Document:

exv10w52

 

Exhibit 10.52

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made effective as of the 1st day of
July, 2004 by and between ENTREMED, INC., a Delaware corporation having its
principal office at 9640 Medical Center Drive, Rockville, MD 20850 (the
“Company”) and Dane Saglio (the “Executive”).

FOR AND IN CONSIDERATION of the mutual premises, agreements and covenants
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:

1. Employment; Position and Duties.

Subject to the terms hereof, the Company hereby agrees to employ the Executive
during the Term (as hereafter defined) to act as, and to exercise all of the
powers and functions of, its Chief Financial Officer and to perform such acts
and duties and to generally furnish such services to the Company and its
subsidiaries (if any) as is customary for a senior management person with a
similar position in like companies; and he shall report to the President and
Chief Executive Officer of the Company (“CEO”) and have such specific powers,
duties and responsibilities as the CEO, in consultation with, and approval of,
the Board of Directors (the “Board”), shall from time to time reasonably
prescribe. Executive hereby agrees to accept such employment and shall perform
and discharge faithfully, diligently, and to the best of his abilities such
duties and responsibilities and shall devote sufficient working time and
efforts to the business and affairs of the Company and its subsidiaries.

2. Place of Employment.

While Executive is employed by the Company during the Term, Executive shall be
required to conduct his duties and responsibilities hereunder primarily from
the executive offices located in Rockville, Maryland (except for routine and
customary business travel), or from such other location as designated from time
to time by the CEO.

3. Compensation

     a. Base Salary. While Executive is employed by the Company during
the Term, the Company shall pay to Executive an initial annual base salary
(“Base Salary”) of $200,000, payable in accordance with the Company’s customary
payroll policy for its executives.

     b. Base Salary Adjustments. Executive’s Base Salary shall be
reviewed at the end of the calendar year and at the end of each calendar year
thereafter. The Board or a committee thereof may make such adjustments as it
deems appropriate in its sole discretion. In making such adjustments the Board
or a committee thereof may solicit and give consideration to the views of the
CEO.

     c. Incentive Compensation. While Executive is employed by the
Company during the Term, Executive’s annual incentive compensation, if any,
(“Incentive Compensation”) shall be determined by the Board or a committee
thereof in its sole discretion, following the last day of each fiscal year of the Company ending during the Term. In making
such determinations, the

 

 

Board or a committee thereof may solicit and take into
consideration the views of the CEO.

     d. Certain Other Benefits. While Executive is employed by the
Company during the Term, Executive shall be entitled to participate in any and
all employee benefit plans and arrangements which are available to senior
executive officers of the Company, including without limitation, group medical
and life insurance plans, and automobile expense reimbursement allowances.
Executive shall also be afforded reasonable paid vacation time pursuant to
vacation policies fixed by the Company.

     e. Expenses. The Company shall pay or reimburse Executive for all
reasonable business expenses actually paid or incurred by Executive while
Executive is employed by the Company during the Term subject to reasonable
documentation and in accordance with the Company’s business expense
reimbursement policy.

4. Term.

The term of this Agreement shall be the period commencing on the date hereof
and continuing through June 30,2005 (the “Initial Term”); provided, however,
that the Term of this Agreement may, by mutual agreement of the parties in
writing, be extended for successive one year periods (each one-year extension a
“Successor Term” and together with the Initial Term referred to herein as the
“Term”). In the event this Agreement is not extended at the end of the Initial
Term and thereby terminates, only paragraphs 6, 7, 8(g), 8(h), 8(i) and 11
shall survive such termination. Executive understands and agrees that the Board
or a committee thereof may, in its sole discretion and without notice to
Executive, elect not to extend this Agreement and in such event not to, either
by contract or practice, continue any of the provisions set forth herein,
except for those provisions that survive termination as set forth in this
paragraph 4. Executive further acknowledges that any such decision by the Board
or a committee thereof not to extend the Term of this Agreement shall not be
deemed “Termination Without Cause” for the purposes of Section 8(d) or any
other provision of this Agreement, including, but not limited to, a
“Resignation for Good Reason” under Section 9.

5. Stock Options.

Periodic stock and incentive stock option grants to Executive, if any, while
Executive is employed by the Company during the Term shall be determined by the
Board or a committee thereof in its discretion. In the event of a termination
pursuant to paragraph 8(d) hereof or a resignation pursuant to paragraph 9
hereof, all of Executive’s un-expired and unvested stock options shall become
vested on the effective date of such termination or resignation and shall be
exercisable in accordance with the terms of such grants until the later of the
date set forth in such grant or the first anniversary of the Executive’s
termination, but in no event beyond the expiration date of the relevant option.

6. Unauthorized Disclosure.

     During the Term and at all times thereafter, Executive shall not, without the
written consent of the Company, or except as required by applicable law,
disclose to any person, other than a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by Executive of his duties as an executive officer of the Company,
any material

 

 

confidential information obtained by Executive while in the employ
of the Company with respect to the businesses of the Company or any of its
subsidiaries, including but not limited to, operations, pricing, contractual or
personnel data, products, discoveries, improvements, trade secrets, license
agreements, marketing information, suppliers, dealers, principles, customers,
or methods of distribution, or any other confidential information the
disclosure of which knows, or in the exercise of reasonable care should know,
will be damaging to the Company; provided, however, that confidential
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by Executive) or any
information so otherwise considered by the Company not to be confidential.

