IPSWICH SAVINGS BANK
1998 STOCK INCENTIVE PLAN
SECTION 1. General Purpose of the Plan; Definitions
The name of the plan is the Ipswich Savings Bank 1998 Stock Incentive
Plan (the "Plan"). The purpose of the Plan is to encourage and enable the
officers, directors and employees of Ipswich Savings Bank (the "Company") and
its wholly owned subsidiaries ("Subsidiaries") upon whose judgment, initiative
and efforts the Company largely depends for the successful conduct of its
business to acquire a proprietary interest in the Company. It is anticipated
that providing such persons with a direct stake in the Company's welfare will
assure a closer identification of their interests with those of the Company and
its shareholders, thereby stimulating their efforts on the Company's behalf and
strengthening their desire to remain with the Company. To reflect the formation
of Ipswich Bancshares, Inc. (the "Holding Company") as the holding company of
the Company on July 1, 1999, the term "Stock" shall mean the common stock, par
value $.10 per share, of the Holding Company and references to the "Company"
shall include the Holding Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards", except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Conditioned Stock Awards, Unrestricted Stock Awards, Performance Share
Awards and Stock Appreciation Rights.
"Board" means the Board of Directors of the Company.
"Change of Control" shall have the meaning set forth in Section 15.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Conditioned Stock Award" means an Award granted pursuant to Section 6.
"Disability" means disability as set forth in Section 22(e)(3) of the
Code.
"Effective Date" shall have the meaning set forth in Section 17.
"Eligible Person" shall have the meaning set forth in Section 4.
"Fair Market Value" on any given date means the closing bid price per
share of the Stock on such date as reported by the Nasdaq Stock Market or
another nationally recognized stock exchange, or, if the Stock is not listed on
such an exchange, the fair market value of the
Stock as determined by the Board.
"Incentive Stock Option" means any Stock Option designated and qualified
as an "incentive stock option" as defined in Section 422 of the Code.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Normal Retirement" means retirement from active employment with, or from
the Board of Directors of, the Company and its Subsidiaries in accordance with
the retirement policies of the Company and its Subsidiaries then in effect.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Performance Share Award" means an Award granted pursuant to Section 8.
"Stock" means the Common Stock, $.10 par value per share, of the Company,
subject to adjustments pursuant to Section 3.
"Stock Appreciation Right" means an Award granted pursuant to Section 9.
"Unrestricted Stock Award" means an Award granted pursuant to Section 7.
SECTION 2. Administration of Plan
(a) The Plan shall be administered by the full Board of Directors of the
Company. The Board shall have the power and authority to grant Awards consistent
with the terms of the Plan, including the power and authority:
(i) to select the directors, officers and other employees of the
Company and its Subsidiaries to whom Awards may from time to time be
granted;
(ii) to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options, Non-Qualified Stock Options, Conditioned
Stock, Unrestricted Stock, Performance Shares and Stock Appreciation
Rights, or any combination of the foregoing, granted to any one or more
participants;
(iii) to determine the number of shares to be covered by any
Award;
(iv) to determine and modify the terms and conditions, including
restrictions, not inconsistent with the terms of the Plan, of any Award,
which terms and conditions may differ among individual Awards and
participants, and to approve the form of written instruments evidencing
the Awards; provided, however, that no such action shall adversely affect
rights under any outstanding Award without the participant's consent;
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(v) to accelerate the exercisability or vesting of all or any
portion of any Award;
(vi) subject to the provisions of Section 5(a)(ii), to extend the
period in which any outstanding Stock Option or Stock Appreciation Right
may be exercised;
(vii) to determine whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
participant and whether and to what extent the Company shall pay or
credit amounts equal to interest (at rates determined by the Board) or
dividends or deemed dividends on such deferrals; and
(viii) to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in connection
with the Plan; and to otherwise supervise the administration of the Plan.
(b) Decisions Binding. All decisions and interpretations of the Board
shall be binding on all persons, including the Company and Plan participants.
SECTION 3. Shares Issuable under the Plan; Mergers; Substitution.
