Right
shall not be greater than an amount equal to the excess of (i) the aggregate Fair Market Value
determined on the date of the exercise of the Stock Appreciation Right of a number of shares of
Company common stock equivalents in which the Participant is vested

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under such Stock Appreciation Right, and with respect to which the Participant is exercising
the Stock Appreciation Right on such date, over (ii) the aggregate strike price in effect for those
shares determined by the Board on the date of grant of the Stock Appreciation Right. The strike
price per share of a Stock Appreciation Right shall not be less than the Fair Market Value on the
date of the grant of the Stock Appreciation Right; provided, however, that the foregoing limitation
shall not apply to a Stock Appreciation Right granted in a manner that would be consistent with
Section 424(a) of the Code if the Stock Appreciation Right were an Option. The appreciation
distribution in respect of a Stock Appreciation Right may be paid in cash, shares of stock, or any
combination thereof, as determined by the Board and set forth in the Stock Award Agreement
evidencing such Stock Appreciation Right. Except as otherwise provided in this Section 8, Stock
Appreciation Rights shall be subject to the same terms and conditions applicable to Nonstatutory
Stock Options as set forth in Section 6.

     (d) Vesting. At the time of the grant of a Stock Appreciation Right, the Board may impose
such restrictions or conditions to the vesting of such Stock Appreciation Right as the Board, in
its sole discretion, deems appropriate.

9. Cancellation and Re-Grant of Options.

     (a) The Board shall have the authority to effect, at any time and from time to time: (i) the
repricing of any outstanding Options and/or any Stock Appreciation Rights under the Plan; and/or
(ii) with the consent of the affected holders of Options and/or Stock Appreciation Rights, the
cancellation of any outstanding Options and/or any Stock Appreciation Rights under the Plan and the
grant in substitution therefor of new Options and/or Stock Appreciation Rights under the Plan
covering the same or different numbers of shares of stock, but having an exercise price per share
not less than one hundred percent (100%) of the Fair Market Value on the new grant date; provided
however, that neither the Board nor any committee appointed by the Board shall have the authority
to (i) reprice any outstanding Options and/or Stock Appreciation Rights under the Plan or (ii)
cancel and re-grant any outstanding Options and/or Stock Appreciation Rights under the Plan, unless
the stockholders of the Company have approved such an action within a twelve (12) month period
preceding or following such an event.

     (b) Shares subject to an Option or Stock Appreciation Right canceled under this Section 9
shall continue to be counted against the maximum award of Options and Stock Appreciation Rights
permitted to be granted pursuant to subsection 5(d) of the Plan. The repricing of an Option and/or
Stock Appreciation Right under this Section 9, resulting in a reduction of the exercise price,
shall be deemed to be a cancellation of the original Option and/or Stock Appreciation Right and the
grant of a substitute Option and/or Stock Appreciation Right; in the event of such repricing, both
the original and the substituted Options and Stock Appreciation Rights shall be counted against the
maximum awards of Options and Stock Appreciation Rights permitted to be granted pursuant to
subsection 5(d) of the Plan. The provisions of this subsection 9(b) shall be applicable only to
the extent required to enable the repriced Options to qualify as “performance-based compensation”
for the purposes of Section 162(m) of the Code.

11.

 

10. Covenants of the Company.

     (a) The Company shall keep available at all times the number of shares of stock reasonably
required to satisfy outstanding Stock Awards.

     (b) The Company shall seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon
exercise of the Stock Award; provided, however, that this undertaking shall not require the Company
to register under the Securities Act either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of such Stock Awards
unless and until such authority is obtained.

     (c) The Company shall have no duty or obligation to any holder of a Stock Award to advise such
holder as to the time or manner of exercising such Stock Award. Furthermore, the Company shall
have no duty or obligation to warn or otherwise advise such a holder of a pending termination or
expiration of a Stock Award or a possible period in which the Stock Award may not be exercised.
Notwithstanding the foregoing, the Board may, in its sole discretion, grant Options or Stock
Appreciation Rights that provide that in the event of a pending or other expiration or termination
of an Option or Stock Appreciation Right, the Participant may receive (in shares of common stock or
cash), either automatically or in the discretion of the Company, the excess of (i) the aggregate
Fair Market Value of the shares of common stock that the Participant would have received upon
exercise of such Option or Stock Appreciation Right, over (ii) the aggregate exercise or strike
price in effect for those shares. The Company has no duty or obligation to minimize the tax
consequences of a Stock Award to the holder of such Stock Award.

11. Use of Proceeds from Stock.

     Proceeds from the sale of stock pursuant to Stock Awards shall constitute general funds of the
Company.

12. Miscellaneous.

     (a) No Participant shall be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares subject to a Stock Award unless and until such person has
exercised the Stock Award pursuant to its terms and such person shall not be deemed a stockholder
of record until the issuance of the Company’s common stock pursuant to such exercise has been
entered into the books and records of the Company.

     (b) Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto
shall confer upon any Participant any right to continue in the employ of the Company or any
Affiliate (or to continue acting as a Director or Consultant), or shall affect the right of the
Company or any Affiliate to terminate the employment or relationship as a Director or Consultant of
any Employee, Director, Consultant, or other holder of Stock Awards with or without cause.

12.

 

     (c) To the extent that the aggregate Fair Market Value (determined at the time of grant) of
stock with respect to which Incentive Stock Options are exercisable for the first time by any
Optionee during any calendar year under all plans of the Company and its Affiliates exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as Nonstatutory Stock Options.

     (d) The Company may require any Participant, as a condition of exercising or acquiring stock
under any Stock Award; (1) to give written assurances satisfactory to the Company as to such
person’s knowledge and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating, alone or together with
the purchaser representative, the merits and risks of exercising the Stock Award; and (2) to give
written assurances satisfactory to the Company stating that such person is acquiring the stock
subject to the Stock Award for such person’s own account and not with any present intention of
selling or otherwise distributing the stock. The foregoing requirements, and any assurances given
pursuant to such requirements, shall be inoperative if: (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act; or (ii) as to any particular
requirement, a determination is made by counsel for the Company that such requirement need not be
met in the circumstances under the then applicable securities laws. The Company may, upon advice
of counsel to the Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.

     (e) To the extent provided by the terms of a Stock Award Agreement, the Company may, in its
sole discretion, require or permit a Participant to satisfy any federal, state, local, or foreign
tax withholding obligation relating to a Stock Award by any of the following means or by a
combination of such means: (1) causing the Participant to tender a cash payment; (2) withholding
amounts from payroll or any amounts otherwise payable to the Participant; (3) withholding shares
from the shares of the common stock otherwise issuable to the Participant as a result of the
exercise or acquisition of stock under the Stock Award; or (4) by accepting delivery to the Company
of other unencumbered shares of the common stock of the Company owned by the Participant.

     (f) Notwithstanding the provisions set forth in subsection 7(d), in the case of Stock Awards
granted after the Effective Date and for which the purchase price is less than the Fair Market
Value of the Company’s common stock subject to the Stock Award on the date the Stock Award is
granted (“Below Market Awards”), the cumulative weighted average vesting period for Below Market
Awards, when combined with the cumulative weighted average vesting period for similar awards after
January 31, 2003 and before the Effective Date pursuant to the Company’s 2003 Equity Incentive Plan
or the Company’s 1997 Equity Incentive Plan, shall be at least three (3) years from the date the
Stock Award is granted. Stock Awards granted in connection with or vesting pursuant to performance
criteria and any acceleration of vesting in connection with a Change in Control (as defined in
subsection 13(c)) pursuant to the Company’s Executive Change in Control and Severance Benefit Plan
or pursuant to subsection 13(b) below shall not be taken

13.

 

into account for purposes of this subsection 12(f). In the event a Participant may potentially
receive acceleration of vesting (other than as described in the preceding sentence), such potential
acceleration of vesting shall not be taken into account for the purposes of this subsection 12(f),
until such time, if ever, that such potential acceleration of vesting occurs.

     (g) Notwithstanding any limitation on the transferability of a Stock Award set forth in the
Plan, except as otherwise set forth in the applicable Stock Award Agreement, a Stock Award shall be
transferable to the extent ordered by a court of competent jurisdiction pursuant to a domestic
relations or similar order.

13. Adjustments upon Changes in Stock.

     (a) If any change is made in the stock subject to the Plan, or subject to any Stock Award
(through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure, or otherwise), the Plan will be appropriately adjusted in
the class(es) and maximum number of shares subject to the Plan pursuant to subsection 4(a), the
classes and maximum number of shares with respect to which Incentive Stock Options may be awarded
pursuant to subsection 4(b), and the maximum number of shares subject to award to any person during
any calendar year pursuant to subsection 5(d), and the outstanding Stock Awards will be
appropriately adjusted in the class(es) and number of shares and price per share of stock subject
to such outstanding Stock Awards.