7. Indemnification. 

     a. The Company shall indemnify and hold harmless Executive if he is made a
party, or threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
or investigative (a “Proceeding”), because he is or was an officer or director
of the Company or any of its subsidiaries, affiliates, or successors, or
because he is or was serving in a fiduciary capacity with respect to employee
benefit plans of the Company, whether or not the basis of such Proceeding is
alleged action in an official capacity or otherwise, against all Expenses
incurred or suffered by him in connection with such Proceeding to the fullest
extent authorized by the General Corporation Law of the State of Delaware and
any other applicable law in effect from time to time, and such indemnification
shall continue as to Executive even if he ceases to be an officer or director
or is no longer employed by the Company, and shall inure to the benefit of
Executive’s heirs, executors and administrators.

     b. As used in this Agreement, the term “Expenses” shall include, without
limitation, damages, losses, judgments, liabilities, fines, penalties, excise
taxes, settlements and reasonable costs, reasonable attorneys’ fees, reasonable
accountants’ fees, and reasonable disbursements and costs of attachment or
similar bonds, investigations, and any reasonable expenses of establishing a
right to indemnification under the Agreement.

     c. Expenses incurred by Executive in connection with any Proceeding shall
be paid by the Company upon presentation of appropriate documentation and a
giving by Executive of any undertakings required by applicable law.

8. Termination.

     a. Termination Upon Death. If Executive dies while employed by the
Company during the Term, his estate shall be entitled to receive payment of
Base Salary through the last day of the twelve (12) months following the month
in which his death occurred, payable over such twelve (12) months at the
Company’s normal pay periods. If, in respect of the fiscal year in which
Executive dies the Board or a committee thereof determines in its discretion
that he would otherwise have been entitled to receive Incentive Compensation
under subparagraph 3(c) by reason of the operations of the Company during such
fiscal year, Executive’s estate shall be entitled to receive a pro rata portion
of his Incentive Compensation for such fiscal year. Such pro rata portion
shall equal the product of (x) the full amount of such Incentive Compensation,
and (y) a fraction, the numerator of which is the number of days in the
fiscal year of Executive’s

 

 

death prior to the date of death, and the
denominator of which is the total number of days in such fiscal year.

     b. Termination Upon Disability. The Company may terminate
Executive’s employment hereunder during the Term at the end of any calendar
month in the event of his Disability by giving to Executive written notice of
termination. In the event of any such termination pursuant to this
subparagraph 8(b), Executive shall be entitled to receive his Base Salary,
payable in accordance with the Company’s customary payroll policy for it
executives, through the last day of the twelve (12) months following the month
in which the date of termination occurred.

If in respect of the fiscal year in which Executive’s employment terminates
pursuant to this subparagraph 8(b) the Board or a committee thereof determines
in its discretion that he would otherwise have been entitled to receive
Incentive Compensation under subparagraph 3(c) by reason of the operations of
the Company during such fiscal year, Executive shall be entitled to receive a
pro rata portion of his Incentive Compensation for such year. Such pro rata
portion shall equal the product of (x) the full amount of such Incentive
Compensation, and (y) a fraction, the numerator of which is the number of days
in the fiscal year of Executive’s termination on account of Disability prior to
the date of termination, and the denominator of which is the total number of
days in such fiscal year.

     c. Termination for Cause. The Company may terminate Executive’s
employment hereunder at any time during the Term for Cause by giving to
Executive written notice of termination that specifies the reasons for and date
of termination. Upon any such termination for Cause under this subparagraph
8(c), the Company shall pay to him his Base Salary through the date of
termination, and the Company shall have no further obligations under this
Agreement.

     d. Termination Without Cause. The Company may terminate
Executive’s employment with the Company at any time during the Term, for any
reason and without Cause, by giving him prior written notice which specifies
the date of termination. Until the effective date of any such termination, the
Company shall continue to pay to him the full compensation specified in this
Agreement. If, in respect of the fiscal year in which Executive’s employment
terminates pursuant to this subparagraph 8(d) the Board or a committee thereof
determines in its discretion that he would otherwise have been entitled to
receive Incentive Compensation under subparagraph 3(c) by reason of the
operations of the Company during such fiscal year, Executive shall be entitled
to receive a pro rata portion of his Incentive Compensation for such year.
Such pro rata portion shall equal the product of (x) the full amount of such
Incentive Compensation, and (y) a fraction, the numerator of which is the
number of days in the fiscal year of Executive’s termination without Cause
prior to the date of termination, and the denominator of which is the total
number of days in such fiscal year. In addition, the Company shall (i) pay
Executive a severance amount equal to twelve (12) months Base Salary over the
following twelve (12) month period at the Company’s normal pay periods, and
(ii) provide Executive, at no charge to Executive, COBRA continuation coverage
under the Company’s health insurance program for a period of twelve (12) months
or until he has obtained substantially equivalent new coverage, as
determined by the Board or a committee thereof in its discretion, through
successor employment, whichever occurs sooner.

     e. Resignation for Other than Good Reason. Executive may
voluntarily terminate his

 

 

employment with the Company during the Term for any
reason upon at least thirty (30) days prior written notice which specifies the
date of termination. Until the effective date of such termination, the Company
shall continue to pay him the full compensation specified in this Agreement,
provided he continues to perform his duties during this period. Thereafter,
the Company shall have no further obligations to him under this Agreement.
This subparagraph 8(e) shall not apply to Executive’s resignation for Good
Reason pursuant to paragraph 9 hereof.

     f. No Mitigation. The parties hereto acknowledge and agree that,
in the event Executive’s employment with the Company is terminated pursuant to
this paragraph 8, he shall not be required to mitigate his damages by
affirmatively seeking other employment. Further, except as provided in
subparagraph 8(d)(ii) above, the amount of any payment or benefit provided for
in this Agreement shall not be reduced by any compensation earned by him or
benefit provided to him as the result of employment by another employer or
otherwise.