(a) Shares Issuable. The maximum number of shares of Stock with respect
to which Awards (including Stock Appreciation Rights) may be issued under the
Plan shall be equal to 100,000. For purposes of this limitation, the shares of
Stock underlying any Awards which are forfeited, canceled, reacquired by the
Company or otherwise terminated (other than by exercise) shall be added back to
the shares of Stock with respect to which Awards may be granted under the Plan
so long as the participants to whom such Awards had been previously granted
received no benefits of ownership of the underlying shares of Stock to which the
Award related. Likewise, if any Option is exercised by the delivery of a number
of shares of Stock, either actually or by attestation, to the Company as full or
partial payment in connection with the exercise of an Option under this or any
prior plan of the Company, only the number of shares of Stock issued net of the
shares of Stock delivered shall be deemed issued for purposes of determining the
maximum number of shares of Stock available for issuance under the Plan. Subject
to such overall limitation, any type or types of Award may be granted with
respect to shares, including Incentive Stock Options. Shares issued under the
Plan may be authorized but unissued shares or shares reacquired by the Company.
(b) Stock Dividends, Mergers, etc. In the event that after approval of
the Plan by the stockholders of the Company in accordance with Section 17, the
Company effects a stock dividend, stock split or similar change in
capitalization affecting the Stock, the Board shall make appropriate adjustments
in (i) the number and kind of shares of stock or securities with respect to
which Awards may thereafter be granted (including without limitation the
limitation set forth in Section 3(a) above), (ii) the number and kind of shares
remaining subject to
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outstanding Awards, and (iii) the option or purchase price in respect of such
shares. In the event of any merger, consolidation, dissolution or liquidation of
the Company, the Board in its sole discretion may, as to any outstanding Awards,
make such substitution or adjustment in the aggregate number of shares reserved
for issuance under the Plan and in the number and purchase price (if any) of
shares subject to such Awards as it may determine and as may be permitted by the
terms of such transaction, or accelerate, amend or terminate such Awards upon
such terms and conditions as it shall provide (which, in the case of the
termination of the vested portion of any Award, shall require payment or other
consideration which the Board deems equitable in the circumstances), subject,
however, to the provisions of Section 15.
(c) Substitute Awards. The Board may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who concurrently become employees of the Company or a Subsidiary as
the result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation (collectively, "Merger"). The
Board may direct that the substitute awards be granted on such terms and
conditions as the Board considers appropriate in the circumstances. Shares which
may be delivered under such substitute awards may be in addition to the maximum
number of shares provided for in Section 3(a).
SECTION 4. Eligibility.
Awards may be granted only to directors, officers or other key employees
of the Company or its Subsidiaries ("Eligible Persons").
SECTION 5. Stock Options.
Any Stock Option granted under the Plan shall be in such form as the
Board may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. To the extent that any option does not
qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock
Option.
No Incentive Stock Option shall be granted under the Plan after the tenth
anniversary of the Effective Date.
(a) Grant of Stock Options. The Board in its discretion may determine the
effective date of Stock Options, provided, however, that grants of Incentive
Stock Options shall be made only to persons who are, on the effective date of
the grant, employees of the Company or any Subsidiary. Stock Options granted
pursuant to this Section 5(a) shall be subject to the following terms and
conditions and the terms and conditions of Section 13 and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Board shall deem desirable.
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(i) Exercise Price. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5(a) shall be
determined by the Board at the time of grant but shall be, in the case of
Incentive Stock Options, not less than one hundred percent (100%) of Fair
Market Value on the date of grant. If an employee owns or is deemed to
own (by reason of the attribution rules applicable under Section 424(d)
of the Code) more than ten percent (10%) of the combined voting power of
all classes of stock of the Company or any Subsidiary or parent
corporation and an Incentive Stock Option is granted to such employee,
the option price shall be not less than one hundred ten percent (110%) of
Fair Market Value on the grant date.
(ii) Option Term. The term of each Stock Option shall be fixed by
the Board but no Incentive Stock Option shall be exercisable more than
ten (10) years after the date the option is granted. If an employee owns
or is deemed to own (by reason of the attribution rules of Section 424(d)
of the Code) more than ten percent (10%) of the combined voting power of
all classes of stock of the Company or any Subsidiary or parent
corporation and an Incentive Stock Option is granted to such employee,
the term of such option shall be no more than five (5) years from the
date of grant.