     (b) Except as otherwise provided in the Stock Award Agreement, in the event of: (1) a
dissolution, liquidation, or sale of substantially all of the assets of the Company; (2) a merger
or consolidation in which the Company is not the surviving corporation; or (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Company’s common stock
outstanding immediately preceding the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise, then to the extent permitted by
applicable law: (i) any surviving corporation may assume any Stock Awards outstanding under the
Plan or may substitute similar Stock Awards for those outstanding under the Plan, and (ii) such
Stock Awards shall continue in full force and effect as so assumed or in such substituted form as
may be determined by the Board in its sole discretion prior to the applicable event. In the event
any surviving corporation does not assume or continue such Stock Awards, and does not substitute
similar options for those outstanding under the Plan, then, with respect to Stock Awards held by
persons then performing services as Employees, Directors, or Consultants, the time during which
such Stock Awards may be exercised shall be accelerated and the Stock Awards terminated if not
exercised prior to such event.

     (c) Notwithstanding any other provision of this Plan, with respect to any Covered Service
Provider, if such Covered Service Provider’s continuous service with the Company or an Affiliate is
terminated by a Covered Termination within eighteen (18) months following the date of the Change in
Control, then any Stock Awards held by such Covered Service Provider shall immediately become fully
vested and exercisable, and any repurchase right by the Company or any Affiliate with respect to
any shares of stock covered by such Stock Awards shall immediately lapse.

14.

 

          For purposes of this subsection 13(c), “Change in Control” means: (i) a sale of all or
substantially all of the assets of the Company, other than a sale to an Affiliate; (ii) a merger or
consolidation in which the Company is not the surviving corporation and in which beneficial
ownership of securities of the Company representing at least fifty percent (50%) of the combined
voting power entitled to vote in the election of directors has changed; (iii) a reverse merger in
which the Company is the surviving corporation but the shares of common stock outstanding
immediately preceding the merger are converted by virtue of the merger into other property, whether
in the form of securities, cash, or otherwise, and in which beneficial ownership of securities of
the Company representing at least fifty percent (50%) of the combined voting power entitled to vote
in the election of directors has changed; (iv) an acquisition by any person, entity or group within
the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor provisions
(excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or
subsidiary of the Company or other entity controlled by the Company) of the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule)
of securities of the Company representing at least fifty percent (50%) of the combined voting power
entitled to vote in the election of directors, or; (v) in the event that the individuals who, as of
the Effective Date, are members of the Board (the “Incumbent Board”), cease for any reason to
constitute at least fifty percent (50%) of the Board; provided, however, if the appointment or
election (or nomination for election) of any new Board member was approved or recommended by at
least fifty percent (50%) of the members of the Incumbent Board then still in office, such new
Board member shall be considered as a member of the Incumbent Board.

          For purposes of this subsection 13(c), “Covered Service Provider” means all employees of the
Company or an Affiliate, members of the board of directors of the Company or an Affiliate, and
selected consultants providing significant services to the Company or an Affiliate as of the
occurrence of a transaction or event constituting a Change in Control.

          For purposes of this subsection 13(c), “Covered Termination” means either a termination by the
Company of the Participant’s services for the Company and its Affiliates without “Cause” or a
“Constructive Termination.”

          For purposes of this subsection 13(c), “Cause” means the occurrence of any of the following
(and only the following): (i) conviction of the Covered Service Provider of any felony involving
fraud or act of dishonesty against the Company or any Affiliate; (ii) conduct by the Covered
Service Provider which, based upon good faith and reasonable factual investigation and
determination of the Company (or, if the Covered Service Provider is a named executive officer as
defined in Item 402(a)(3) of Regulation S-K promulgated by the Securities and Exchange Commission),
demonstrates gross unfitness to serve; or, (iii) intentional, material violation by the Covered
Service Provider of any contractual, statutory, or fiduciary duty owed by the Covered Service
Provider to the Company or any Affiliate, provided that in the event that any of the foregoing
events is capable of being cured, the Company shall provide written notice to the Covered Service
Provider describing the nature of such event and the Covered Service Provider shall thereafter have
thirty (30) days to cure such event. In addition, if the Covered Service Provider is not a
corporate officer of the Company (i.e., an Employee not holding the title of Vice President or
higher), “Cause” shall also include poor performance of the Covered Service Provider’s services for
the Company or any Affiliate as determined by the Company following:

15.

 

(A) written notice to the Covered Service Provider describing the nature of such deficiency;
and (B) the Covered Service Provider’s failure to cure such deficiency within thirty (30) days
following receipt of such written notice.

          For purposes of this subsection 13(c), “Constructive Termination” means that a Covered Service
Provider who is a corporate officer of the Company (i.e., an Employee holding the title of Vice
President or higher) terminates his or her service after any of the following are undertaken
without the Covered Service Provider’s express written consent: (i) the assignment to the Covered
Service Provider of any duties or responsibilities which result in any diminution or adverse change
of the Covered Service Provider’s position, responsibility, authority, status, circumstances, or
scope of service as in effect immediately prior to a Change in Control, or a change in the Covered
Service Provider’s titles or offices as in effect immediately prior to a Change in Control, or any
removal of the Covered Service Provider from or any failure to re-elect the Covered Service
Provider to any of such positions, except in connection with the termination of the Covered Service
Provider’s service on account of death, disability, retirement, for Cause, or any voluntary
termination of service by the Covered Service Provider other than Constructive Termination; (ii) a
reduction by the Company in the Covered Service Provider’s annual base compensation; (iii) any
failure by the Company to continue in effect any benefit plan or arrangement, including incentive
plans or plans to receive securities of the Company, in which the Covered Service Provider is
participating at the time of a Change in Control (hereinafter referred to as “Benefit Plans”), or
the taking of any action by the Company which would adversely affect the Covered Service Provider’s
participation in or reduce the Covered Service Provider’s benefits under any Benefit Plans or
deprive the Covered Service Provider of any fringe benefit enjoyed by the Covered Service Provider
at the time of a Change in Control, provided, however, that the Covered Service Provider may not
incur a Constructive Termination following a Change in Control if the Company offers a range of
benefit plans and programs which, taken as a whole, are comparable to the Benefit Plans; (iv) a
relocation of the Covered Service Provider or the Company’s offices to a location more than
twenty-five (25) miles from the location at which the Covered Service Provider performed his or her
duties prior to a Change in Control, except for required travel by the Covered Service Provider on
the Company’s or any Affiliate’s business to an extent substantially consistent with the Covered
Service Provider’s business travel obligations at the time of a Change in Control; (v) any breach
by the Company of any provision of a Stock Award Agreement; or, (vi) any failure by the Company to
obtain the assumption of a Stock Award Agreement by any successor or assign of the Company.

14. Amendment of the Plan and Stock Awards.

     (a) The Board at any time, and from time to time, may amend the Plan. However, except as
provided in Section 13 relating to adjustments upon changes in stock, no amendment shall be
effective unless approved by the stockholders of the Company within twelve (12) months before or
after the adoption of the amendment, if such approval is required pursuant to the applicable
listing requirements of any stock exchange or national market system on which the Company has
listed the stock subject to this Plan for trading. For clarity, but not by way of limitation,
except as may otherwise be permitted by such listing requirements, the following amendments will
require such approval by the stockholders of the Company:

16.

 

          (1) An amendment which materially increases the number of shares reserved for Stock Awards
under the Plan;

          (2) An amendment which materially expands the class of individuals eligible for participation
in the Plan;

          (3) An amendment which materially increases the benefits accruing to Participants under the
Plan or materially reduces the exercise price for Options or Stock Appreciation Rights;

          (4) An amendment which materially extends the term of the Plan; or

          (5) An amendment which expands the types of awards available for issuance under the Plan which
are payable in shares of the Company’s common stock.

     (b) The Board may in its sole discretion submit any other amendment to the Plan for
stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the
requirements of (i) Section 162(m) of the Code and the regulations promulgated thereunder regarding
the exclusion of performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers, (ii) Section 422 of the Code regarding Incentive
Stock Options, or (iii) Rule 16b-3.

     (c) It is expressly contemplated that the Board may amend the Plan in any respect the Board
deems necessary or advisable to provide eligible Employees, Directors, or Consultants with the
maximum benefits provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder including, without limitation, relating to Incentive Stock Options and
certain nonqualified deferred compensation under Section 409A of the Code and/or to bring the Plan
and/or Stock Awards granted under the Plan into compliance therewith.

