Document:

Exhibit
10.6

 

AMENDMENT
TO SENIOR MANAGEMENT AGREEMENT

 

This AMENDMENT TO SENIOR MANAGEMENT AGREEMENT
is dated as of December 27, 2004 (this “Amendment”), by and among
VeriFone Holdings, Inc., a Delaware corporation (the “Company”),
VeriFone, Inc., a Delaware corporation (the “Employer”) and Douglas G.
Bergeron (the “Executive”).

 

RECITALS

 

WHEREAS, the Company and the Executive are
parties to a Senior Management Agreement dated as of July 1, 2002, as
amended (the “Agreement”);

 

WHEREAS, Employer and Executive have agreed
upon a new base salary for the 2005 calendar year and a new bonus target.

 

NOW, THEREFORE, for good and valuable
consideration, the parties agree as follows:

 

1.                                       Definitions.  Any capitalized term used but not defined
herein shall have the meaning set forth in the Agreement.

 

2.                                       Base Salary
and Bonus.  For purposes of Section 7(b)
of the Agreement, (i) Executive’s Annual Base Salary for calendar year 2005
shall be $535,000, and (ii) from and after the date of this Amendment, the
annual bonus for which Executive shall be eligible shall be up to 100% of
Executive’s Annual Base Salary.

 

3.                                       Miscellaneous.

 

(a)                                  Survival of Other
Provisions.  Unless specifically
amended herein, all of the other covenants, agreements, representations,
warranties, promises or other terms and conditions of the Agreement shall
remain in full force and effect without any change whatsoever.

 

(b)                                 Entire Agreement.  This Amendment and the Agreement constitutes
the full and entire understanding and agreement of the parties with respect to
the subject matter hereof, and there are no further or other agreements or
undertakings, written or oral, in effect between the parties relating to the
subject matter hereof unless expressly referred to in this Amendment or the
Agreement.

 

(c)                                  Execution in
Counterparts.  This Amendment may be
executed in any number of counterparts and in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same instrument.

 

*                                         *                                         *                                         *

 

 

IN WITNESS WHEREOF, the Parties have signed
this Amendment as of the date set forth in the first paragraph of this
Amendment.

 

	
   

  	
  VERIFONE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Douglas G. Bergeron

  
	
   

  	
  Its:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERIFONE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Douglas G. Bergeron

  
	
   

  	
  Its:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Douglas G. Bergeron

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed and Accepted:

  	
   

  
	
   

  	
   

  
	
  GTCR FUND VII, L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  GTCR Partners VII, L.P.

  	
   

  
	
  Its:

  	
  General Partner

  	
   

  
	
   

  	
   

  
	
  By:

  	
  GTCR Golder Rauner, L.L.C.

  	
   

  
	
  Its:

  	
  General Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Collin E. Roche, its Principal

  	
   

  
	
   

  	
   

  
	
  GTCR CO-INVEST, L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  GTCR Golder Rauner, L.L.C.

  	
   

  
	
  Its:

  	
  General Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Collin E. Roche, its Principal

  	
   

  
											

 

Signature page to Bergeron Salary &

Bonus Amendment

 

2Exhibit
10.7

 

VERIFONE HOLDINGS, INC.

 

2002 SECURITIES PURCHASE PLAN

 

1.                                       Purpose of
Plan.  This 2002 Securities Purchase
Plan (the “Plan”) of VeriFone Holdings, Inc. (the “Company”) is designed to
provide incentives to such present and future employees, directors, consultants
or advisers of the Company or its Subsidiaries, as may be selected in the sole
discretion of the Committee (“Participants”), through the sale of Common Stock
to Participants.  Only those Participants
who are employees of the Company or its Subsidiaries shall be eligible to
participate in this Plan.  This Plan is
intended to qualify under Securities and Exchange Commission Rule 701.

 

2.                                       Definitions.  Certain terms used in this Plan have the
meanings set forth below:

 

“Board” means the Board of Directors
of the Company.