(iii) Exercisability; Rights of a Shareholder. Stock Options shall
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Board at or after the grant
date. The Board may at any time accelerate the exercisability of all or
any portion of any Stock Option. An optionee shall have the rights of a
shareholder only as to shares acquired upon the exercise of a Stock
Option and not as to unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole
or in part, by delivering written notice of exercise to the Company,
specifying the number of shares to be purchased. Payment of the purchase
price may be made by one or more of the following methods:
(A) In cash, by certified or bank check or other instrument
acceptable to the Board;
(B) If permitted by the Board, in its discretion, in the
form of shares of Stock that are not then subject to restrictions
under any Company plan. Such surrendered shares shall be valued at
Fair Market Value on the exercise date; or
(C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to
a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company to pay the purchase price;
provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall
comply with such procedures and enter into such agreements of
indemnity and other agreements as the Board shall prescribe as a
condition of such payment procedure. The Company need not act upon
such exercise notice until the Company receives full payment of
the exercise price; or
(D) By any other means (including, without limitation, by
delivery of a promissory note of the optionee payable on such
terms as are specified by the Board) which the Board determines
are consistent with the purpose of the Plan and with applicable
laws and regulations.
The delivery of certificates representing shares of Stock to be
purchased pursuant to the exercise of a Stock Option will be
contingent upon receipt from the Optionee (or a purchaser acting
in his stead in accordance with the provisions of the Stock
Option) by the Company of the full purchase price for such shares
and the fulfillment of any other requirements contained in the
Stock Option or applicable provisions of laws.
(v) Non-transferability of Options. Except as otherwise may
be provided in the option agreement governing an Option granted
under the Plan, no Stock Option shall be transferable other than
by will or by the laws of descent and distribution, and all Stock
Options shall be exercisable, during the optionee's lifetime, only
by the optionee.
(vi) Annual Limit on Incentive Stock Options. To the extent
required for "incentive stock option" treatment under Section 422
of the Code, the aggregate Fair Market Value (determined as of the
time of grant) of the Stock with respect to which incentive stock
options granted under this Plan and any other plan of the Company
or its Subsidiaries become exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000.
(vii) Form of Settlement. Shares of Stock issued upon
exercise of a Stock Option shall be free of all restrictions under
the Plan, except as otherwise provided in this Plan.
(b) Reload Options. At the discretion of the Board, Options granted under
Section 5(a) may include a so-called "reload" feature pursuant to which an
optionee exercising an Option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with the same expiration
date as the original Option being exercised, and with such other terms as the
Board may provide) to purchase that number of shares of Stock equal to the
number delivered to exercise the original Option.
SECTION 6. Conditioned Stock Awards.
(a) Nature of Conditioned Stock Award. The Board in its discretion may
grant Conditioned Stock Awards to any Eligible Person. A Conditioned Stock Award
is an Award entitling the recipient to acquire, at no cost or for a purchase
price determined by the Board, shares of Stock subject to such restrictions and
conditions as the Board may determine at the time of grant ("Conditioned
Stock"). Conditions may be based on continuing employment
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and/or achievement of pre-established performance goals and objectives. In
addition, a Conditioned Stock Award may be granted to an employee by the Board
in lieu of a cash bonus due to such employee pursuant to any other plan of the
Company.
(b) Acceptance of Award. A participant who is granted a Conditioned Stock
Award shall have no rights with respect to such Award unless the participant
shall have accepted the Award within sixty (60) days (or such shorter date as
the Board may specify) following the award date by making payment to the
Company, if required, by certified or bank check or other instrument or form of
payment acceptable to the Board in an amount equal to the specified purchase
price, if any, of the shares covered by the Award and by executing and
delivering to the Company a written instrument that sets forth the terms and
conditions of the Conditioned Stock in such form as the Board shall determine.