     g. Non-Competition. For a period of twelve (12) months after
termination of Executive’s active employment with the Company, Executive shall
not, as an individual, principal, agent, employee, consultant or otherwise,
directly or indirectly, in the United States or with respect to any company or
entity in Europe or Canada with whom Executive or the Company has concluded
partnership, licensing or other similar business development agreements on
behalf of and during his employment with the Company, render any services to
any firm or company or any division or subsidiary of any firm or company,
engaged in the research, development or commercialization of compounds, analogs
or derivatives of those compounds which compete directly with those being
researched, developed and or commercialized by the Company during the Term.
Moreover, for a period of twelve (12) months after the termination of
Executive’s employment with the Company, Executive shall not take any action,
without the prior written consent of the Company, to assist Executive’s
successor employer or any other entity in recruiting or hiring any other
employee who was an employee of the Company during Executive’s employment. This
prohibition includes (i) identifying to such successor employer or its agents
or such other entity, the person or persons who have special knowledge
concerning the Company or its inventions, processes, methods or confidential
affairs, and (ii) commenting to Executive’s successor employer or its agents or
such other entity about the quantity or work, quality of work, special
knowledge or personal characteristics of any person who is still employed by
the Company. Executive also agrees that he will not provide such information to
a prospective employer or to an executive search firm during interviews
preceding possible employment.

 

 

     h. Non-Disparagement. During the Term and thereafter, Executive
shall not communicate negatively about or otherwise disparage the Company or
its products or each and any of the released parties described in subparagraph
8(i) in any way whatsoever. The Company, acting in its official capacity, shall
not make any public false, disparaging or derogatory statements in connection
with or concerning Executive’s service to the Company except as may be required
for truthful sworn testimony or in connection with a legal or administrative
proceeding, report, claim or dispute. In the event Executive breaches any of
the conditions set forth herein or in any other paragraph of this Agreement,
the Company shall discontinue the provision of any payment or benefits to him
under this Agreement and he shall forfeit his entitlement to any further
payments or benefits under this Agreement.

     i Release. In consideration of Executive’s receipt of
severance benefits subject to and in accordance with subparagraphs 8(b)
and (d) and paragraph 9 of this Agreement, Executive agrees that, upon
his first receipt and acceptance of any such benefits, he shall have
released and forever discharged the Company, its subsidiaries and
affiliates, successors and assigns, predecessors and all of their
respective officers, directors, employees and agents and employee
benefits plans from all claims, demands, liabilities and causes of action
arising out of facts or occurrences arising or occurring at any time up
to and including the time of Executive’s termination or resignation,
whether known or unknown, and the parties hereto contemplate that this
release shall be broadly construed.

9. Resignation for Good Reason.

If Executive has Good Reason during the Initial Term, Executive may resign at
any time during the Initial Term by providing at least thirty (30) days prior
written notice to the Company that specifies the reason for, and the effective
date of, his resignation. If Executive resigns during the Initial Term for
Good Reason, such resignation shall be deemed a Termination without Cause under
subparagraph 8(d) hereof and Executive shall receive the compensation and
benefits provided under subparagraph 8(d) hereof as if he had been terminated
without Cause.

10. Definitions.

     a. “Cause” shall mean Executive’s (i) habitual drunkenness or drug
addiction or failure materially to perform and discharge his duties and
responsibilities hereunder, (ii) misconduct that is materially and
significantly injurious to the Company, (iii) conviction of a felony involving
the personal dishonesty of Executive or moral turpitude, (iv) conviction of any
crime or offense involving the property of the Company, or (v) breach of this
Agreement

     b. “Disability” shall mean the Executive’s incapacity due to physical or
mental illness which prevents the proper performance of Executive’s duties as
set forth herein or established pursuant hereto for a substantial portion of
any three-month period of the Term. Any questions as to the existence or
extent of illness or incapacity of Executive, upon which the Company and
Executive cannot agree, shall be determined by a qualified independent
physician selected by the Company and approved by the Executive. The
determination of such physician certified in writing to the Company and to the
Executive shall be final and conclusive for all purposes of this Agreement.
For purposes of the disability provisions of this Agreement, if the Executive
is

 

 

unable to act on his own behalf due to incapacity, any person legally
authorized to do so may act on the Executive’s behalf.

     c. “Good Reason” shall mean the occurrence of any of the following events
during the Initial Term: (A) the assignment to Executive of any duties
inconsistent in any material respect to Executive’s position, authority, duties
or responsibilities as of the commencement of the Term or any other action by
the Company which results in a diminution in any material respect in such
position, duties or responsibilities, excluding for this purpose an isolated
and inadvertent action not taken in bad faith that is remedied by the Company
promptly after receipt of written notice thereof given by Executive; (B) a
reduction by the Company in Executive’s annual Base Salary as in effect on the
date hereof; (C) the Company’s requiring Executive to be based at any office or
location that is more than fifty (50) miles from Executive’s office or location
as of the commencement of the Term; (D) the failure by the Company to continue
to provide Executive with benefits substantially similar to those enjoyed by
him under any of the Company’s pension, life insurance, medical, health and
accident, disability or other welfare plans in which he was participating as of
the commencement of the Term, unless such change was applicable to all senior
executives of the Company; (E) the failure by the Company to pay to Executive
any deferred compensation when due under any deferred compensation plan or
agreement applicable to him; or (F) the failure by the Company to honor in any
material respect the terms and provisions of this Agreement.

11. Miscellaneous.

     a. Assignments and Binding Effect. The respective rights and
obligations of the parties under this Agreement shall be binding upon the
parties hereto and their heirs, executors, administrators, successors, and
assigns, including, in the case of the Company, any other corporation or entity
with which the Company may be merged or otherwise combined and, in the case of
Executive, his estate or other legal representatives.

     b. No Assignment of Benefits. Except as otherwise provided herein
or by applicable law, no right or interest of the Executive under this
Agreement shall be assignable or transferable, in whole or in part, either
directly or by the operation of law or otherwise, including without limitation
execution, levy, garnishment, attachment, pledge or in any manner; no attempted
transfer thereof shall be effective.

     c. Governing Law. This Agreement shall be governed as to its
validity, interpretation and effect by the laws of the State of Maryland,
without reference to its conflict of laws provisions.

     d. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid, illegal, or unenforceable for
any reason, the remaining provisions and portions of this Agreement shall
remain in full force and effect to the fullest extent permitted by law. Such
invalid, illegal or unenforceable provision(s) shall be deemed modified to the
extent necessary to make it (them) valid, legal, and enforceable.