 

“Committee” shall mean the committee
of the Board which may be designated by the Board to administer the Plan.  The Committee shall be composed of two or
more directors as appointed from time to time to serve by the Board.

 

“Common Stock” means the Company’s
Common Stock, par value $.01 per share.

 

“Subsidiary” means any corporation of
which shares of stock having a majority of the general voting power in electing
the board of directors are, at the time as of which any determination is being
made, owned by the Company either directly or through its Subsidiaries.

 

3.                                       Sale of
Common Stock. The Committee shall have the power and authority to sell to
any Participant any Common Stock at any time prior to the termination of this Plan
in such quantity, at such price, on such terms and subject to such conditions
that are consistent with this Plan and established by the Committee. Common
Stock sold under this Plan shall be subject to such terms and evidenced by
agreements as shall be determined from time to time by the Committee.

 

4.                                       Administration
of the Plan.  The Plan shall be
administered by the Committee; provided that if for any reason the Committee
shall not have been appointed by the Board, all authority and duties of the
Committee under the Plan shall be vested in and exercised by the Board.  The Committee shall have the power and
authority to prescribe, amend and rescind rules and procedures governing the
administration of this Plan, including, but not limited to the full power and
authority (i) to interpret the terms of this Plan and (ii) to determine the
rights of any person under this Plan, or the meaning of requirements imposed by
the terms of this Plan or any rule or procedure established by the Committee or
the Board. Each action of the Committee shall be binding on all persons.

 

1

 

5.                                       Taxes.  The Company shall be entitled, if necessary
or desirable, to withhold (or secure payment from the Plan participant in lieu
of withholding) the amount of any withholding or other tax due from the Company
with respect to any amount payable and/or shares issuable under this Plan, and
the Company may defer such payment or issuance unless indemnified to its
satisfaction.

 

6.                                       Termination
and Amendment.  The Committee at any
time may suspend or terminate this Plan and make such additions or amendments
as it deems advisable under this Plan.

 

*   *  
*   *   *

 

2Exhibit 10.8

 

VERIFONE
HOLDINGS, INC.

NEW
FOUNDERS’ STOCK OPTION PLAN

 

ARTICLE I

 

Purpose
of Plan

 

The New Founders’ Stock Option Plan (the “Plan”)
of VeriFone Holdings, Inc., a Delaware corporation (the “Company”),
adopted by the Board of Directors of the Company on April 29, 2003 (the “Approval
Date”), for executives and other key employees of the Company, is intended
to advance the best interests of the Company and its Subsidiaries by providing
those persons who have a substantial responsibility for its management and
growth with additional incentives by allowing them to acquire an ownership
interest in the Company and thereby encouraging them to remain in its
employ.  The availability and offering of
stock options under the Plan also increases the Company’s ability to attract
and retain individuals of exceptional managerial talent upon whom, in large
measure, the sustained progress, growth, and profitability of the Company
depends.  By adopting the plan, the Board
wishes to create, during the ten-year term of the Plan, an equity-oriented
compensation plan for and to reward the founding and future employees who will
contribute to the growth of the Company. 
The stock options granted pursuant to this Plan will enable those
employees and others to share in the resulting increase in the equity value of
the Company.  This Plan shall terminate
on the tenth anniversary of the Approval Date; no Option shall be granted,
however, after the fifth anniversary of the Approval Date.

 

All options granted under the Plan and the issuance
of any Shares upon the exercise of options are intended to qualify for an
exemption (the “Exemptions”) from (i) the registration requirements
under the Securities Act of 1933, as amended (the “Act”), pursuant to
Rule 701 of the Act, and (ii) the qualification requirements under the
California Corporate Securities Law of 1968, as amended (the “Blue Sky Law”),
pursuant to Section 25102(o) of the Blue Sky Law.  In the event that any provision of the Plan
would cause any option granted under the Plan to not qualify for the
Exemptions, the Plan shall be deemed automatically amended to the extent
necessary to cause all Options (as defined in Article IV below)
granted under the Plan to qualify for the Exemptions.