(c) Rights as a Shareholder. Upon complying with Section 6(b) above, a
participant shall have all the rights of a shareholder with respect to the
Conditioned Stock, including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase or forfeiture rights
described in this Section 6 and subject to such other conditions contained in
the written instrument evidencing the Conditioned Award. Unless the Board shall
otherwise determine, certificates evidencing shares of Conditioned Stock shall
remain in the possession of the Company until such shares are vested as provided
in Section 6(e) below.
(d) Restrictions. Shares of Conditioned Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment by the
Company and its Subsidiaries for any reason (including death, Disability, Normal
Retirement and for cause), the Company shall have the right, at the discretion
of the Board, to repurchase shares of Conditioned Stock with respect to which
conditions have not lapsed at their purchase price, or to require forfeiture of
such shares to the Company if acquired at no cost, from the participant or the
participant's legal representative. The Company must exercise such right of
repurchase or forfeiture within ninety (90) days following such termination of
employment (unless otherwise specified, in the written instrument evidencing the
Conditioned Award).
(e) Vesting of Conditioned Stock. The Board at the time of grant shall
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the non-transferability of the
Conditioned Stock and the Company's right of repurchase or forfeiture shall
lapse. Subsequent to such date or dates and/or the attainment of such
preestablished performance goals, objectives and other conditions, the shares on
which all restrictions have lapsed shall no longer be Conditioned Stock and
shall be deemed "vested." The Board at any time may accelerate such date or
dates and otherwise waive or, subject to Section 13, amend any conditions of the
Award.
(f) Waiver, Deferral and Reinvestment of Dividends. The written
instrument evidencing the Conditioned Stock Award may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on the
Restricted Stock.
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SECTION 7. Unrestricted Stock Awards.
(a) Grant or Sale of Unrestricted Stock. The Board in its discretion may
grant or sell to any Eligible Person shares of Stock free of any restrictions
under the Plan ("Unrestricted Stock") at a purchase price determined by the
Board. Shares of Unrestricted Stock may be granted or sold as described in the
preceding sentence in respect of past services or other valid consideration.
(b) Restrictions on Transfers. The right to receive unrestricted Stock
may not be sold, assigned, transferred, pledged or otherwise encumbered, other
than by will or the laws of descent and distribution.
SECTION 8. Performance Share Awards.
(a) Nature of Performance Shares. A Performance Share Award is an award
entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Board may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any Eligible
Person including those who qualify for awards under other performance plans of
the Company. The Board in its discretion shall determine whether and to whom
Performance Share Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and all
other limitations and conditions applicable to the awarded Performance Shares;
provided, however, that the Board may rely on the performance goals and other
standards applicable to other performance-based plans of the Company in setting
the standards for Performance Share Awards under the Plan.
(b) Restrictions on Transfer. Performance Share Awards and all rights
with respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.
(c) Rights as a Shareholder. A participant receiving a Performance Share
Award shall have the rights of a shareholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Board).
(d) Termination. Except as may otherwise be provided by the Board at any
time prior to termination of employment, a participant's rights in all
Performance Share Awards shall automatically terminate upon the participant's
termination of employment by the Company and its Subsidiaries for any reason
(including death, Disability, Normal Retirement and for cause).
(e) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment, the Board may in its sole discretion accelerate,
waive or, subject to Section 13,
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amend any or all of the goals, restrictions or conditions imposed under any
Performance Share Award.
SECTION 9. Stock Appreciation Rights
(a) The Board in its discretion may grant Stock Appreciation Rights to
any Eligible Person (i) alone, (ii) simultaneously with the grant of a Stock
Option and in conjunction therewith or in the alternative thereto or (iii)
subsequent to the grant of a Non-Qualified Option and in conjunction therewith
or in the alternative thereto.
(b) The exercise price per share of a Stock Appreciation Right granted
alone shall be determined by the Board. A Stock Appreciation Right granted
simultaneously with or subsequent to the grant of a Stock Option and in
conjunction therewith or in the alternative thereto shall have the same exercise
price as the related Stock Option, shall be transferable only upon the same
terms and conditions as the related Stock Option, and shall be exercisable only
to the same extent as the related Stock Option; provided, however, that a Stock
Appreciation Right, by its terms, shall be exercisable only when the Fair Market
Value per share of Stock exceeds the exercise price per share thereof.