     (d) Except as provided in subsection 14(c), rights and obligations under any Stock Award
granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless: (i)
the Company requests the consent of the person to whom the Stock Award was granted; and (ii) such
person consents in writing.

     (e) The Board at any time, and from time to time, may amend the terms of any Stock Award;
provided, however, that, except as provided in subsection 14(c), the rights and obligations under
any Stock Award shall not be impaired by any such amendment unless: (i) the Company requests the
consent of the person to whom the Stock Award was granted and (ii) such person consents in writing.

     (f) The Board may amend the terms of any Stock Award (including, without limitation, by
amending the Company’s Executive Change in Control and Severance Benefit Plan) without approval by
the stockholders of the Company: (i) to extend the period for exercise of an Option pursuant to
subsection 6(f), 6(h), or 6(i), provided that in no case shall such period extend beyond the
maximum term of the Option as set forth in the Option Agreement; or (ii) to accelerate the time at
which a Stock Award may first be exercised or the time during which a Stock Award or any part
thereof will vest pursuant to subsection 6(e), 7(d), or 8(c) or Section 13.

17.

 

15. Termination or Suspension of the Plan.

     (a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the
Plan shall terminate on December 31, 2011. No Stock Awards may be granted under the Plan while the
Plan is suspended or after it is terminated.

     (b) Except as provided in subsection 14(c), rights and obligations under any Stock Award
granted while the Plan is in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom the Stock Award was granted.

16. Effective Date of Plan.

     The Plan shall become effective on the Effective Date. Prior to the Effective Date the Prior
Plans are unaffected by the Plan, and Stock Awards shall continue to be granted from the Prior
Plans. If the Plan has not been approved by the stockholders of the Company by the first
anniversary of the Adoption Date, the adoption of the Plan shall be null and void and the Prior
Plans shall continue unaffected by the adoption of the Plan. If the Plan is so approved, (i) the
Prior Plans shall be deemed merged into the Plan and to cease their separate existence and (ii)
outstanding options and other awards granted pursuant to the Prior Plans shall automatically become
Stock Awards. Notwithstanding that the Prior Plans are merged into the Plan, the terms of the
Prior Plans shall continue to govern any Stock Awards granted prior to the Effective Date.

18.Exhibit 10.1

    Exhibit
      10.1

     

    LEASE

    

    THE
      DWIGHT FOSTER BUILDING

    

    33
      WALDO STREET

    

    WORCESTER,
      MASSACHUSETTS

    

    Lease
      Dated

    

    as
      of

    

    DECEMBER
      1, 2001

    

    

    ARTICLE
      I

    

    1.
      REFERENCE
      DATA:

    

    1.1. SUBJECTS
      REFERRED TO:
      Each
      reference in this Lease to any of the following subjects shall be construed
      to
      incorporate the data stated for each such subject in this Article.

    

    LANDLORD:
      J. Robert Seder

    

    LANDLORD'S
      ADDRESS:
      339
      Main Street, Worcester, Massachusetts 01608.

    

    TENANT:
      Commonwealth National Bank

    

    THE
      PREMISES:
      The
      entire interior of the second floor (Waldo Street level) of the building known
      as the Dwight Foster Building, 33 Waldo Street, Worcester, Massachusetts (the
      "Building"), excepting the lobby, stairs, and elevator thereof containing
      approximately 7,450 square feet and approximately 1,657 square feet in the
      interior of the westerly portion of the third floor of the Building; and store
      room #5 in the basement of the Building, containing approximately 850 square
      feet.

    

    PARKING:
      (a)
      During the Lease Term, the right and license is granted by the Landlord to
      the
      Tenant’s employees to park twenty-eight (28) motor vehicles between the hours of
      7:00 a.m. and 6:00 p.m. on property of Landlord contiguous to the
      Building; twelve (12) parking unassigned places in the parking lot with entry
      from the Waldo Street level (the "Lot") and sixteen (16) parking places, as
      assigned by Landlord in the garage contiguous to the Building at the Commercial
      Street level thereof (the "Garage"). 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)
      Landlord grants to Tenant’s customers and invitees a license to park their motor
      vehicles in the Lot for one-half (.5) hour at no cost only when such persons
      are
      visiting the Premises for banking business, subject to a validation system
      mutually agreeable to Landlord and Tenant. The license granted in this
      subparagraph (b) is subject to availability of space in the Lot. 

     

    Tenant
      acknowledges that other tenants of Landlord and their employees have been
      granted similar licenses. Parking spots allocated to employee parking may not
      be
      used by Tenant for any other purpose.

    

    At
      all
      times the license granted herein is subject to compliance with Landlord's Rules
      and Regulations in effect from time to time governing the use of the Lot and
      the
      Garage, a copy of which (as in force as of the date hereof) is annexed hereto
      as
Exhibit
      “A”).

    

    LEASE
      TERM:
      Term
      fifteen (15) years.  

    

    LEASE
      TERM COMMENCEMENT DATE:
      December 1, 2001.

    

    RENT:
      See
      Paragraph 2.3  

    

    ADDITIONAL
      TENANT’S CHARGES:
      Tenant
      shall pay:

    

    (1.)(a)
      for all electricity charges for lighting and electrical outlets on the
      Premises;

    

    (b)
      for
      all electricity charges for drive-through lighting from portico and
      drive-through control gate and pedestrian warning in Lot contiguous to the
      Building; and

    

    (c)
      for
      all electricity charges for all of Tenant’s signage which is electrified and/or
      lit by electric lighting. 

    

    All
      of
      such charges shall be paid to the utility providing such electricity, as
      separately metered to Tenant.

    

    (2.)
      annually, as additional rent, and within twenty (20) days of Landlord’s invoice
      delivered to the Tenant therefor, an amount equal to thirty percent (30%) of
      the
      cost of electricity incurred by Landlord for Building electricity (including
      cost of air conditioning) which exceeds such cost for the twelve (12) month
      period ending December 31, 2000. Landlord’s said cost for the twelve (12) month
      period ending December 31, 2000 was Twenty Thousand Five Hundred Fifty-seven
      and
      42/100 Dollars ($20,557.42). Upon request of Tenant, Landlord shall present
      evidence of said cost of electricity to Tenant, no more often than
      annually.

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    

    (3.)
      annually, as additional rent, and within twenty (20) days of Landlord’s invoice
      delivered to the Tenant therefor, an amount equal to thirty percent (30%) of
      the
      cost of heating incurred by Landlord for heating the Building which exceeds
      such
      cost for the twelve (12) month period ending December 31, 2000. Landlord’s said
      cost for the twelve (12) month period ending December 31, 2000 was Thirteen
      Thousand One Hundred Twelve and 18/100 dollars ($13,112.18). Upon request of
      Tenant, Landlord shall present evidence of said cost of heating to Tenant,
      no
      more often than annually.

    

    (4.)
      quarter-annually (or such other times as real estate tax bills are issued),
      as
      additional rent, and within twenty (20) days of Landlord’s invoice delivered to
      the Tenant therefor, an amount equal to thirty percent (30%) of the real estate
      tax assessed on the Building (but not the Lot) which exceeds the real estate
      taxes assessed on the Building for the twelve (12) month period ending December
      31, 2000. The real estate taxes assessed on the Building for the twelve (12)
      month period ending December 31, 2000 were $45,767.49.

     

    (5.)
      for
      all cleaning of the Premises including carpet cleaning and the removal of
      rubbish to rubbish room on the first floor of the Building, by Tenant’s own
      cleaning contractor.

    

    (6.)
      for
      the cost of removal (not plowing) of snow from the Lot. (Tenant may, if Tenant
      so desires hire its own snow removal contractor). If Tenant does not hire its
      own snow removal contractor for such snow removal, Tenant shall pay Landlord
      therefor as additional rent, within ten (10) days of Landlord’s invoice therefor
      having been delivered to Tenant. If Tenant shall hire its own contractor to
      plow
      and remove snow from the Lot, Landlord shall reimburse Tenant for snow plowing
      only if (a) Landlord shall have approved the calculation of the cost thereof
      prior to the first snowfall in each autumn/winter; and (b) the cost of snow
      plowing is stated separately on all invoices received from Tenant’s snow removal
      contractor.

    

    (7.)
      for
      and provide all replacement lamps, light bulbs, replacement fixture ballasts
      (and installation thereof) on the Premises, the drive-through portico, and
      with
      respect to Tenant’s signage.