 

 

     e. Withholding. All amount payable hereunder shall be paid net of
any applicable withholding required under federal, state or local laws and any
additional withholding to which Executive has agreed.

     f. Entire Agreement; Amendments. This Agreement constitutes the
entire Agreement and understanding of the Company and Executive with respect to
the terms of Executive’s employment with the Company and supersedes all prior
discussions, understandings and agreements with respect thereto except to those
agreements relating to the assignment of patents and inventions and a Combined
Non-disclosure and Patent Employee Agreement to which Executive acknowledges
signing which will remain in effect.

     g. Captions. All captions and heading used herein are for
convenient reference only and do not form part of this Agreement.

     h. Waiver. No provision of this Agreement may be modified, waived
or discharged unless such modification, waiver or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Board or its delegee. The Company’s or the Executive’s
failure to insist upon strict compliance with the terms of this Agreement or
the failure of the Company or the Executive to assert any right the Company or
the Executive may have hereunder shall not be deemed a waiver of such provision
or right or any other provision of this Agreement.

     i. Notice. Any notice or communication required or permitted under
this Agreement shall be made in writing and shall be delivered by hand, or
mailed by registered or certified mail, return receipt requested, first call
postage prepaid, addressed as follows:

If to Executive:

Dane Saglio

c/o EntreMed, Inc.

9640 Medical Center Drive

Rockville, Maryland 20850

If to the Company:

EntreMed, Inc.

9640 Medical Center Dive

Rockville, Maryland 20850

Attn.: General Counsel

     j. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute one and the same agreement.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective
as of the date first above written.

	 	 	 	 	 
	 	 	 
	 	                                               /s/ Dane Saglio
 	 
	 	Executive 	 
	 	 	 
	 

	 	 	 	 	 
	 	Entremed, Inc.

 	 
	 	By:  	/s/ James S. Burns
 	 
	 	 	James S. Burns 	 
	 	 	President and Chief Executive Officerexv10w1

 

MUNICIPAL MORTGAGE & EQUITY, LLC

2004 NON-EMPLOYEE DIRECTORS’ SHARE PLAN

     1.     Purpose. The purpose of this 2004 Non-Employee Directors’ Share Plan
(the “Plan”) of Municipal Mortgage & Equity, LLC, a Delaware limited liability
company (the “Company”), is to advance the interests of the Company and its
shareholders by providing a means to attract and retain highly qualified
persons to serve as non-employee directors of the Company and to promote
ownership by such directors of a greater proprietary interest in the Company,
thereby aligning such directors’ interests more closely with the interests of
shareholders of the Company.

     2.     Definitions. In addition to terms defined elsewhere in the Plan, the
following are defined terms under the Plan:

     (a)     “Annual Award Amount” means an amount paid to a Participant as
determined by the Board, in its sole discretion, from time to time.

     (b)     “Code” means the Internal Revenue Code of 1986, as amended from time
to time. References to any provision of the Code include regulations
thereunder and successor provisions and regulations thereto.

     (b)     For purposes of the Plan, a “Change in Control” shall have occurred
if:

	 	 	          (i)     Any “person,” as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company, any entity controlling,
controlled by or under common control with the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as
their ownership of shares of the Company), is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 25% or more of
either the combined voting power of the Company’s then outstanding voting
securities or the then outstanding Shares (in either case, other than as
a result of an acquisition of securities directly from the Company);
	 
	 	 	          (ii)      during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (iii), or (iv) of this Section 2(b)) whose election by the Board or
nomination for election by the Company’s shareholders was approved by a
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason
to constitute at least a majority of the Board;
	 
	 	 	          (iii)     the shareholders of the Company approve a merger,
consolidation, recapitalization, or reorganization of the Company, or a
reverse share split of any class of voting securities of the Company, or
the consummation of any such transaction if shareholder approval is not
obtained, other than any such transaction which would result in at least
75% of the total voting power represented by the voting securities of the
Company or the surviving entity outstanding immediately after such
transaction being beneficially owned by persons who together beneficially
owned at least 75% of the combined voting power of the voting securities
of the Company outstanding immediately prior to such transaction, with
the relative voting power of each such continuing holder compared to the
voting power of each other continuing holder not substantially altered as

 

 

	 	 	a result of the transaction; provided that, for purposes of this
paragraph (iii), such continuity of ownership (and preservation of
relative voting power) shall be deemed to be satisfied if the failure to
meet such 75% threshold (or to substantially preserve such relative
voting power) is due solely to the acquisition of voting securities by an
employee benefit plan of the Company or such surviving entity or of any
subsidiary of the Company or such surviving entity; or
	 
	 	 	          (iv)     the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s
assets (or any transaction having a similar effect).

     (c)     “Deferred Share” means a credit to a Participant’s deferral account
under Section 8 which represents the right to receive one Share upon settlement
of the deferral account. Deferral accounts, and Deferred Shares credited
thereto, are maintained solely as bookkeeping entries by the Company evidencing
unfunded obligations of the Company.

     (d)     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act include the rules promulgated
thereunder and successor provisions and rules thereto.

     (e)     “Fair Market Value” of a Share means, as of any given date, the
closing sales price of a Share on the New York Stock Exchange for such date or,
if such day was not a trading day, the closing sales price for the most recent
trading day prior to such date.

     (f)     “Option” means the right, granted to a director under Section 7, to
purchase a specified number of Shares at the specified exercise price for a
specified period of time under the Plan. All Options will be non-qualified
stock Options.

     (g)     “Participant” means any person who, as a non-employee director of the
Company, has been granted a Restricted Share, an Option or Deferred Shares
which remain outstanding or who has elected to be paid fees in the form of
Shares or Deferred Shares under the Plan.