 

ARTICLE II

 

Definitions

 

For purposes of the Plan, except where the context
clearly indicates otherwise, the following terms shall have the meanings set
forth below:

 

“Affiliate” shall mean, with respect to any
Person, any other Person, which, directly or indirectly, controls, is
controlled by, or is under common control with such Person.

 

“Board” shall mean the Board of Directors of
the Company.

 

“Cause” shall mean (i) the commission of a
felony or a crime involving moral turpitude or the commission of any other act
or omission involving material dishonesty, material 

 

 

disloyalty,
or fraud with respect to the Company or any of its Subsidiaries or any of their
customers or suppliers, (ii) conduct tending to bring the Company or any of its
Subsidiaries into public disgrace or disrepute, (iii) a Participant’s failure
(other than by reason of Disability) to carry out effectively his or her duties
and obligations to the Company or to participate effectively and actively in
the management of the Company, as determined in the reasonable judgment of
senior management of the Company or the Board, (iv) gross negligence or willful
misconduct with respect to the Company, (v) any material breach of the
agreement pursuant to which the Participant’s Options were granted, or (vi) any
material breach of the Participant’s employment agreement, if any, with the
Company or any Subsidiary.

 

“Code” shall mean the Internal Revenue Code
of 1986, as amended, and any successor statute.

 

“Committee” shall mean the committee of the
Board that may be designated by the Board to administer the Plan.

 

“Common Shares” shall mean the Company’s
non-voting common stock, par value $.01 per share, and any other shares into
which such stock may be changed or converted by reason of a recapitalization,
reorganization, merger, consolidation, or any other change in the corporate
structure or capital stock of the Company.

 

“Company” shall mean VeriFone Holdings, Inc.,
a Delaware corporation and (except to the extent the context requires
otherwise) any subsidiary corporation of VeriFone Holdings, Inc. as such term
is defined in Section 424(f) of the Code.

 

“Date of Termination” shall mean, with
respect to any Participant, (i) if such Participant’s employment is terminated
by the Company, the effective date of termination as specified in the written
notice from the Company to such Participant terminating your employment, (ii)
if such Participant terminates his or her employment, the date the Company
receives notice from such Participant terminating his or her employment or
(iii) if such Participant’s employment is terminated other than pursuant to (i)
or (ii), then the date determined in good faith by the Board.

 

“Disability” shall mean the inability, due to
documented illness, accident, injury, physical or mental incapacity, or other
disability, of any Participant to carry out effectively his or her duties and
obligations to the Company or to participate effectively and actively in the
management of the Company for a period of at least 90 consecutive days or for
shorter periods aggregating at least 120 days (whether or not consecutive)
during any twelve-month period, as determined in the reasonable judgment of the
Board.

 

“Expiration Date” shall have the meaning set
forth in Article VI.

 

“Fair Market Value” of the Common Shares
shall mean the fair market value of such stock, taking into account all
relevant factors determinative of value, as solely determined by the Board; provided,
however, that in the case of a Sale of the Company, the Fair Market Value of
the Common Shares shall be the price per Common Share in such transaction, as
solely determined by the Board.

 

“Incentive Stock Option” shall have the
meaning set forth in Article V.

 

2

 

“Investors” shall mean GTCR Fund VII, L.P., a
Delaware limited partnership, and any other investment fund managed by GTCR
Golder Rauner, L.L.C.

 

“Nonqualified Stock Option” shall have the
meaning set forth in Article V.

 

“Option Agreement” shall have the meaning set
forth in Article VI.

 

“Options” shall have the meaning set forth in
Article IV.

 

“Participant” shall mean any executive or
other key employee of the Company (including any employee located outside of
the United States, but not including the Chief Executive Officer and the Chief
Financial Officer) who has been selected by the Board to participate in the
Plan.

 

“Person” means an individual, a partnership,
a corporation, a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization, and a governmental
entity or any department, agency, or political subdivision thereof.

 

“Plan” shall have the meaning set forth in Article I.

 

“Plan Year” shall mean any 12-month period
beginning on the Approval Date or any anniversary thereof.