    

    (8.)
      for
      and provide all bathroom supplies, including soap, towels and toilet tissue
      used
      on the Premises.

    

    PERMITTED
      USES:
      Banking, financial services and general office and associated uses.

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    ARTICLE
      II

    

    2.
      PREMISES:
      

     

    2.1.
      (a)
      Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the
      Premises identified in Article I in the Building, excluding (a) the common
      stairways, stairwells, elevators and elevator wells, the exterior faces of
      the
      exterior walls, and (b) the pipes, ducts, conduits, wires and appurtenant
      fixtures serving the Premises and/or other parts of the Building, and reserving
      to the Landlord the right to relocate same within or without the Premises,
      upon
      reasonable advance notice to Tenant, and in such a manner as to minimize
      interference with Tenant’s business operations (except for
      emergencies). 

    

    (b)
      Tenant, its agents, employees and invitees shall have, in common with other
      tenants of Landlord and their respective agents, employees and invitees, the
      use
      of the common areas of the Building, the Lot and the Garage, subject to parking
      privileges and the Rules and Regulations set forth in Exhibits “A”
      and
“B”
      annexed
      hereto. 

    

    (c)
      Tenant, in common with other tenants of the Building and the Landlord, shall
      have the use of the area above the ceilings in the Premises for cabling, wiring,
      piping, and associated uses, at no additional rent.

    

    (d)
      Tenant may, at Tenant’s expense, install a satellite dish and/or an antenna on
      the roof of the Building or on a structure located thereon provided (i) Tenant
      shall promptly repair all roof punctures made on account thereof, (ii) Tenant
      shall place such items as Landlord shall direct, and (iii) wiring to any such
      installation shall comply with all codes applicable thereto and shall be
      effected by contractors reasonably satisfactory to Landlord.

    

    2.2.
      TERM:
      Tenant
      shall have and hold the Premises for a period commencing December 1, 2001 and
      continuing for the Lease Term unless sooner terminated as provided
      herein.

    

    2.3.
      RENT:

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    
      	
               

              Lease
                Year

               

            	
               

              Period

               

            	
               

              Annual
                Rent

               

            	
               

              Payable
                monthly on the 

              1st
                day of each month, 

              in
                advance

            
	
               

              1

            	
               

              12/1/01
                to 11/30/02

            	
               

              $152,399.00

            	
               

              $12,699.92

            
	
               

              2

            	
               

              12/1/02
                to 11/30/03

            	
               

              $152,399.00

            	
               

              $12,699.92

            
	
               

              3

            	
               

              12/1/03
                to 11/30/04

            	
               

              $152,399.00

            	
               

              $12,699.92

            
	
               

              4

            	
               

              12/1/04
                to 11/30/05

            	
               

              $163,066.93

            	
               

              $13,588.91

            
	
               

              5

            	
               

              12/1/05
                to 11/30/06

            	
               

              $163,066.93

            	
               

              $13,588.91

            
	
               

              6

            	
               

              12/1/06
                to 11/30/07

            	
               

              $163,066.93

            	
               

              $13,588.91

            
	
               

              7

            	
               

              12/1/07
                to 11/30/08

            	
               

              $174,481.61

            	
               

              $14,540.13

            
	
               

              8

            	
               

              12/1/08
                to 11/30/09

            	
               

              $174,481.61

            	
               

              $14,540.13

            
	
               

              9

            	
               

              12/1/09
                to 11/30/10

            	
               

              $174,481.61

            	
               

              $14,540.13

            
	
               

              10

            	
               

              12/1/10
                to 11/30/11

            	
               

              $186,695.32

            	
               

              $15,557.94

            
	
               

              11

            	
               

              12/1/11
                to 11/30/12

            	
               

              $186,695.32

            	
               

              $15,557.94

            
	
               

              12

            	
               

              12/1/12
                to 11/30/13

            	
               

              $186,695.32

            	
               

              $15,557.94

            
	
               

              13

            	
               

              12/1/13
                to 11/30/14

            	
               

              $199,763.99

            	
               

              $16,646.99

            
	
               

              14

            	
               

              12/1/14
                to 11/30/15

            	
               

              $199,763.99

            	
               

              $16,646.99

            
	
               

              15

            	
               

              12/1/15
                to 11/30/16

            	
               

              $199,763.99

            	
               

              $16,646.99

            

    

    

    ARTICLE
      III

     

    3.
      LANDLORD
      COVENANTS:

    

    3.1.
      SERVICES:
      (a) To
      keep in good order and condition, and furnish through Landlord's employees
      or
      independent contractors, repairs to the foundation, roofs, exterior walls,
      windows in common areas, common areas, and structural components of the Building
      and the Premises in a manner consistent with the standards applicable to office
      space comparable to the Premises and the Building. 

    

    (b)
      To
      provide and pay for the removal of Tenant’s usual trash from the rubbish room on
      first floor. “Usual trash” means trash emptied from waste baskets. Trash such as
      bulk quantities of brochures, cardboard boxes, and the like which is removed
      by
      Landlord will result in extra expense to Tenant, which Tenant shall pay to
      Landlord within ten (10) days of the delivery to Tenant of Landlord’s invoice
      therefor.

    

    (c)
      To
      remove snow and ice from the sidewalks abutting the Building.

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    3.2.
      QUIET
      ENJOYMENT:
      That
      Landlord has the right to make this Lease and that Tenant on timely paying
      the
      rent and performing the Tenant’s obligations in this Lease shall peacefully and
      quietly have, hold and enjoy the Premises, subject to all of the terms and
      provisions hereof.

     

    3.3.
      INTERRUPTIONS:
      (a)
      That Landlord shall not be liable to Tenant for compensation or reduction of
      rent by reason of inconvenience or annoyance or for loss of business arising
      from the necessity of Landlord's entering the Premises for any of the purposes
      in this Lease authorized, or for repairing the Premises or any portion of the
      Building, however the necessity may occur, except as otherwise specifically
      provided in this Lease.  In case Landlord is prevented or delayed from
      making any repairs, alterations or improvements, or furnishing any services
      or
      performing any other covenant or duty to be performed on Landlord's part, by
      reason of any cause beyond Landlord's control, Landlord shall not be liable
      to
      Tenant therefor, nor, except as expressly otherwise provided in Section 5.1
      shall Tenant be entitled to any abatement or reduction of rent by reason
      thereof, nor shall the same give rise to a claim in Tenant's favor that such
      failure constitutes actual or constructive, total or partial, eviction from
      the
      Premises.

    

    (b)
      The
      Landlord reserves the right to close the Lot for a period not to exceed six
      (6)
      consecutive months in order to construct a parking deck over the Lot. So long
      as
      the Lot is closed, and if and to the extent the Tenant shall not have available
      to it parking space for its employees in the Lot and/or the use of the
      drive-through window, monthly rent shall be abated by the number of employee
      parking spots not available to the Bank x $80.00 plus, if the drive-in window
      traffic cannot be accommodated, $1,040.00 per month (the portion of the rent
      attributable thereto, to be adjusted, if Lot closing occurs after year three
      (3)
      of the lease term). 

    

    3.4
      INDEMNITY:
      To save
      harmless, and indemnify Tenant from any liability for injury, loss, accident
      or
      damage to any person or property, and from any claims, actions, proceedings,
      and
      expenses and costs in connection therewith (including without limitation
      reasonable counsel fees), (excepting for any liability arising from Tenant's
      own
      actions or the actions of any of Tenant’s contractors, agents, or employees) (i)
      arising from the omission, fault, willful act, negligence or other misconduct
      of
      Landlord or its agents, servants, employees, invitees, licensees and independent
      contractors hired by Landlord, or (ii) resulting from the failure of Landlord
      to
      perform and discharge his covenants and obligations under this
      Lease.

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    3.5
      INSURANCE.
      To
      maintain all-risk hazard insurance on the Building in an amount which shall
      be
      at least eighty percent (80%) of the value of the Building. 

    

    ARTICLE
      III-A

     

    3.A.1.
      EMERGENCIES:
      The
      Landlord reserves the right to stop any service or utility system, when
      necessary by reason of accident or emergency, or until necessary repairs have
      been completed, provided, however, that in each instance of stoppage, Landlord
      shall exercise reasonable diligence to eliminate the cause thereof.  Except
      in case of emergency repairs, Landlord will give Tenant reasonable advance
      notice of any contemplated stoppage and will use reasonable efforts to avoid
      inconvenience to Tenant by reason thereof.