     (h)     “Restricted Share” means, an award of a Share that is subject to
restrictions under Section 6.

     (i)     “Rule 16b-3” means Exchange Act Rule 16b-3 as from time to time in
effect and applicable to the Plan and Participants.

     (j)     “Share” means a Common Share of the Company and such other securities
as may be substituted for such Share or such other securities pursuant to
Section 9.

     3.     Shares Available Under the Plan. Subject to adjustment as provided in
Section 9, the total number of Shares reserved and available for issuance under
the Plan is 400,000. Such Shares may be authorized but unissued Shares,
treasury Shares, or Shares acquired in the market for the account of the
Participant. For purposes of the Plan, Shares issued in connection with an
award of Restricted Shares or Shares that may be purchased upon exercise of an
Option or delivered in settlement of Deferred Shares will not be considered to
be available after such Restricted Share or Option has been granted or credited
in respect of a Deferred Share, except for purposes of issuance in connection
with such Restricted Share, Option or Deferred Share; provided, however, that,
if an Option expires for any reason without having been exercised in full or
the Restricted Share or Deferred Share is forfeited, the Shares subject to the
unexercised portion of such Option or credited in respect of a Restricted Share
or Deferred Share will again be available for issuance under the Plan.

2

 

     4.     Administration of the Plan. The Plan will be administered by the Board
of Directors of the Company (the “Board”); provided, however, that any action
by the Board relating to the Plan will be taken only if, in addition to any
other required vote, such action is approved by the affirmative vote of a
majority of the directors who are not then eligible to participate in the Plan.
The Board shall have authority to (i) determine the number of Options, Shares,
Restricted Shares or Deferred Shares to be credited to each Participant; (ii)
determine the amount of cash fees eligible for deferral under the Plan; and
(iii) determine or impose conditions on such Options, Shares, Restricted Shares
and Deferred Shares and cash fees under the Plan as it may deem appropriate.
The Participant shall take whatever additional actions and execute whatever
additional documents the Board may in its reasonable judgment deem necessary or
advisable in order to carry out or effect one or more of the obligations or
restrictions imposed on the Participant pursuant to the express provisions of
the Plan.

     5.     Eligibility. Each director of the Company who, on any date on which an
Option is to be granted under Section 6, a Restricted Share is to be granted
under Section 7 or on which fees are to be paid that could be received in the
form of Shares or deferred in the form of Deferred Shares under Section 8, is
not an employee of the Company or any subsidiary of the Company will be
eligible, at such date, to be granted an Option under Section 6, a Restricted
Share under Section 7 or receive fees in the form of Shares or defer fees in
the form of Deferred Shares under Section 8. No person other than those
specified in this Section 5 will be eligible to participate in the Plan.

     6.     Options. An Option to purchase 7,000 Shares, subject to adjustment as
provided in Section 9, will be automatically granted to a person who is first
elected or appointed to serve as a member of the Board at or after the
effective date of the Plan, on the date of such election or appointment, if
such director is eligible to be granted an Option at that date.
Notwithstanding the foregoing, the Board may, in its discretion, grant
additional Options (which are not to be treated as incentive options under
Section 422 of the Code) to Participants from time to time.

     (a)     Exercise Price. The exercise price per Share purchasable upon
exercise of an Option will be equal to 100% of the Fair Market Value of a Share
on the date of grant of the Option.

     (b)     Option Expiration. A Participant’s Option will expire at the earlier
of (i) 10 years after the date of grant or (ii) one year after the date the
Participant ceases to serve as a director of the Company for any reason.

     (c)     Exercisability. Unless otherwise provided by the Board, no Option may
be exercised unless and until it has become exercisable in accordance with this
Section 6(c). A Participant’s Option received upon initial election or
appointment will become exercisable in three equal annual installments
commencing at the earlier of the next anniversary of the director’s initial
election or appointment and the next Annual Meeting of Shareholders; provided,
however, that a Participant’s Option (granted pursuant to Section 6) will
become immediately exercisable in full at the time the Participant ceases to
serve as a director due to death or disability or upon a Change in Control; and
provided further, that a Participant’s Option may be exercised after the
Participant ceases to serve as a director for any reason other than death or
disability only to the extent that the Option was exercisable at the date he or
she ceased to be a director or has become exercisable pursuant to this Section
6(c) within two months after the date he or she ceased to be a director.

     (d)     Method of Exercise. A Participant may exercise an Option, in whole or
in part, at such time as it is exercisable and prior to its expiration, by
giving written notice of exercise to the Secretary of the Company, specifying
the Option to be exercised and the number of Shares to be purchased, and paying
in full the exercise price in cash (including by check) or by surrender of

3

 

Shares already owned by the Participant (except for Shares acquired from
the Company by exercise of an Option or other award less than six months before
the date of surrender) having a Fair Market Value at the time of exercise equal
to the exercise price, or by a combination of cash and Shares.

     7.     Restricted Shares. An annual award of Restricted Shares, in an amount
equal to the Annual Award Amount divided by the Fair Market Value of a Share on
the date of such grant, shall automatically be granted to each member of the
Board on the date of the final adjournment of the Company’s Annual Meeting of
Shareholders each year, if such director is eligible to be granted Restricted
Shares at that date. Notwithstanding the forgoing, the Board, in its
discretion may make additional grants of Restricted Stock to Participants from
time to time.

