EXHIBIT 4
BEVERLY NATIONAL CORPORATION
1998 Incentive Stock Option Plan for Key Employees
l. Purpose.
1.1 The purpose of the Beverly National Corporation l998
Incentive Stock Option Plan for Key Employees (hereinafter referred to as the
"Plan") is to provide incentives to present and future employees of Beverly
National Corporation, a Massachusetts corporation (this "Corporation"), and
any of its present and future subsidiaries at least fifty percent (50%) owned
by this Corporation ("Subsidiaries") (such employees being hereinafter
referred to as "Employees" and each of them individually as an "Employee") in
order that they may provide exceptional services to this Corporation and its
Subsidiaries, and to offer inducements to Employees to accept and continue
employment with this Corporation and its Subsidiaries by offering Employees
options to purchase shares of this Corporation's common stock which may
qualify for treatment as incentive stock options under the Internal Revenue
Code of 1986, as amended (the "Code") upon the approval of the Plan by the
shareholders of this Corporation and upon the satisfaction by such Employees
of the requirements for such qualification. This Plan is an "incentive stock
option plan" described in Section 422 of the Code.
2. Administration of Plan.
2.l The Plan shall be administered by the Board of
Directors of this Corporation (the "Board of Directors") which shall: (l)
determine which Employees shall be granted options to purchase shares of this
Corporation's Common Stock ($2.50 par value) ("Stock") pursuant to the Plan
(which options shall hereinafter be referred to as "Options," or in the
singular as an "Option"); (2) determine the time or times when Options shall
be granted and the number of shares of Stock to be subject to each Option; (3)
determine the option price at which the shares of Stock subject to each Option
may be purchased pursuant to the Plan and the forms of the instruments
evidencing any Options granted under the Plan or any other instrument to be
used in connection with the Plan; (4) adopt, amend and rescind, in its
discretion, rules and regulations for the administration of the Plan; (5)
interpret the Plan and decide all questions and settle all controversies and
disputes which may arise in connection with the Plan, which decisions and
interpretations shall be binding upon all persons; and (6) exercise such other
powers as may be necessary or desirable to implement the provisions of this
Plan.
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2.2 Members of the Board of Directors who are Employees
shall be eligible to receive Options pursuant to the Plan. The grant of an
Option to an Employee who is also a director of this Corporation shall not be
affected or invalidated by reason of the fact that such director voted to
approve the grant of such Option.
2.3 No member of the Board of Directors shall be liable
for any action taken or determination made in good faith and in a manner
reasonably believed to be in the best interests of this Corporation with
respect to the Plan or any Option granted pursuant thereto. The Board of
Directors may indemnify any person against expenses reasonably incurred or the
amount of any damages, fine, or settlement assessed against or agreed to by
such person, in connection with any action, suit or proceeding in which such
person may be involved in connection with any Option or this Plan to the same
extent that the Board of Directors may indemnify such person under the By-laws
of this Corporation.
3. Authority to Grant Options.
3.l Subject to the terms and conditions of this Plan, the
Board of Directors may from time to time grant to such Employees as it may
determine to be capable of making substantial contributions to the management
or development of this Corporation and its Subsidiaries Options, upon such
terms and conditions as it may deem appropriate, subject to applicable
provisions of this Plan.
3.2 The Board of Directors may authorize the grant of
Options to Employees by action taken with or without a meeting. The effective
date of the grant of an Option pursuant hereto shall be the date specified by
the Board of Directors in the Stock Option Agreement, as hereinafter defined.
3.3 The number of shares of Stock subject to an Option
shall in each case be determined by the Board of Directors, subject to the
applicable provisions of this Plan. More than one Option may be granted to
the same Employee.
3.4 Nothing contained in this Plan or in any resolution
adopted by the Board of Directors or the shareholders of this Corporation
shall constitute the grant of an Option hereunder, and no Employee shall be
entitled to the grant of an Option unless action granting an Option to such
Employee shall have been taken by the Board of Directors and unless the
recipient of an Option shall have executed an agreement in form and substance
satisfactory to the Board of Directors containing terms, restrictions and
conditions imposed upon the exercise of the Option and the transfer of any
Stock pursuant thereto ("Stock Option Agreement").
3.5 Any purported disposition of shares of Stock acquired
pursuant to an Option which shall be in contravention of the terms,
restrictions and conditions contained in the Stock Option Agreement executed
in connection with such Option shall be ineffective, and such disposition
shall not be registered upon the stock transfer books of this Corporation.