    

    ARTICLE
      IV

    

    4.
      TENANT
      COVENANTS:
      During
      the Lease Term and such further time as Tenant occupies any part of the
      Premises, Tenant covenants:

    

    4.1.
      RENT:
      To pay
      when due all rent, and additional rent. 

    

    4.2.
      CONDITION:
      Except
      as otherwise provided in Article V, to keep the Premises in good order, repair
      and condition, reasonable wear and tear, damage by fire or casualty only
      excepted, and all glass in windows and doors of the Premises whole and in good
      condition with glass of the same quality as that injured or broken, damage
      by
      fire or casualty only excepted, and at the expiration or termination of the
      Lease Term or any extension of the Lease Term, peaceably to yield up the
      Premises and all alterations and additions thereto in good order, repair and
      condition, reasonable wear and tear, damage by fire or other casualty only
      excepted, first removing all goods and effects of Tenant and, to the extent
      specified by Landlord by notice to Tenant given at least ten (10) days before
      such expiration or termination, all alterations and additions made by Tenant
      after the Lease Term Commencement Date, and repairing any damage caused by
      such
      removal and restoring the Premises and leaving them neat, and in broom-clean
      condition.

    

    4.3.
      USE:
      To use
      and occupy the Premises for the Permitted Uses only and not to injure or deface
      the Premises, Building, Lot, or Garage, not to permit in the Premises any
      auction sale, vending machine, or inflammable fluids or chemicals, or nuisance,
      or the emission from the Premises of any objectionable noise or odor, nor to
      permit any use thereof which is improper or 

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    offensive,
      contrary to law or ordinance or liable to invalidate or increase the premiums
      for any insurance on the Building or its contents or liable to render necessary
      any alteration or addition to the Building.

    

    4.3.A
      PLATE
      GLASS INSURANCE.
      To
      maintain plate glass insurance insuring the plate glass windows on the Waldo
      Street side of the Building against breakage, and in any event, in the event
      of
      breakage, Tenant shall be responsible for the cost of replacing any and all
      of
      the plate glass in such windows.

    

    4.4.
      RULES:
      Not to
      obstruct in any manner any portion of the Building, Lot or Garage not hereby
      leased or any portion thereof used by Tenant in common with others; and to
      comply with all reasonable Rules and Regulations uniformly in force now as
      set
      forth in Exhibit
      "B"
      or
      hereafter made by Landlord for the care and use of Building, and the Lot and
      the
      Garage and their facilities and approaches.

     

    4.5.
      SAFETY:
      To keep
      the Premises equipped with all safety appliances required by law or ordinance
      or
      any other regulation of any public authority, because of any use thereof made
      by
      Tenant which use is different from most banks and commercial offices and to
      procure all licenses and permits so required because of such use and, if
      requested by Landlord, to do any work so required because of such use, it being
      understood that the foregoing provisions shall not be construed to broaden
      in
      any way Tenant's Permitted Uses.

    

    4.6.
      ASSIGNMENT:
      Not,
      without prior written consent of Landlord, which consent shall not be
      unreasonably withheld or delayed, to assign, mortgage, pledge or otherwise
      transfer this Lease, including by operation of law, or to make any sublease,
      or
      to permit occupancy of the Premises or any part thereof by anyone other than
      Tenant, provided however, that Tenant shall remain liable as a primary obligor
      under and pursuant to all of Tenant’s obligations under this Lease. At the
      option of the Landlord, to be exercised after request of the Tenant to assign
      this Lease or sublet all or any portion of the Premises, the Tenant shall
      specifically agree that the Premises shall be restored to the condition they
      were in at the time of the Tenant’s request to assign this Lease or sublet all
      or any portion of the Premises. If any amount is payable to Tenant by any
      assignee or sublessee which exceeds the rent and additional rent reserved
      hereunder, such amount shall be paid to Landlord, in full, within ten (10)
      days
      after its receipt by Tenant.   

    

    4.7.
      INSPECTION:
      To
      permit Landlord and Landlord's agents and designees, on reasonable advance
      notice, to examine the 

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    Premises
      at reasonable times and, if Landlord shall so elect, to make any repairs or
      replacements Landlord may deem necessary; to remove, at Tenant's expense, any
      alterations, additions, signs, curtains, blinds, shades, awnings, aerials,
      or
      the like not consented to in writing by Landlord; and to show the Premises
      to
      prospective Tenants and post “For Rent” signs on the Premises during the six (6)
      months preceding expiration of the Lease Term (unless Tenant shall have properly
      exercised it’s option to extend the Lease Term, as hereinafter provided), and
      any extended Lease Term, and to prospective purchasers and mortgagees at all
      reasonable times.  

    

    4.8.
      FLOOR
      LOAD:
      Not to
      place a load upon the Premises exceeding the live load for which the floors
      have
      been designed; and not to move any safe, vault or other heavy equipment in,
      about or out of the Premises except in such manner and at such time as Landlord
      shall in each instance authorize; and to isolate and maintain all of Tenant's
      business machines and mechanical equipment, which cause or may cause air-borne
      or structure-borne vibration or noise, whether or not it may be transmitted
      to
      any other leased space in the Building, in such manner acceptable to Landlord
      so
      as to eliminate such vibration or noise.

     

    4.9.
      PERSONAL
      PROPERTY:
      To pay
      promptly when due all taxes which may be imposed upon personal property
      (including without limitation, fixtures and equipment) in the Premises by
      whomsoever assessed.

    

    4.10.
      COSTS
      AND FEES:
      To pay
      as additional rent all such reasonable costs (including attorneys’ reasonable
      fees incurred by Landlord arising out of any breach by Tenant of any of its
      obligations under this Lease in connection with the successful enforcement
      by
      Landlord of said obligations of Tenant.

    

    4.11.
      INDEMNITY:
      To save
      harmless, and indemnify Landlord from any liability for injury, loss, accident
      or damage to any person or property, and from any claims, actions, proceedings,
      and expenses and costs in connection therewith (including without limitation
      reasonable counsel fees), (excepting for any liability arising from Landlord's
      own actions or the actions of any of Landlord’s contractors, agents, or
      employees) (i) arising from the omission, fault, willful act, negligence or
      other misconduct of Tenant or its agents, servants, employees, invitees,
      licensees and independent contractors hired by Tenant, or (ii) resulting from
      the failure of Tenant to perform and discharge its covenants and obligations
      under this Lease.

    

    4.12.
      INSURANCE:
      To
      procure, keep in force and pay for comprehensive public liability insurance
      to
      the limit of its 

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    policy
      (which is $1,000,000.00 per person, $5,000,000.00 in the aggregate, and
      $100,000.00 in property damage) indemnifying Landlord and Tenant as their
      interests may appear against all claims and demands for injury to, or death
      of,
      persons or damage to property which may be claimed to have occurred upon the
      Premises in the amounts which shall from time to time be approved by
      Landlord.  Such insurance shall provide that it shall not be cancelled
      without at least twenty (20) days’ prior written notice to Landlord, who shall
      be named an additional insured, and certificates thereof shall be promptly
      delivered to Landlord upon request of the Landlord.

    

    Any
      insurance carried by either party with respect to the Premises and property
      therein or occurrences thereon shall include a clause or endorsement denying
      the
      insurer rights of subrogation against the other party to the extent rights
      have
      been waived by the insured prior to occurrence of injury or loss. Each party,
      notwithstanding any provisions of this Lease to the contrary, hereby waives
      any
      rights of recovery against the other for injury or loss due to hazards covered
      by insurance containing such clause or endorsement to the extent of the
      indemnification received thereunder.

     

    4.13.
      PROPERTY
      DAMAGE:
      In
      addition to and not in limitation of the foregoing, Tenant covenants and agrees
      that all merchandise, furniture, fixtures and property of every kind, nature
      and
      description of Tenant or Tenant's employees, agents, contractors, invitees,
      visitors or guests which may be in or upon the Premises or Building in the
      public corridors or on the sidewalks, areaways, Lot or Garage and approaches
      adjacent thereto, during the Lease Term (as it may be extended), shall be at
      the
      sole risk and hazard of Tenant, and that if the whole or any part thereof shall
      be damaged, destroyed, stolen or removed by reason of any cause or reason
      whatsoever, other than the negligence or willful act of Landlord, no part of
      said damage or loss shall be charged to or borne by Landlord.

    

    4.14.
      SIGNAGE:
      The
      Tenant, at its own expense, may affix its signage to the sign band of the
      Building and other locations thereof, subject to the prior approval of the
      Landlord. In addition, the Tenant, at its expense and with the prior approval
      of
      the Landlord, may erect up to two (2) signs in the Lot. Tenant may use the
      existing sign (and change the lettering thereof) on the easterly side of the
      Building, provided that, at Tenant’s expense, the electricity therefor is
      metered to Tenant.