     (a)     Restrictions and Conditions. Unless otherwise provided by the Board,
Restricted Shares awarded to a Participant shall be subject to a restriction
from any voluntary or involuntary sale, transfer, pledge, anticipation,
alienation, encumbrance or assignment unless the restrictions on such shares
have lapsed and vest in accordance with this Section 7(a). Restricted Shares
received on the date of each Annual Meeting of Shareholders will vest at the
earlier of the next anniversary of the grant of such Restricted Shares and the
next Annual Meeting of Shareholders; provided, however, that a Participant’s
Restricted Shares (granted pursuant to Section 7) will become fully vested at
the time the Participant ceases to serve as a director due to death or
disability or upon a Change in Control; and provided further, that a
Participant’s Restricted Shares will become fully vested after the Participant
ceases to serve as a director for any reason other than death or disability
only to the extent that the Restricted Shares are vested at the date he or she
ceased to be a director or has vested pursuant to this Section 7(a) within two
months after the date he or she ceased to be a director. Restricted Shares
that will, at the time the Participant ceases to be a director, remain subject
to restriction shall be forfeited and reacquired by the Company. Except to the
extent restricted under this Section 7(a), a Participant granted Restricted
Shares shall have all of the rights of a shareholder including, without
limitation, the right to vote Restricted Shares and the right to receive
dividends thereon (as described below).

     (b)     Certificates for Shares. Restricted Shares granted under the Plan may
be evidenced in such manner as the Board shall determine. If certificates
representing Restricted Shares are registered in the name of the Participant,
such certificates shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Shares, the Company
may retain physical possession of the certificate, and the Participant shall
have delivered a stock power to the Company, endorsed in blank, relating to the
Restricted Shares.

     (c)     Dividends and Distributions. Dividends paid on Restricted Shares
shall be either paid at the dividend payment date in the form the dividends are
paid to other shareholders, in cash, or in unrestricted Shares having a Fair
Market Value equal to the amount of such dividends, or the payment of such
dividends shall be deferred and/or the amount or value thereof automatically
reinvested in additional Restricted Shares or other investment vehicles, as the
Board shall determine or permit the Participant to elect. Shares distributed
in connection with a Share split or Share dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Shares with respect to which
such Shares or other property are distributed.

     8.     Receipt of Shares or Deferred Shares In Lieu of Fees. Each director of
the Company may elect to be paid fees, in his or her capacity as a director
(including the Annual Award Amount, annual retainer fees for service on the
Board, fees for service on a Board committee, fees for service as chairman of a
Board committee, and any other fees paid to directors) in the form of Shares or
Deferred Shares in lieu of receipt of such fees, if such director is eligible
to do so under Section 5 at the date any such fee is otherwise payable. If so
elected,

4

 

payment of fees in the form of Shares or Deferred Shares shall be made in
accordance with this Section 8.

     (a)     Elections. Each director who elects to be paid fees for a given
calendar year in the form of Shares or to defer such payment of fees in the
form of Deferred Shares for such calendar year must file an irrevocable written
election with the Secretary of the Company no later than December 31 of the
year preceding such calendar year; provided, however, that any newly elected or
appointed director may file an election for any year not later than 30 days
after the date such person first became a director, and a director may file an
election for the year in which the Plan became effective not later than 30 days
after the date of effectiveness (in either case, with respect to the fees not
earned as of the date of such election). An election by a director shall be
deemed to be continuing and therefore applicable to subsequent Plan years
unless the director revokes or changes such election by filing a new election
form by the due date for such form specified in this Section 8(a). The
election must specify the following:

	 	 	          (i)     A percentage of fees to be received in the form of Shares or
deferred in the form of Deferred Shares under the Plan; and
	 
	 	 	          (ii)     In the case of a deferral, the period or periods during which
settlement of Deferred Shares will be deferred (subject to such
limitations as may be specified by counsel to the Company).

     (b)     Payment of Fees in the Form of Shares. At any date on which fees are
payable to a Participant who has elected to receive such fees in the form of
Shares, the Company will issue to such Participant, or to a designated third
party for the account of such Participant, a number of Shares having an
aggregate Fair Market Value at that date equal to the fees, or as nearly as
possible equal to the fees (but in no event greater than the fees), that would
have been payable at such date but for the Participant’s election to receive
Shares in lieu thereof. If the Shares are to be credited to an account
maintained by the Participant and to the extent reasonably practicable without
requiring the actual issuance of fractional Shares, the Company shall cause
fractional Shares to be credited to the Participant’s account. If fractional
Shares are not so credited, any part of the Participant’s fees not paid in the
form of whole Shares will be payable in cash to the Participant (either paid
separately or included in a subsequent payment of fees, including a subsequent
payment of fees subject to an election under this Section 8).

     (c)     Deferral of Fees in the Form of Deferred Shares. The Company will
establish a deferral account for each Participant who elects to defer fees in
the form of Deferred Shares under this Section 8. At any date on which fees
are payable to a Participant who has elected to defer fees in the form of
Deferred Shares, the Company will credit such Participant’s deferral account
with a number of Deferred Shares equal to the number of Shares having an
aggregate Fair Market Value at that date equal to the fees that otherwise would
have been payable at such date but for the Participant’s election to defer
receipt of such fees in the form of Deferred Shares. The amount of Deferred
Shares so credited shall include fractional Shares calculated to at least three
decimal places.

     (d)     Crediting of Dividend Equivalents. Whenever dividends are paid or
distributions are made with respect to Shares, a Participant to whom Deferred
Shares are then credited in a deferral account shall be entitled to receive, as
dividend equivalents, an amount equal in value to the amount of the dividend
paid or property distributed on a single Share multiplied by the number of
Deferred Shares (including any fractional Share) credited to his or her
deferral account as of the record date for such dividend or distribution. Such
dividend equivalents shall be credited to the Participant’s deferral account as
a number of Deferred Shares determined by dividing the aggregate value of such
dividend equivalents by the Fair Market Value of a Share at the payment date of
the dividend or distribution.