 

“Public Offering” shall mean an initial
public offering registered under the Act of equity securities of the Company,
as approved by the Board and GTCR.

 

“Sale of the Company” means any transaction
or series of transactions as a consequence of which any Person or group of related
Persons (other than the Investors and their Affiliates) in the aggregate
acquire(s) (i) capital stock of the Company possessing the voting power (other
than voting rights accruing only in the event of a default, breach or event of
noncompliance) to elect a majority of the Company’s board of directors (whether
by merger, consolidation, reorganization, combination, sale or transfer of the
Company’s capital stock, shareholder or voting agreement, proxy, power of
attorney or otherwise) or (ii) all or substantially all of the Company’s assets
determined on a consolidated basis; provided that a Public Offering
shall not constitute a Sale of the Company.

 

“Shares” shall have the meaning set forth in Article IV.

 

“Subsidiary” means, with respect to any Person,
any corporation, limited liability company, partnership, association, or
business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers, or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a limited liability company, partnership, association,
or other business entity (other than a corporation), a majority of partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that Person
or a combination thereof.  For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association, or other
business entity (other than a 

 

3

 

corporation)
if such Person or Persons shall be allocated a majority of limited liability
company, partnership, association, or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association, or other business entity.  For purposes hereof, references to a “Subsidiary”
of any Person shall be given effect only at such times that such Person has one
or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary”
refers to a Subsidiary of the Company.

 

ARTICLE III

 

Administration

 

The Plan shall be administered by the Committee; provided
that if for any reason the Committee shall not have been appointed by the
Board, all authority and duties of the Committee shall be vested in and
exercised by the Board.  Subject to the
limitations of the Plan, the Committee shall have the sole and complete
authority to (i) select Participants, (ii) grant Options (as defined in Article IV
below) to Participants in such forms and amounts as it shall determine, (iii)
impose such limitations, restrictions, and conditions upon such Options as it
shall deem appropriate, (iv) interpret the Plan and adopt, amend, and rescind
administrative guidelines and other rules and regulations relating to the Plan,
(v) correct any defect or omission or reconcile any inconsistency in the Plan
or in any Option granted hereunder, and (vi) make all other determinations and
take all other actions necessary or advisable for the implementation and
administration of the Plan, subject to such limitations as may be imposed by
the Code on the grant of Incentive Stock Options or other applicable law.  The Committee’s determinations on matters
within its authority shall be conclusive and binding upon the Participants, the
Company, and all other Persons.  The
validity, construction, and effect of the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with applicable federal
and state laws and rules and regulations promulgated pursuant thereto.  No member of the Committee and no officer of
the Company shall be liable for any action taken or omitted to be taken by such
member, by any other member of the Committee, or by any officer of the Company
in connection with the performance of duties under the Plan, except for such
person’s own willful misconduct or as expressly provided by statute.  All expenses associated with the
administration of the Plan shall be borne by the Company.  The Committee may, as approved by the Board
and to the extent permissible by law, delegate any of its authority hereunder
to such persons as it deems appropriate.

 

ARTICLE IV

 

Limitation
on Aggregate Shares

 

The number of Common Shares with respect to which
options may be granted under the Plan (the “Options”) and which may be
issued upon the exercise thereof shall not exceed, in the aggregate, 1,000,000
Common Shares (the “Shares”); provided that the type and the
aggregate number of shares which may be subject to Options shall be subject to
adjustment in accordance with the provisions of Section 6.9 below,
and further  provided that to the extent any Options expire
unexercised or are canceled, terminated, or forfeited in any manner without the
issuance of Common Shares thereunder, such shares shall again be available
under the Plan; and provided 

 

4

 

further that
at no time shall the total number of shares issuable upon exercise of all
outstanding options for the purchase of shares of the Company’s capital stock
and the total number of shares provided under any stock bonus or similar plan
of the Company (including, without limitation, Shares issuable pursuant to the
Plan) exceed a number of shares equal to 30% of the then outstanding shares of
the Company (as calculated in accordance with Rule 260.140.45 of the Blue Sky
Law).  The Shares available under the
Plan may be either authorized and unissued shares, treasury shares, or a
combination thereof, as the Committee shall determine.