    

    4.15.
      ALTERATIONS.
      Not to
      make alterations (except for cosmetic changes) to the Premises unless (i) the
      same shall have been approved in advance by the Landlord, and (ii) the
      contractor 

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    making
      any such alterations shall have been approved in advance by Landlord. Landlord’s
      approval required hereunder shall not be unreasonably withheld, delayed or
      conditioned. 

    

    ARTICLE
      V

    

    5.
      CASUALTY
      AND TAKING:
      

     

    5.1.
 
      In case during the Lease Term (or any extension thereof) all or any part of
      the
      Premises or the Building or the Lot or the Garage are damaged materially by
      fire, force majeure,
      civil
      commotion, war, or casualty or by action of public or other authority in
      consequence thereof, or are taken by eminent domain or Landlord receives
      compensable damage by reason of anything lawfully done in pursuance of public
      or
      other authority, this Lease shall terminate at Landlord's election, which
      election may be made only if all or a material part of the Premises, the
      Building, the Lot and/or the Garage are so taken or damaged. If the Landlord
      elects to terminate, the Landlord must give notice to Tenant of such election
      within ninety (90) days after the event which gives rise to the right to elect
      termination. The effective date of termination shall be not less than fifteen
      (15) nor more than thirty (30) days after the date of notice of such
      termination. Rent and additional rent shall abate effective on the date of
      termination or such earlier date as the Premises are not fit for the Permitted
      Uses. If in any such case, the Premises, Building, Lot and/or Garage are
      rendered unfit for the Permitted Uses and the Lease is not so terminated,
      Landlord shall use due diligence (following the expiration of all periods in
      which Landlord may terminate this Lease pursuant to the foregoing provisions
      of
      this Section 5.1) to put the Premises, Building, Lot and/or Garage, or in case
      of taking what may remain thereof (excluding any items installed or paid for
      by
      Tenant which Tenant may be required to remove pursuant to Section 4.2) into
      proper condition for the Permitted Uses. In the event of a casualty, a just
      proportion of the rent and additional rent according to the nature and extent
      of
      the injury shall be abated until the Premises, Building, Lot and/or Garage
      or
      such remainder shall have been put by Landlord in such condition as the same
      may
      be used and occupied for the Permitted Uses. In the event of a taking which
      permanently reduces the areas of the Premises, Building, Lot and/or Garage,
      a
      just proportion of the rent and additional rent shall be abated for the
      remainder of the Lease Term. In case of such damage or taking, Landlord shall
      notify Tenant within thirty (30) days after the occurrence thereof of Landlord’s
      estimate of the time needed to do the construction work necessary to put the
      Premises, Building, Lot and/or Garage or such remainder in proper condition
      for
      the Permitted Uses. If Landlord has not commenced such repairs within sixty
      (60)
      days of 

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    such
      damage or taking having occurred, and/or shall not thereafter cause such repairs
      to be diligently pursued until completion, Tenant may terminate this Lease
      upon
      thirty (30) days’ prior notice to Landlord.

    

    5.2.
      CONDEMNATION
      AWARDS:
      Landlord reserves to itself any and all rights to receive awards made for
      damages to the Premises and Building and Lot and the leasehold hereby created
      or
      any one or more of them, accruing by reason of exercise of eminent domain or
      by
      reason of anything lawfully done in pursuance of public or other
      authority.  Tenant hereby releases and assigns to Landlord all Tenant's
      rights to such awards, and covenants to deliver such further assignments and
      assurances thereof as Landlord may from time to time request, hereby irrevocably
      designating and appointing Landlord as its attorney-in-fact to execute and
      deliver in Tenant's name and behalf all such further assignments thereof.
      Notwithstanding the foregoing, Tenant shall have the right to prosecute a claim
      arising from the exercise of eminent domain and/or anything lawfully done in
      pursuance of public or other authority which results in the loss or damage
      to
      the leasehold improvements created at Tenant’s expense and for its moving costs
      and expenses, and to retain any recovery thereby effected.

    

    ARTICLE
      VI

     

    6.
      DEFAULT:
      

     

    6.1.
      This
      Lease is upon this condition, that if Tenant shall neglect or fail to perform
      any one or more of its terms, covenants, agreements, or conditions contained
      herein and any such neglect or failure continues after notice, in case of
      payment of rent or additional rent for more than ten (10) days, or in any other
      case for more than thirty (30) days and such additional time, if any, as is
      reasonably necessary to cure the default, if the default is of such a nature
      that it cannot reasonably be cured in said thirty (30) days; or if Tenant makes
      any assignment for the benefit of creditors, fails or admits in writing its
      inability to pay its debts generally as they become due; files a petition in
      bankruptcy or a petition to take advantage of any insolvency law; is subject
      to
      the appointment of a receiver, trustee, liquidator, conservator or similar
      officer of itself or of the whole or any substantial part of its business or
      property, or on voluntary or involuntary petition in bankruptcy filed by or
      against it (if said petition is not discharged within sixty (60) days after
      filing of the same), has an order for relief entered with respect to it or
      is
      otherwise adjudicated a bankrupt or insolvent; or files a petition or answer
      seeking reorganization, arrangement, insolvency, readjustment of debt,
      dissolution or liquidation or consents to 

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    the
      filing of such petition or complaint or answer under the Federal bankruptcy
      laws
      or any other applicable law or statute of the United States of America or any
      state thereof, now or hereafter in effect; or if any attachment or execution
      is
      levied upon this Lease, or if the leasehold is taken on execution or other
      process of law in any action against the Tenant, then in any such case, Landlord
      may immediately, or at any time while such default exists and without further
      notice, terminate this Lease by notice to Tenant, specifying a date not less
      than ten (10) days after the giving of such notice on which this Lease shall
      terminate and this Lease shall come to an end on the date specified therein
      as
      fully and completely as if such date were the date herein originally fixed
      for
      the expiration of the Lease Term, (or if during an extended Lease Term, the
      date
      originally fixed for the termination thereof) or Landlord, at his election,
      may
      lawfully or at any time after such default and without further notice, enter
      into and upon the Premises or any part thereof in the name of the whole, and
      repossess the same as of Landlord's former estate and expel Tenant and those
      claiming through or under Tenant and remove their effects (forcibly if
      necessary) without being deemed guilty of any manner of trespass and without
      prejudice to any remedies for arrears of rent or any other preceding breach
      of
      covenant and Landlord may, at his election, store any effects so removed in
      a
      public warehouse or otherwise for the account of, and at the expense of, Tenant,
      and upon termination of this Lease as aforesaid or under any provision of any
      statute, whether or not Landlord enters the Premises, Tenant will then quit
      and
      surrender the Premises to Landlord, but Tenant shall remain liable as
      hereinafter provided.

     

    6.2.
      LANDLORD
      REMEDIES:
      In the
      event that this Lease is terminated under any of the provisions contained in
      Section 6.1 or shall be otherwise terminated for breach of any obligation of
      Tenant, Tenant covenants to pay forthwith to Landlord, as compensation, the
      total rent reserved for the residue of the Lease Term (or extended Lease Term,
      as the case may be).  In calculating the rent reserved there shall be
      included, in addition to the fixed rent and all additional rent, the value
      of
      all other considerations agreed to be paid or performed by Tenant for said
      residue.  Tenant further covenants as an additional and cumulative
      obligation after any such ending to pay punctually to Landlord all the sums
      and
      perform all the obligations which Tenant covenants in this Lease to pay and
      to
      perform in the same manner and to the same extent and at the same time as if
      this Lease had not been terminated.  In calculating the amounts to be paid
      by Tenant under the next foregoing covenant Tenant shall be credited with any
      amount with the net proceeds of any rent obtained by Landlord by re-letting
      the
      Premises after deducting all Landlord's reasonable expenses in connection with
      such re-

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    letting,
      including, without limitation, all repossession costs, brokerage commissions,
      fees for legal services and expenses of preparing the Premises for such
      re-letting, it being agreed by Tenant that Landlord may (i) re-let the Premises
      or any part or parts thereof, for a term or terms which may at Landlord's option
      be equal to or less than or exceed the period which would otherwise have
      constituted the balance of the Lease Term and any Extended Lease Term (as the
      case may be), and may grant such concessions and free rent as Landlord in his
      sole judgement considers advisable or necessary to re-let the same and (ii)
      make
      such alterations, repairs and decorations in the Premises as Landlord in his
      sole judgment considers advisable or necessary to re-let the same (which shall
      in any event not include alterations, repairs and decorations inconsistent
      with
      the remainder of the Building), and no action of Landlord in accordance with
      the
      foregoing or failure to re-let or to collect rent under any re-letting shall
      operate as a release of Tenant or be construed to release or reduce Tenant's
      liability as aforesaid.