5

 

     (e)     Settlement of Deferred Shares. The Company will settle the
Participant’s deferral account by delivering to the Participant (or his or her
beneficiary) a number of Shares equal to the number of whole Deferred Shares
then credited to his or her deferral account (or a specified portion in the
event of any partial settlement), together with cash in lieu of any fractional
share remaining at a time when less than one whole Deferred Share is credited
to such deferral account. Such settlement shall be made at the time or times
specified in the Participant’s election filed in accordance with Section 8(a);
provided, however, that a Participant may further defer settlement of Deferred
Shares if counsel to the Company determines that such further deferral likely
would be effective under applicable federal income tax laws and regulations.

     (f)     Unforeseen Emergency. Notwithstanding the foregoing provisions of this
Section 8, a Participant may receive any amounts deferred by the Participant in
the event of an “Unforeseeable Emergency.” For these purposes, an
“Unforeseeable Emergency,” as determined by the Board in its sole discretion,
is a severe financial hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or “dependent,” as defined in
Section 152(a) of the Code, of the Participant, loss of the Participant’s
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant. The circumstances that will constitute an Unforeseeable Emergency
will depend upon the facts of each case, but, in any case, payment may not be
made to the extent that such hardship is or may be relieved:

	 	(i)    through reimbursement or compensation by insurance or otherwise,
	 
	 	(ii)   by liquidation of the Participant’s assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship, or
	 
	 	(iii)  by future cessation of the making of additional deferrals.

     Without limitation, the need to send a Participant’s child to college or
the desire to purchase a home shall not constitute an Unforeseeable Emergency.
Distributions of amounts because of an Unforeseeable Emergency shall be
permitted to the extent reasonably needed to satisfy the emergency need.

     (g)     Nonforfeitability. The interest of each Participant in any fees paid
in the form of Shares or Deferred Shares (and any deferral account relating
thereto) at all times will be nonforfeitable.

     9.      Adjustment Provisions.

     (a)     Corporate Transactions and Events. In the event any recapitalization,
reorganization, merger, consolidation, spin-off, combination, repurchase,
exchange of Shares or other securities of the Company, share split or reverse
split, extraordinary dividend (whether in the form of cash, Shares, or other
property), liquidation, dissolution, or other similar corporate transaction or
event affects the Shares such that an adjustment is appropriate in order to
prevent dilution or enlargement of each Participant’s rights under the Plan
(which would not include a transaction in which public stockholders retain no
interest in the surviving company), then an adjustment shall be made, in a
manner that is proportionate to the change to the Shares and otherwise
equitable, in (i) the number and kind of Shares remaining reserved and
available for issuance under Section 3, (ii) the number and kind of Shares to
be subject to each automatic grant of an Option under Section 6, (iii) the
number and kind of Shares issuable upon exercise of outstanding Options, and/or
the exercise price per Share thereof (provided that no fractional Shares will
be issued upon exercise of any Option), (iv) the number and kind of Shares to
be subject to each automatic grant of Restricted Shares under Section 7, (v)
the kind of Shares to be issued in lieu of fees under Section 8 and (vi) the
number and kind of Shares to be issued upon

6

 

settlement of Deferred Shares under Section 8. The foregoing
notwithstanding, no adjustment may be made hereunder except as will be
necessary to maintain the proportionate interest of the Participant under the
Plan and to preserve, without exceeding, the value of outstanding Options and
Restricted Shares and potential grants of Options and Restricted Shares and the
value of outstanding Deferred Shares.

     (b)     Insufficient Number of Shares. If at any date an insufficient number
of Shares are available under the Plan for the automatic grant of Options or
Restricted Shares or the receipt of fees in the form of Shares or deferral of
fees in the form of Deferred Shares at that date, Options and Restricted Shares
will first be automatically granted proportionately to each eligible director,
to the extent Shares are then available (provided that no fractional Shares
will be issued with respect to such Options or Restricted Shares) and otherwise
as provided under Section 6 and Section 7, and then, if any Shares remain
available, fees shall be paid in the form of Shares or deferred in the form of
Deferred Shares proportionately among directors then eligible to participate to
the extent Shares are then available and otherwise as provided under Section 8.

     10.     Interpretation and Other Rules. The Board may make such rules and
regulations and establish such procedures for the administration of the Plan as
it deems appropriate. Without limiting the generality of the foregoing, the
Board may (i) interpret the Plan and any agreements under Section 12(a), with
such interpretations to be conclusive and binding on all persons and otherwise
accorded the maximum deference permitted by law, provided, that the Board’s
interpretation shall not be entitled to deference on and after a Change in
Control except to the extent that such interpretations are made exclusively by
members of the Board who are individuals who served as Board members before the
Change in Control; and (ii) take any other actions and make any other
determinations or decisions that it deems necessary or appropriate in
connection with the Plan or the administration or interpretation thereof. In
the event of any dispute or disagreement as to the interpretation of the Plan
or of any rule, regulation or procedure, or as to any question, right or
obligation arising from or related to the Plan, the decision of the Board shall
be final and binding upon all persons. Unless otherwise expressly provided
hereunder, the Board, with respect to any grant of Restricted Shares or an
Option, may exercise its discretion hereunder at the time of the grant or
thereafter.

     11.     Changes to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or authority to grant Restricted Shares or
Options or pay fees in the form of Shares or Deferred Shares under the Plan
without the consent of shareholders or Participants, except that any amendment
or alteration will be subject to the approval of the Company’s shareholders at
or before the next annual meeting of shareholders for which the record date is
after the date of such Board action if such shareholder approval is required by
any applicable federal or state law or regulation or the rules of any stock
exchange or automated quotation system as then in effect, and the Board may
otherwise determine to submit other such amendments or alterations to
shareholders for approval; provided, however, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant with respect to any previously granted Option or any previous
payment of fees in the form of Shares or Deferred Shares.

     12.     General Provisions.

     (a)     Agreements. Options, Restricted Shares, Deferred Shares, and any
other right or obligation under the Plan may be evidenced by agreements or
other documents executed by the Company and the Participant incorporating the
terms and conditions set forth in the Plan, together with such other terms and
conditions not inconsistent with the Plan, as the Board may from time to time
approve.