(c) Upon any exercise of a Stock Appreciation Right which has been issued
in conjunction with a stock option, the number of shares of Stock for which any
related Stock Option shall be exercisable shall be reduced by the number of
shares for which the Stock Appreciation Right shall have been exercised. The
number of shares of Stock with respect to which a Stock Appreciation Right shall
be exercisable shall be reduced upon any exercise of any related Stock Option by
the number of shares for which such Option shall have been exercised. Any Stock
Appreciation Right shall be exercisable upon such additional terms and
conditions as may from time to time be prescribed by the Board.
(d) A Stock Appreciation Right shall entitle the participant upon
exercise thereof to receive from the Company, upon written request to the
Company at its principal offices (the "Request"), a number of shares of Stock
(with or without restrictions as to substantial risk of forfeiture and
transferability, as determined by the Board in its sole discretion), an amount
of cash, or any combination of Stock and cash, as specified in the Request (but
subject to the approval of the Board in its sole discretion, at any time up to
and including the time of payment, as to the making of any cash payment), having
an aggregate Fair Market Value equal to the product of (i) the excess of Fair
Market Value, on the date of such Request, over the exercise price per share of
Stock specified in such Stock Appreciation Right or its related Option,
multiplied by (ii) the number of shares of Stock for which such Stock
Appreciation Right shall be exercised. Notwithstanding the foregoing, the Board
may specify at the time of grant of any Stock Appreciation Right that such Stock
Appreciation Right may be exercisable solely for cash and not for Stock.
(e) Within thirty (30) days of the receipt by the Company of a Request to
receive cash in full or partial settlement of a Stock Appreciation Right or to
exercise such Stock Appreciation Right for cash, the Board shall, in its sole
discretion, either consent to or
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disapprove, in whole or in part, such Request. A Request to receive cash in full
or partial settlement of a Stock Appreciation Right or to exercise a Stock
Appreciation Right for cash may provide that, in the event the Board shall
disapprove such Request, such Request shall be deemed to be an exercise of such
Stock Appreciation Right for Stock.
(f) If the Board disapproves in whole or in part any election by a
participant to receive cash in full or partial settlement of a Stock
Appreciation Right or to exercise such Stock Appreciation Right for cash, such
disapproval shall not affect such participant's right to exercise such Stock
Appreciation Right at a later date, to the extent that such Stock Appreciation
Right shall be otherwise exercisable, or to elect the form of payment at a later
date, provided that an election to receive cash upon such later exercise shall
be subject to the approval of the Board. Additionally, such disapproval shall
not affect such participant's right to exercise any related Option.
(g) A Stock Appreciation Right shall be deemed exercised on the last day
of its term, if not otherwise exercised by the holder thereof, provided that the
fair market value of the Stock subject to the Stock Appreciation Right exceeds
the exercise price thereof on such date.
(h) No Stock Appreciation Right shall be transferable other than by will
or by the laws of descent and distribution and all Stock Appreciation Rights
shall be exercisable, during the holder's lifetime, only by the holder.
SECTION 10. Termination of Stock Options and Stock Appreciation Rights.
(a) Stock Options:
(i) Termination by Death. If any participant's employment or
directorship with the Company and its Subsidiaries terminates by reason
of death, any Stock Option owned by such participant may thereafter be
exercised to the extent exercisable at the date of death, by the legal
representative or legatee of the participant, for a period of one year
from the date of death (or such longer period as the Board shall specify
at any time, it being understood that any Incentive Stock Options that
are so extended shall thereafter become Non-Qualified Stock Options to
the extent provided by applicable law), or until the expiration of the
stated term of the Stock Option, if earlier.
(ii) Termination by Reason of Disability. Any Stock Option held by
a participant whose employment or directorship with the Company and its
Subsidiaries has terminated by reason of Disability may thereafter be
exercised, to the extent it was exercisable at the time of such
termination, for a period of one year from the date of such termination
of employment or directorship (or such longer period as the Board shall
specify at any time, it being understood that any Incentive Stock Options
that are so extended shall thereafter become Non-Qualified Stock Options
to the extent provided by applicable law) or until the expiration of the
stated term of the Stock Option, if earlier. The Board shall
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have sole authority and discretion to determine whether a participant's
employment or directorship has been terminated by reason of Disability.