 

ARTICLE V

 

Awards

 

5.1                                 Options.  The Committee may grant
Options to Participants in accordance with this Article V.

 

5.2                                 Form of Option. 
Options granted under this Plan shall be presumed to be nonqualified
stock options (the “Nonqualified Stock Options”) and are not intended to
be incentive stock options within the meaning of Section 422A of the Code
or any successor provision  (“Incentive
Stock Options”) unless clearly indicated by the Committee in the Option
Agreement.  The Committee may grant
Incentive Stock Options only to eligible employees of the Company or its
Subsidiaries (as defined in Section 424(f) of the Code).  It is the Company’s intent that Nonqualified
Stock Options granted under the Plan not be classified as Incentive Stock
Options, that Incentive Stock Options be consistent with and contain or be
deemed to contain all provisions required under Section 422 of the Code
and any successor thereto, and that any ambiguities in construction be
interpreted in order to effectuate such intent. 
If an Incentive Stock Option granted under the Plan does not qualify as
such for any reason, then to the extent of such nonqualification, the stock
option represented thereby shall be regarded as a Nonqualified Stock Option
duly granted under the Plan, provided that such stock option otherwise
meets the Plan’s requirements for Nonqualified Stock Options.

 

5.3                                 Exercisability. 
Options granted hereunder shall be exercisable at such times and under
such circumstances as determined by the Committee and as shall be permissible
under the terms of the Plan, and as specified in the Option Agreement; provided
that, in the case of employees of the Company who are not officers, directors
or consultants to the Company, the right to exercise shall be at the rate at
least equal to twenty percent (20%) per year over five (5) years from the date
of grant (subject to reasonable conditions).

 

5.4                                 Payment of Exercise Price. 
Options shall be exercised in whole or in part by written notice to the
Company (to the attention of the Company’s Secretary) accompanied by payment in
full of the option exercise price. 
Payment of the option exercise price shall be made (i) in cash
(including check, bank draft, or money order), (ii) by delivery of outstanding
shares of Common Stock that have been owned by the Participant for a minimum of
six months and one day with a Fair Market Value on the date of exercise equal
to the aggregate exercise price payable with respect to the options’ exercise,
(iii) through a “same day sale” commitment from a Participant and a
broker-dealer that is a member of the National Association of Securities
Dealers, Inc. specified by the Committee (the “NASD Dealer”) whereby the
Participant irrevocably elects to exercise the Option and to sell a portion of
the Option Shares so purchased 

 

5

 

to
pay for the Option Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Option Shares to forward the Option Price directly to the
Company, (iv) through a “margin” commitment from a Participant and the NASD
Dealer reasonably acceptable to the Committee whereby the Participant
irrevocably elects to exercise such Participant’s Option and to pledge the
Option Shares so purchased to the NASD Dealer in a margin account as security
for a loan from the NASD Dealer in the amount of the Option Price, and whereby
the NASD Dealer irrevocably commits upon receipt of the Option Shares to
forward the Option Price to the Company, or (v) by any combination of the
foregoing.  The methods of payment set
forth in clauses (ii) through (iv) above shall apply only if there is a public
market for the Common Shares.

 

5.5                                 Terms of Options. The term during which each Option may be
exercised shall be determined by the Committee, but, except as otherwise
provided herein, in no event shall an option be exercisable in whole or in
part, in the case of a Nonqualified Stock Option or an Incentive Stock Option
(other than as described below), more than ten (10) years from the date it is
granted or, in the case of an Incentive Stock Option granted to an employee who
at the time of the grant owns more than 10% of the total combined voting power
of all classes of stock of the Company or any of its Subsidiaries, if required
by the Code, more than five (5) years from the date it is granted.  All rights to purchase Shares pursuant to an
Option shall, unless sooner terminated, expire at the date designated by the
Committee.  The Shares constituting each
installment may be purchased in whole or in part at any time after such
installment becomes exercisable, subject to such minimum exercise requirements
as may be designated by the Committee. 
Unless otherwise provided herein or in the terms of the related grant, a
Participant may exercise an Option only if he or she is, and has continuously
since the date the Option was granted, been a director, officer, or employee of
or performed other services for the Company or a Subsidiary.  Prior to the exercise of an Option and
delivery of the Shares represented thereby, the Participant shall have no
rights as a stockholder with respect to any Shares covered by such outstanding
Option (including any dividend or voting rights).