    

    6.3.
      BANKRUPTCY:
      Nothing
      contained in this Lease shall limit or prejudice the right of Landlord to prove
      for and obtain in proceedings for bankruptcy or insolvency by reason of the
      termination of this Lease, an amount equal to the maximum allowed by any statute
      or rule of law in effect at the time when, and governing the proceedings in
      which, the damages are to be proved, whether or not the amount be greater,
      equal
      to, or less than the amount of the loss or damages referred to
      above. 

    

    ARTICLE
      VII

     

    7.
      NOTICE

    

    7.1.
      NOTICE
      OF LEASE:
      This
      Lease shall not be recorded.  Upon request of either party hereto both
      parties shall execute and deliver after the Lease Term begins a notice of this
      Lease in form appropriate for recording or registration, and if this Lease
      is
      terminated before the Lease Term expires, an instrument in such form
      acknowledging the date of termination. 

     

     

    7.2.
      COMMUNICATIONS:
      Whenever any notice, approval, consent, request or election is given or made
      pursuant to this Lease it shall be in writing.  Communications and payments
      shall be addressed:

    

    if
      to
      Landlord, 

    to
      Landlord at:      339 Main Street

    Worcester,
      MA 01608 

    

    or
      at
      such other address or designated person as may have been 

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    specified
      by prior notice by Landlord.

    

    if
      to
      Tenant, 

    to
      Tenant
      at:     33
      Waldo
      Street

    Worcester,
      MA 01608

    ATTN:
      Chief Financial Officer

    

    or
      at
      such other address or designated person as may have been specified by prior
      notice by Tenant.  Any communication so addressed shall be deemed duly
      served if mailed by United States registered or certified mail, postage prepaid,
      return receipt requested, or delivered in hand.  

     

    7.3.
      BINDING
      EFFECT:
      This
      Lease shall be binding upon and inure to the benefit of the parties hereto
      and
      their respective successors, and permitted assigns, except that only the
      Landlord shall be liable for obligations accruing prior to the transfer of
      the
      real estate of which the Premises are a part, and each successive owner of
      the
      Premises shall be liable only for obligations accruing during the period of
      its,
      his or her ownership.

    

    7.4.
      KEYS:
      The
      delivery of keys to any employee of Landlord or to Landlord's agent or any
      employee thereof shall not operate as a termination of this Lease or a surrender
      of the Premises.

    

    7.5.
      WAIVERS:
      The
      failure of Landlord or of Tenant to seek redress for violation of, or to insist
      upon the strict performance of, any covenant or condition of this Lease, or
      any
      of the Rules and Regulations as set forth in Exhibit
      “A”
      and
Exhibit
      “B”
      hereto,
      as amended, shall not be deemed a waiver of such violation.  No consent or
      waiver, express or implied, by Landlord or Tenant, to or of any breach of any
      agreement or duty shall be construed as a waiver of or consent to any other
      breach of the same or any other agreement or duty.

     

    7.6.
      REMEDIES:
      The
      specific remedies to which Landlord and Tenant may resort under the terms of
      this Lease are cumulative and are not intended to be exclusive of any other
      remedies or means of redress to which he or it may be lawfully entitled in
      case
      of any breach or threatened breach by Landlord or Tenant of any provisions
      of
      this Lease.  In addition to the other remedies provided in this Lease,
      Landlord and Tenant shall be entitled to the restraint by injunction of the
      violation or attempted or threatened violation of any of the covenants,
      conditions or provisions of this Lease or to a decree compelling specific
      performance of any such covenants, conditions or provisions.

    

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    7.7.
      SEVERABILITY:
      If any
      terms of this Lease, or the application thereof to any person or circumstances,
      shall to any extent be invalid or unenforceable, the remainder of this Lease,
      or
      the application of such term to persons or circumstances other than those as
      to
      which it is invalid or unenforceable, shall not be affected thereby, and each
      term of this Lease shall be valid and enforceable to the fullest extent
      permitted by law.

    

    7.8.
      RIGHT
      TO CURE:
      (a) If
      Tenant shall at any time default in the performance of any obligation under
      this
      Lease, Landlord shall have the right, but shall not be obligated, to enter
      upon
      the Premises and to perform such obligation notwithstanding the fact that no
      specific provision for such substituted performance by Landlord is made in
      this
      Lease with respect to such default.  In performing such obligations,
      Landlord may make any payment of money or perform any other act.  All sums
      so paid by Landlord (together with interest at the rate of twelve percent (12%)
      per annum) and all necessary incidental costs and expenses in connection with
      the performance of any such act by Landlord, shall be deemed to be additional
      rent under this Lease and shall be payable to Landlord immediately on
      demand.  Landlord may exercise the foregoing rights without waiving any
      other of his rights or releasing Tenant from any of its obligations under this
      Lease.  

    

    (b)
      If
      Landlord shall at any time default in the performance of any obligation under
      this Lease, Tenant shall have the right, but not be obligated, to perform such
      obligation notwithstanding the fact that no specific provision for such
      substituted performance by Tenant is made in this Lease with respect to such
      default.  In performing such obligations, Tenant may make any payment of
      money.  Tenant shall be entitled, upon demand, to reimbursement for all
      sums so paid (together with interest at the rate of twelve percent (12%) per
      annum) and all necessary incidental costs and expenses in connection with the
      performance of any such act by Tenant, but such sums, costs, and expenses shall
      not be deductible from the rent or additional rent payable by the Tenant under
      this Lease.

     

    7.9.
      ESTOPPEL
      CERTIFICATE:
      Each
      party hereto Tenant
      agrees
      from time to time, upon not less than fifteen (15) days prior written request
      from the other, to execute, acknowledge and deliver to the other a statement
      in
      writing certifying that this Lease is unmodified and in full force and effect
      and that Tenant has no defenses, offsets or counterclaims against its
      obligations to pay the fixed rent and additional rent and to perform its other
      covenants under this Lease and that there are no uncured defaults of Landlord
      or
      Tenant under this Lease (or if there have been any modifications that the same
      are in full force and effect 

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    as
      modified and stating the modifications and, if there are any defenses, offsets,
      counterclaims, or defaults, setting them forth in reasonable detail), and the
      dates to which the fixed rent, additional rent and other charges have been
      paid.  Any such statement delivered pursuant to this Section 7.9 may be
      relied upon by any prospective purchaser or mortgagee of the Premises or any
      prospective assignee of any mortgage of the Premises.

    

    ARTICLE
      VIII

     

    8.
      UTILITIES

    

    8.1.HEATING,
      VENTILATING, AIR CONDITIONING:
      

    

    Subject
      to the provisions of Section 3.A.1. of Article III-A of this Lease, Landlord
      shall furnish, at Landlord's expense, space heating and cooling as normal
      seasonal changes may require to provide reasonable space temperature and
      ventilation for occupants of the Premises under normal business operation,
      Monday through Friday from 8:00 a.m. to 6:00 p.m. (Saturday 8:00
      a.m. to 1:00 p.m.), Sundays and holidays excepted.  

    

    8.2.
      WATER:

    

    Landlord
      will provide, to Tenant, at Landlord's expense, water for drinking, lavatory,
      and  toilet
      purposes, on the Premises.

     

    8.3.
      ELECTRICAL
      SERVICE:
      

     

    Landlord
      shall not in any manner be liable or responsible to Tenant for any loss or
      damage or expense which Tenant may sustain or incur if, during the Lease Term
      (or any extension thereof), for the quantity or character of electrical current
      or if electric current is no longer available or suitable for Tenant's
      requirements due to a factor or cause beyond Landlord's control.  Any riser
      or risers or other necessary and proper equipment required to supply Tenant's
      electrical requirements (in addition to such risers and equipment initially
      installed upon construction of the Building or added subsequently thereto and
      prior to the Lease Commencement Date), will upon and within a reasonable time
      after written request of Tenant, be furnished and installed by Landlord, at
      Tenant's expense, if, in Landlord's judgment, the same will not cause permanent
      damage or injury to the Building or cause or create a dangerous or hazardous
      condition or entail excessive or unreasonable alterations, repairs or expense,
      or interfere with or disturb other tenants of Landlord or occupants of the
      Building.  Any such risers and equipment shall be maintained by Landlord in
      good operating condition and repair. Tenant covenants and agrees that its use
      

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    of
      electric current shall not exceed the capacity of the existing feeders to the
      Building or the risers or wiring installation, provided that Landlord shall
      at
      all times maintain the feeders, risers and wiring installation serving the
      Premises.  All costs and expenses incurred by Landlord which are chargeable
      to Tenant pursuant to the provisions of this section shall be paid by Tenant
      as
      additional rent.