Except as otherwise provided by the Board at the time of grant, the death
of a participant during a period provided in this Section 10(a)(ii) for
the exercise of a Stock Option shall extend such period for one year from
the date of death, subject to termination on the expiration of the stated
term of the Stock Option, if earlier.
(iii) Termination by Reason of Normal Retirement. Any Stock Option
held by a participant whose employment or directorship with the Company
and its Subsidiaries has terminated by reason of Normal Retirement may
thereafter be exercised, to the extent it was exercisable at the time of
such termination, for a period of three months from the date of such
termination of employment or directorship (or such longer period as the
Board shall specify at any time, it being understood that any Incentive
Stock Options that are so extended shall thereafter become Non-Qualified
Stock Options to the extent provided by applicable law) or until the
expiration of the stated term of the Option, if earlier. The Board shall
have sole authority and discretion to determine whether a participant's
employment or directorship has been terminated by reason of Normal
Retirement. Except as otherwise provided by the Board at the time of
grant, the death of a participant during a period provided in this
Section 10(a)(iii) for the exercise of an Stock Option shall extend such
period for one year from the date of death, subject to termination on the
expiration of the stated term of the Stock Option, if earlier.
(iv) Voluntary Termination. Any Stock Option held by a participant
whose employment or directorship by the Company and its Subsidiaries has
terminated by reason of voluntary resignation by the optionee may
thereafter be exercised, to the extent it was exercisable at the time of
such termination, for a period of thirty (30) days from the last day of
the optionee's employment or, in the case of a director, for a period of
thirty (30) days from the effective date of the optionee's resignation
from the Board of Directors (or in either case for such longer period as
the Board shall specify at any time, it being understood that any
Incentive Stock Options that are so extended shall thereafter become
Non-Qualified Stock Options to the extent provided by applicable law) or
until the expiration of the stated term of the Stock Option, if earlier.
(v) Termination for Cause. If any participant's employment or
directorship with the Company and its Subsidiaries has been terminated by
the Company or any of its Subsidiaries for cause, any Stock Option held
by such participant shall immediately terminate at the end of the last
day of the optionee's employment or directorship and shall thereafter be
of no further force and effect; provided, however, that the Board may, in
its sole discretion, provide that such Stock Option can be exercised for
a period of up to seven (7) days from the date of termination of
employment (it being understood that any Incentive Stock Options so
extended shall thereafter become Non-Qualified Stock Options to the
extent provided by applicable law) or directorship or until the
expiration of the stated term of the Stock Option, if earlier. The Board
shall have sole
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authority and discretion to determine whether a participant's employment
has been terminated for cause.
(vi) Termination Without Cause. Unless otherwise determined by the
Board, if a participant's employment or directorship with the Company and
its Subsidiaries is terminated by the Company or any of its Subsidiaries
without cause, any Stock Option held by such participant may thereafter
be exercised, to the extent it was exercisable on the date of termination
of employment or directorship, for thirty (30) days from the last day of
the optionee's employment or directorship (or such longer period as the
Board shall specify at any time, it being understood that any Incentive
Stock Options that are so extended shall thereafter become Non-Qualified
Stock Options to the extent provided by applicable law) or until the
expiration of the stated term of the Stock Option, if earlier.
(b) Stock Appreciation Rights. Any Stock Appreciation Right granted under
the Plan shall contain such terms and conditions with respect to its termination
as the Board, in its discretion, may from time to time determine.
SECTION 11. Tax Withholding.
(a) Payment by Participant. Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Board regarding payment of any Federal, state or local taxes
of any kind required by law to be withheld with respect to such income. The
Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant.