 

5.6                                 Limitations on Grants»

 

(a)                                  The maximum number of Shares with respect
to which the Committee may grant Options during the first Plan Year shall be
75% of the Shares.  The maximum number of
Shares with respect to which the Committee may grant Options during any
subsequent Plan Year shall be 15% of the Shares; provided, however, that
the Committee may not grant any Options after the fifth anniversary of the
Approval Date.

 

(b)                                 The Committee may not grant an Option or
Options to any Participant that would permit such Participant to acquire, in
the aggregate, 35,000 or more Shares without the prior approval of a majority
of the members of the Board.

 

(c)                                  The Committee shall not grant any Option
if, as a result of such grant or (assuming that all other Options have been
fully exercised) the exercise of such Option, the Company would be required to
register any of its equity securities under the Act.

 

6

 

ARTICLE VI

 

General
Provisions

 

6.1                                 Conditions and Limitations on Exercise. 
Except as otherwise provided in this Plan, Options may be made
exercisable in one or more installments, upon the happening of certain events,
upon the passage of a specified period of time, upon the fulfillment of certain
conditions, or upon the achievement by the Company of certain performance
goals, as the Committee shall decide in each case when the Options are granted.

 

6.2                                 Sale of the Company.  In
the event of a Sale of the Company, the Committee may (i) terminate without
payment of any kind any Options that have an exercise price in excess of the
Fair Market Value per Common Share (measured as of the date of such Sale of the
Company); (ii) terminate any vested Options for a payment in such form as the
Committee may determine in an amount equal to the excess of the Fair Market
Value per Common Share (measured as of the date of such Sale of the Company)
over such Option’s exercise price multiplied by the number of Options to be
terminated; or (iii) terminate any unvested Options.

 

6.3                                 Organic Change. 
Except as otherwise provided in this Plan, any recapitalization,
reorganization, reclassification, consolidation, merger, sale of all or
substantially all of the Company’s assets, or other transaction which is
effected in such a way that holders of Common Shares are entitled to receive
(either directly or upon subsequent liquidation) stock, securities, or assets
with respect to or in exchange for Common Shares is referred to herein as an “Organic
Change.”  Except as otherwise
provided in this Plan, and unless such Options are terminated in accordance
with Section 6.2 above, after the consummation of any Organic
Change, each Participant holding Options shall thereafter have the right to
acquire and receive upon exercise thereof, rather than the Common Shares
immediately theretofore acquirable and receivable upon exercise of such
Participant’s Options, such shares of stock, securities, or assets as may be
issued or payable with respect to or in exchange for the number of Common
Shares immediately theretofore acquirable and receivable upon exercise of such
Participant’s Options had such Organic Change not taken place.  Except as otherwise provided in this Plan, in
any such case, the Company shall make appropriate provision with respect to
such Participant’s rights and interests to insure that the provisions hereof
(including this Section 6.3) shall thereafter be applicable to the
Options (including, in the case of any such Organic Change in which the
successor entity or purchasing entity is other than the Company, an immediate
adjustment of the exercise price to the value for the Common Shares reflected
by the terms of such Organic Change and a corresponding immediate adjustment in
the number of Common Shares acquirable and receivable upon exercise of the
Options, if the value so reflected is less than the Fair Market Value of the
Common Shares in effect immediately before such Organic Change).