7

 

     (b)     Compliance with Laws and Obligations. The Company will not be
obligated to issue or deliver Shares in connection with any Option or award of
Restricted Shares, in payment of any directors’ fees, or in settlement of
Deferred Shares in a transaction subject to the registration requirements of
the Securities Act of 1933, as amended, or any other federal or state
securities law, any requirement under any listing agreement between the Company
and any stock exchange or automated quotation system, or any other law,
regulation, or contractual obligation of the Company, until the Company is
satisfied that such laws, regulations, and other obligations of the Company
have been complied with in full. Certificates representing Shares issued under
the Plan will be subject to such stop-transfer orders and other restrictions as
may be applicable under such laws, regulations, and other obligations of the
Company, including any requirement that a legend or legends be placed thereon.

     (c)     Compliance. The obligation of the Company to provide Shares under the
Plan shall be subject to all applicable laws, rules and regulations, including
all applicable federal and state securities laws, and the obtaining of all such
approvals by governmental agencies as may be deemed necessary or appropriate by
the Board. The Board may make such changes to the Plan as may be necessary or
appropriate to comply with the rules and regulations of any government
authority or to obtain tax benefits applicable to rights under the Plan.
Notwithstanding any other provision of the Plan, the Company shall not be
required to take or permit any action under the Plan or any agreement under
Section 12(a) which, in the good-faith determination of the Company, would
result in a material risk of a violation by the Company of Section 13(k) of the
Exchange Act.

     (d)     Limitations on Transferability. Options, Restricted Shares, Deferred
Shares, and any other right under the Plan will not be transferable by a
Participant except by will or the laws of descent and distribution (or to a
designated beneficiary in the event of a Participant’s death), and will be
exercisable during the lifetime of the Participant only by such Participant or
his or her guardian or legal representative; provided, however, that Options,
Restricted Shares, and Deferred Shares (and rights relating thereto) may be
transferred to one or more trusts or other beneficiaries during the lifetime of
the Participant for purposes of the Participant’s estate planning or at the
Participant’s death, and such transferees may exercise rights thereunder in
accordance with the terms thereof, but only if and to the extent then permitted
under Rule 16b-3 and consistent with the registration of the offer and sale of
Shares related thereto on Form S-8, Form S-3, or such other registration form
of the Securities and Exchange Commission as may then be filed and effective
with respect to the Plan. The Company may rely upon the beneficiary
designation last filed in accordance with this Section 12(d). Options,
Restricted Shares, Deferred Shares, and other rights under the Plan may not be
pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be
subject to the claims of creditors of any Participant.

     (e)     No Fiduciary Relationship. Nothing contained in the Plan and no action
taken pursuant to the provisions of the Plan, shall create or shall be
construed to create a trust of any kind, or a fiduciary relationship between
the Company or its subsidiaries, or their officers or the Board, on the one
hand, and the Participant, the Company, its subsidiaries or any other person or
entity, on the other.

     (f)     Notices. All notices under the Plan shall be in writing, and if to
the Company, shall be delivered to the Board or mailed to its principal office,
addressed to the attention of the Board; and if to the Participant, shall be
delivered personally, sent by facsimile transmission or mailed to the
Participant at the address appearing in the records of the Company. Such
addresses may be changed at any time by written notice to the other party given
in accordance with this Section 12(f).

8

 

     (g)     Compliance with Rule 16b-3. It is the intent of the Company that this
Plan complies in all respects with applicable provisions of Rule 16b-3.
Accordingly, if any provision of this Plan or any agreement hereunder does not
comply with the requirements of Rule 16b-3 as then applicable to a transaction
by a Participant, such provision will be construed or deemed amended to the
extent necessary, to conform to the applicable requirements with respect to
such Participant.

     (h)     No Right To Continue as a Director. Nothing contained in the Plan or
any agreement hereunder will confer upon any Participant any right to continue
to serve as a director of the Company.

     (i)     No Shareholder Rights Conferred. Except as otherwise provided in
Section 6(a), nothing contained in the Plan or any agreement hereunder will
confer upon any Participant (or any person or entity claiming rights by or
through a Participant) any rights of a shareholder of the Company unless and
until Shares are in fact issued to such Participant (or person) or, in the case
of an Option, such Option is validly exercised in accordance with Section 6.

     (j)     Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor any submission thereof to the shareholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other compensatory arrangements for directors as it may
deem desirable.

     (k)     Limitation of Liability. Each member of the Board shall be entitled
to, in good faith, rely or act upon any report or other information furnished
to him by any officer or other employee of the Company or any subsidiary, the
Company’s independent certified public accountants, or any executive
compensation consultant, legal counsel, or other professional retained by the
Company to assist in the administration of the Plan. No member of the Board,
nor any officer or employee of the Company acting on behalf of the Board, shall
be personally liable for any action, determination, or interpretation taken or
made in good faith with respect to the Plan, and all members of the Board and
any officer or employee of the Company acting on behalf of the Board or members
thereof shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination, or
interpretation.

     (l)       Captions. The use of captions in this Plan is for convenience. The
captions are not intended to provide substantive rights.

     (m)     Governing Law. The validity, construction, and effect of the Plan and
any agreement hereunder will be determined in accordance with the Delaware
Limited Liability Company Act and other laws (including those governing
contracts) of the State of Delaware, without giving effect to principles of
conflicts of laws, and applicable federal law.

     13.     Effective Date and Plan Termination. The Plan will be effective if,
and at such time as, the Company’s 2004 Share Incentive Plan has become
effective, subject to its approval by the shareholders of the Company. Unless
earlier terminated by action of the Board, the Plan will remain in effect until
such time as no Shares remain available for issuance under the Plan and the
Company and Participants have no further rights or obligations under the Plan.

As adopted by the Board:                     April 9, 2004

9

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