(b) Payment in Shares. A Participant may elect, with the consent of the
Board, to have such tax withholding obligation satisfied, in whole or in part,
by (i) authorizing the Company to withhold from shares of Stock to be issued
pursuant to an Award a number of shares with an aggregate Fair Market Value (as
of the date the withholding is effected) that would satisfy the withholding
amount due with respect to such Award, or (ii) transferring to the Company
shares of Stock owned by the participant with an aggregate Fair Market Value (as
of the date the withholding is effected) that would satisfy the withholding
amount due.
SECTION 12. Transfer, Leave of Absence, Etc.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another;
(b) an approved leave of absence for military service or sickness, or for
any other
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purpose approved by the Company, if the employee's right to re-employment is
guaranteed either by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Board otherwise so provides in
writing.
SECTION 13. Amendments and Termination.
The Board may at any time amend or discontinue the Plan and the Board may
at any time amend or cancel any outstanding Award (or provide substitute Awards
at the same or reduced exercise or purchase price or with no exercise or
purchase price, but such price, if any, must satisfy the requirements which
would apply to the substitute or amended Award if it were then initially granted
under this Plan) for the purpose of responding to comments of banking
regulators, satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. However, no such amendment, unless approved by the
stockholders of the Company, shall be effective if it would cause the Plan to
fail to satisfy the incentive stock option requirements of the Code, or cause
transactions under the Plan to fail to satisfy the requirements of Rule 16b-3 or
any successor rule under the Act as in effect on the date of such amendment.
SECTION 14. Status of Plan.
With respect to the portion of any Award which has not been exercised and
any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Board shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Board may
authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the provision of the foregoing sentence.
SECTION 15. Change of Control Provisions.
(a) In the event of a Change of Control while unexercised Stock Options,
Conditional Stock Awards, Performance Share Awards or Stock Appreciation Rights
remain outstanding under the Plan, then (i) the time for exercise of all
unexercised and unexpired Awards shall be automatically accelerated, effective
as of the effective time of the Change of Control (or such earlier date as may
be specified by the Board), and (ii) after the effective time of such Change of
Control, unexercised Stock Options, Conditional Stock Awards, Performance Share
Awards or Stock Appreciation Rights shall remain outstanding and shall be
exercisable in full for shares of Stock (or consideration based upon the Fair
Market Value of Stock) or, if applicable, for shares of such securities, cash or
property (or consideration based upon shares of such securities, cash or
property) as the holders of shares of Stock received in connection with such
Change of Control.
(b) "Change of Control" shall mean the occurrence of any one of the
following events:
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(i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Act) becomes a "beneficial owner" (as such term is
defined in Rule 13d-3 promulgated under the Act) (other than 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 stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), directly or
indirectly, of securities of the Company representing thirty-five percent
(35%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) persons who, as of January 1, 1999, constituted the Company's
Board (the "Incumbent Board") cease for any reason, including without
limitation as a result of a tender offer, proxy contest, merger or
similar transaction, to constitute at least a majority of the Board,
provided that any person becoming a director of the Company subsequent to
January 1, 1999 whose election was approved by, or who was nominated with
the approval of, at least a majority of the directors then comprising the
Incumbent Board shall, for purposes of this Plan, be considered a member
of the Incumbent Board; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or other entity,
other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
sixty-five percent (65%) of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
SECTION 16. General Provisions.
(a) No Distribution; Compliance with Legal Requirements. The Board may
require each person acquiring shares pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities laws and other legal and stock exchange requirements have
been satisfied. The Board may require the placing of such stop orders and
restrictive legends on certificates for Stock and Awards as it deems
appropriate.
(b) Delivery of Stock Certificates. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, subject to stockholder approval if
such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan or any
Award under the Plan does not confer upon any employee any right to continued
employment with the Company or any Subsidiary.
SECTION 17. Effective Date of Plan.
The Effective Date of the Plan shall be the date of its adoption by the
Board of Directors provided that the stockholders of the Company and the
Commissioner of Banks of the Commonwealth of Massachusetts shall have approved
the Plan within twelve months following the adoption of the Plan by the Board.
SECTION 18. Governing Law.
This Plan shall be governed by, and construed and enforced in accordance
with, the substantive laws of the Commonwealth of Massachusetts without regard
to its principles of conflicts of laws.