    

    8.4.
      EXCESS
      SERVICES:
      Tenant
      requiring services in excess of those described above shall request same through
      Landlord and, if Landlord determines to provide same, they shall be at Tenant's
      expense.

    

    ARTICLE
      IX

    

    9.
      BROKERS:

    

    Landlord
      and Tenant each represent to the other that he and it have not dealt with a
      broker or finder in connection with the transaction which is the subject of
      this
      Lease.

    

    ARTICLE
      X

    

    10.
      OPTION
      TO EXTEND:

    

    (a)
      Landlord hereby grants to Tenant: 

    

    (i)
      the
      option to extend the Lease Term for five (5) years, commencing December 1,
      2016
      and expiring on November 30, 2021 (the “First Extended Term”); and 

    

    (ii)
      the
      option to extend the Lease Term for five (5) years, commencing December 1,
      2021
      and expiring on November 30, 2026 (the “Second Extended Term”), provided the
      option to extend the Lease Term for the First Extended Term shall have been
      exercised.

    

    (b)
      the
      options to extend the Lease Term granted in Section 10.(a) shall be exercisable
      and properly exercised by Tenant only if: 

    

    (i)
      there
      shall be no uncured default in any of Tenant’s obligations under and pursuant to
      this Lease when the relevant option is exercised (and none thereafter occurs
      prior to the commencement of the relevant extended term); and

    

    (ii)
      the
      said option shall be deemed properly exercised if Tenant shall have given
      Landlord notice of its intention to exercise its said option at least two
      hundred and seventy (270) days prior to the expiration of the Lease Term or
      the
      First Extended Term, as the case may be.

    

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    

    10.1.
      If
      an option is exercisable and properly exercised, all of the terms and conditions
      of this Lease shall continue in full force and effect except that fixed rent
      shall be as set forth on Schedule
      10.1
      annexed
      hereto. 

    

    ARTICLE
      XI

    

    11.
      SUBORDINATION
      AND NON-DISTURBANCE; NOTICE OF DEFAULT BY  LANDLORD
      WITH RESPECT TO EXISTING MORTGAGE:

    

    11.1
      FUTURE
      MORTGAGES/DEEDS OF TRUST.

    

    This
      Lease shall be subject and subordinate to the lien of any mortgage and/or deed
      of trust which Landlord may hereafter place upon the Premises provided that:
      (a)
      if there are no uncured defaults hereunder on the part of Tenant, the right
      of
      possession of Tenant to the Premises and Tenant’s rights arising out of this
      Lease shall not be affected or disturbed by the mortgagee, trustee or
      beneficiary under the mortgage and/or deed of trust in the exercise of any
      of
      its rights under the mortgage, deed of trust or the promissory notes secured
      thereby; (b) if there are no uncured defaults hereunder on the part of Tenant,
      Tenant shall not be named as a party defendant to any foreclosure or other
      proceeding under the mortgage or deed of trust nor in any other way be deprived
      of its rights under this Lease, nor shall this Lease be terminated or affected
      by any foreclosure or sale or any proceeding under any mortgage or deed of
      trust; and (c) the mortgagee, trustee and/or beneficiary shall execute and
      deliver to Tenant an Agreement of Attornment and Non-Disturbance in substantial
      conformance with the form attached hereto as Exhibit
      “C”
      prior to
      the execution of the mortgage or deed of trust. Landlord agrees that in the
      event of any foreclosure of any mortgage or deed of trust affecting the
      Premises, Tenant shall have the right to withhold the payment of any rent due
      hereunder and pay the same directly to the mortgagee or trustee in satisfaction
      of its obligations to pay rent to the Landlord hereunder. Within fifteen (15)
      days after request from Landlord, Tenant shall execute any and all instruments
      requested by Landlord which are necessary or proper to effect the subordination
      of this Lease to any mortgage, deed of trust or other encumbrance, but only
      if
      Tenant, by the same instrument or otherwise, shall have received from the
      mortgagor or trustee of such mortgage or deed of trust, the executed attornment
      and non-disturbance agreements hereinabove described.

    

    11.2
      PRESENTLY
      EXISTING MORTGAGES/DEEDS OF TRUST.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    Landlord
      may, at any time, provide Tenant with Agreements of Attornment and
      Non-Disturbance in forms which are in substantial conformance with the form
      attached hereto as Exhibit
      “C”
      executed
      or to be executed by all entities or parties presently holding mortgages, deeds
      of trust or other liens upon the Premises, and Tenant shall promptly execute
      same and return them to Landlord.

    

    11.3
      NOTICE
      TO TENANT OF LANDLORD’S DEFAULT UNDER MORTGAGE,
      ETC. 

    

    If
      Landlord receives any notice that Landlord is in default with respect to any
      of
      Landlord’s obligations under and pursuant to any mortgage encumbering the
      Building and/or the Lot (a “Default Notice”), Landlord shall, within five (5)
      days of the receipt by Landlord of any Default Notice, send a copy thereof
      to
      Tenant, and, to the extent permitted by the mortgagee sending the Default
      Notice, Tenant may, but shall not be obligated to, cure any default which is
      the
      subject of a Default Notice. If and to the extent Tenant expends any sums in
      connection with curing any such default (including the reasonable fees of its
      counsel), Landlord shall reimburse Tenant therefor within five (5) days of
      Tenant’s written request for reimbursement. If Landlord shall not make
      reimbursement, as aforesaid, Tenant may withhold rental payments due to Landlord
      to the extent of and until the amount due to Tenant on account of such
      reimbursement shall have been fully reimbursed to Tenant.

    

    Executed
      as a sealed instrument as of the day and year first above written.

     

    
      
        	 	 	
                LANDLORD

              
	 	 	 
	 	 	 
	
                /s/
                  Debra Wentworth

              	 	
                /s/
                  J. Robert Seder

              
	
                Witness
                  

              	 	
                J. Robert
                  Seder

              
	 	 	 
	
                 

              	 	
                TENANT

              
	 	 	 
	
                 

              	 	
                COMMONWEALTH
                  NATIONAL BANK

              
	 	 	 
	 	 	 
	
                /s/
                  Christine Trifari

              	 	
                By:
                  /s/
                  Charles R. Valade

              
	
                Witness

              	 	
                Charles
                  R. Valade, President

              
	 	 	
                and
                  Chief Executive Officer 

              

      

    

     

    

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      10.1

    

    FIXED
      RENT DURING EXTENDED TERMS

    

    A.
      FIRST
      EXTENDED TERM

    

    
      	
               

              Lease
                Year

            	
               

              Period

            	
               

              Annual
                Rent

            	
               

              Payable
                monthly in 

              advance
                on the 

              first
                day of each month

            
	
               

              16

            	
               

              12/1/16
                to 11/30/17

            	
               

              $213,747.46

            	
               

              $17,812.28

            
	
               

              17

            	
               

              12/1/17
                to 11/30/18

            	
               

              $213,747.46

            	
               

              $17,812.28

            
	
               

              18

            	
               

              12/1/18
                to 11/30/19

            	
               

              $213,747.46

            	
               

              $17,812.28

            
	
               

              19

            	
               

              12/1/19
                to 11/30/20

            	
               

              $223,237.84

            	
               

              $18,603.15

            
	
               

              20

            	
               

              12/1/20
                to 11/30/21

            	
               

              $223,237.84

            	
               

              $18,603.15

            

    

    

    

    B.
      SECOND
      EXTENDED TERM

    

    
      	
               

              Lease
                Year

            	
               

              Period

            	
               

              Annual
                Rent

            	
               

              Payable
                monthly in 

              advance
                on the 

              first
                day of each month

            
	
               

              21

            	
               

              12/1/21
                to 11/30/22

            	
               

              $223,237.84

            	
               

              $18,603.15

            
	
               

              22

            	
               

              12/1/22
                to 11/30/23

            	
               

              $238,864.48

            	
               

              $19,905.37

            
	
               

              23

            	
               

              12/1/23
                to 11/30/24

            	
               

              $238,864.48

            	
               

              $19,905.37

            
	
               

              24

            	
               

              12/1/24
                to 11/30/25

            	
               

              $238,864.48

            	
               

              $19,905.37

            
	
               

              25

            	
               

              12/1/25
                to 11/30/26

            	
               

              $244,430.02

            	
               

              $20,369.16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}]]