 

6.4                                 Written Agreement.  Each
Option granted hereunder to a Participant shall be embodied in a written
agreement (an “Option Agreement”) which shall be signed by the
Participant and by the Chief Executive Officer of the Company for and in the
name and on behalf of the Company and shall be subject to the terms and
conditions of the Plan prescribed in the Option Agreement.

 

7

 

6.5                                 Listing,
Registration, and Compliance with Laws and Regulations.  Options shall be subject to the requirement
that, if at any time the Committee shall determine, in its discretion, that the
listing, registration, or qualification of the Common Shares subject to the
Options upon any securities exchange or under any state or federal securities
or other law or regulation, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition to or in connection
with the granting of the Options or the issuance or purchase of Common Shares
thereunder, then no Options may be granted or exercised, in whole or in part,
unless such listing, registration, qualification, consent, or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee.  The holders of such Options
shall supply the Company with such certificates, representations, and
information as the Company shall request and shall otherwise cooperate with the
Company in obtaining such listing, registration, qualification, consent, or
approval.  In the case of officers and
other Persons subject to Section 16(b) of the Securities Exchange Act of
1934, as amended, the Committee may at any time impose any limitations upon the
exercise of an Option that, in the Committee’s discretion, are necessary or
desirable in order to comply with such Section 16(b) and the rules and
regulations thereunder.  If the Company,
as part of an offering of securities or otherwise, finds it desirable because
of federal or state regulatory requirements to reduce the period during which
any Options may be exercised, then the Committee, may, in its discretion and
without the Participant’s consent, so reduce such period on not less than 15
days written notice to the holders thereof.

 

6.6                                 Nontransferability.  Options may not be transferred other than by
will or the laws of descent and distribution and, during the lifetime of the
Participant, may be exercised only by such Participant (or his legal guardian
or legal representative).  In the event
of the death of a Participant, exercise of Options granted hereunder shall be
made only:

 

(i)                                     by the executor or administrator of the
estate of the deceased Participant or the Person or Persons to whom the
deceased Participant’s rights under the Option shall pass by will or the laws
of descent and distribution; and

 

(ii)                                  to the extent that the deceased Participant
was entitled thereto at the date of his death, unless otherwise provided by the
Committee in such Participant’s Option Agreement.

 

6.7                                 Expiration of Options.

 

(a)                                  Normal Expiration. 
In no event shall any part of any Option be exercisable after the date
of expiration thereof (the “Expiration Date”), as determined by the
Committee pursuant to Section 5.5 above.

 

(b)                                 Early Expiration Upon Termination of
Employment.  Except as otherwise provided by the Committee
in the Option Agreement, any portion of a Participant’s Option that was not
vested and exercisable on the such Participant’s Date of Termination shall
expire and be forfeited as of such date, and any portion of a Participant’s
Option that was vested and exercisable on such Participant’s Date of
Termination shall expire and be forfeited as of such date, except that: (i) if
a Participant’s employment terminates because such Participant dies or becomes
subject to any Disability, such Participant’s Option shall expire six months
after his or 

 

8

 

her Date of Termination,
but in no event after the Expiration Date, (ii) if a Participant’s employment
terminates because such Participant retires (with the approval of the Board),
such Participant’s Option shall expire 30 days after his or her Date of
Termination, but in no event after the Expiration Date, and (iii) if any
Participant is discharged other than for Cause, such Participant’s Option shall
expire 30 days after his or her Date of Termination, but in no event after the
Expiration Date.

 

6.8                                 Withholding of Taxes

 

(a)                                  The Company shall be entitled, if
necessary or desirable, to withhold from any Participant, from any amounts due
and payable by the Company to such Participant (or secure payment from such
Participant in lieu of withholding), the amount of any withholding or other tax
due from the Company with respect to any shares issuable under the Options, and
the Company may defer the exercise of the Options or the issuance of the Shares
thereunder unless such taxes are paid or the Company is indemnified to its
satisfaction.

 

(b)                                 Notwithstanding any provision of this
Plan to the contrary, in connection with the transfer of an Option to a
transferee pursuant to Section 6.6 of the Plan, the grantee shall
remain liable for any withholding taxes required to be withheld upon exercise
of such Option by the transferee.

 

6.9                                 Adjustments.  In the event of a reorganization, recapitalization,
stock dividend, or stock split, combination or other reclassification affecting
the Common Shares, the Committee shall, in order to prevent the dilution or
enlargement of rights under outstanding Options, make such adjustments in the
number and type of shares authorized by the Plan, the number and type of shares
covered by outstanding Options, and the exercise prices specified therein as
may be determined to be appropriate and equitable.

 

6.10                           Rights
of Participants.  Nothing in this
Plan or in any Option Agreement shall interfere with or limit in any way the
right of the Company or a Subsidiary to terminate any Participant’s employment
at any time (with or without cause), nor confer upon any Participant any right
to continue in the employ of the Company or a Subsidiary for any period of time
or to continue his or her present (or any other) rate of compensation, and
except as otherwise provided under this Plan or by the Committee in the Option
Agreement, in the event of any Participant’s termination of employment
(including, but not limited to, the termination by the Company or a Subsidiary
without cause) any portion of such Participant’s Option that was not previously
vested and exercisable shall expire and be forfeited as of the date of such
termination.  No employee shall have a
right to be selected as a Participant or, having been so selected, to be
selected again as a Participant.

 

6.11                           Amendment,
Suspension, and Termination of Plan. 
The Committee may suspend or terminate the Plan or any portion thereof
at any time and may amend it from time to time in such respects as the
Committee may deem advisable; provided that no such amendment shall be
made without stockholder approval to the extent such approval is required by
law, agreement, or the rules of any exchange upon which the Common Shares are
listed, and no such amendment, suspension, or termination shall impair the
rights of Participants under outstanding Options without the consent of the
Participants affected thereby.  No Option
shall be granted or Common 

 

9

 

Shares issued
hereunder after 5 years from the date this Plan is adopted or the date this
Plan is approved by the shareholders, whichever is earlier.

 

6.12                           Amendment,
Modification, and Cancellation of Outstanding Options.  The Committee may amend or modify any Option
in any manner to the extent that the Committee would have had the authority
under the Plan initially to grant such Option; provided that no such
amendment or modification shall impair the rights of any Participant under any
Option in a manner not contemplated hereby without the consent of such
Participant adversely affected thereby. 
With the Participant’s consent or as otherwise contemplated hereby, the
Committee may cancel any Option and issue a new Option to such Participant.

 

6.13                           Shareholder
Approval.  This Plan shall be subject
to approval by the shareholders of the Company within twelve (12) months before
or after this Plan is adopted by the Committee. 
Any Option exercised before shareholder approval is obtained must be
rescinded if shareholder approval is not obtained within twelve (12) months
before or after the Plan is adopted. 
Shares issued upon the exercise of any such Option shall not be counted
in determining whether such approval is obtained.

 

6.14                           Indemnification.  In addition to such other rights of
indemnification as they may have as members of the Committee, the members of
the Committee and any person designated by the Committee to administer the Plan
shall be indemnified by the Company against all costs and expenses reasonably
incurred by them in connection with any action, suit, or proceeding to which
they or any of them may be party by reason of any action taken or failure to
act under or in connection with the Plan or any Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit, or
proceeding; provided that any such Committee member shall be entitled to
the indemnification rights set forth in this Section 6.14 only if
such member has acted in good faith and in a manner that such member reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe that such conduct was unlawful, and further  provided that
upon the institution of any such action, suit, or proceeding a Committee member
shall give the Company written notice thereof and an opportunity, at its own
expense, to handle and defend the same before such Committee member undertakes
to handle and defend it on his or her own behalf.

 

6.15                           Information.  In accordance with Rule 260.140.46 of the
Blue Sky Law, Participants shall receive on an annual basis financial
statements of the Company unless such Participants’ duties in connection with
the Company assure such Participants access to equivalent information.

 

 

Adopted
by the Board of Directors on April 29, 2003 and approved by the
shareholders of the Company on April 29, 2003.

 

*     *     *     *

 

10

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