3.6 The aggregate fair market value of Stock with respect
to which Options issued hereunder are exercisable for the first time during
any calendar year, when aggregated with the fair market value of stock subject
to other incentive stock options then outstanding under all plans of this
Corporation and its parent and subsidiary corporations and exercisable for
the first time during such calendar year, shall not exceed $l00,000 or such
other amount as shall be permitted for options intended to qualify for
incentive stock option treatment. For purposes of this section the fair market
value of Stock subject to Options shall be determined at the time the Options
are issued.
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4. Stock Subject to the Plan.
4.l Stock to be issued upon the exercise of an Option
shall be made available, in the discretion of the Board of Directors, from
authorized but unissued shares of Stock or from shares of Stock held in the
treasury of this Corporation, however acquired.
4.2 The aggregate number of shares of Stock for which
Options may be granted under the Plan shall be 60,000. If an Option shall
expire, terminate, or be canceled or surrendered in whole or in part prior to
the exercise thereof, the number of shares of Stock subject to the unexercised
portion of such Option shall be subject to other Options granted theretofore
or thereafter pursuant to the Plan.
4.3 Appropriate adjustments in the number of shares of
Stock subject to Options previously issued hereunder and in the number of
shares of Stock for which Options have not yet been granted under this Plan
shall be made by the Board of Directors if at any time after the effective
date of this Plan this Corporation shall increase or decrease the number of
outstanding shares of Stock, whether by stock split, combination, stock
dividend or reclassification, or merger, consolidation, recapitalization, or
reorganization.
4.4 No provision of this Plan, nor any Option granted
pursuant hereto or Stock Option Agreement entered into in connection therewith
shall confer upon any Employee or any other person any preemptive right to
acquire any stock of this Corporation.
5. Eligibility.
5.l The Board of Directors may grant Options pursuant
hereto to such Employees as it may designate from time to time pursuant to
Section 3.l hereof regardless of whether such Employees are also officers or
directors of this Corporation.
5.2 No officer or director of this Corporation shall be
eligible to receive any Option pursuant to this Plan unless such officer or
director is also an Employee.
5.3 No Employee may exercise any part of an Option unless
he or she has been continuously employed by this Corporation from the date the
Option was granted until no more than three (3) months prior to the time of
such exercise, provided, that in the case of a deceased employee or an
employee whose employment terminates for reason of permanent and total
disability, no Option may be exercised unless the optionee was continuously
employed by this Corporation from the date the Option was granted until no
more than l2 months prior to the time of such exercise.
5.4 If an Employee or former Employee eligible to exercise
an Option granted pursuant to this Plan dies prior to such exercise, such
Option may be exercised to the extent permitted herein by his estate or a
person who acquires the right to exercise such Option by bequest or
inheritance.
5.5 No Option granted pursuant to this Plan may be
transferred by the holder thereof other than by will or the laws of descent
and distribution of the state in which such holder is domiciled at the time of
his death.
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6. Terms of Options.
6.l The price at which shares of Stock may be purchased
pursuant to an Option shall be the fair market value of the Stock on the date
of the grant of such Option (as determined pursuant to Section 3.2 hereof),
provided, that in the case of Options granted to an Employee who at the date
of the grant of such Option owns l0% or more of the combined voting stock of
the Corporation (a "l0% Employee"), such price shall be equal to 110% of the
fair market value of the Stock on the date of the grant of such Option. For
purposes of determining the percentage of stock of the Corporation owned by an
Employee, attribution rules made applicable by the Code and related
regulations shall apply. The fair market value of any Stock shall be
determined by the Board of Directors in good faith.
6.2 Each Option granted under this Plan shall expire, and
may not be exercised to any extent, upon the earliest to occur of the
following:
(a) Each Option shall expire ten years after the date of
grant of such Option (as determined pursuant to Section 3.2 hereof), or on
such date prior thereto as may be fixed by the Board of Directors, provided,
however, that each Option granted to a l0% Employee shall expire five years
after the date of grant of such Option, or such date prior thereto as may be
fixed by the Board of Directors.
(b) Each Option shall expire not later than three months
after termination of the optionee's employment with this Corporation or any
of its Subsidiaries (with or without cause, voluntary or involuntary) for
reasons other than death or total and permanent disability, during which
three-month period the Option may be exercised only to the extent that it was
exercisable upon termination. If the optionee's employment with this
Corporation or any of its Subsidiaries terminates for reasons of death or
total and permanent disability, then the Option shall expire l2 months after
such termination of employment, and during that 12-month period the Option may
be exercised only to the extent it was exercisable upon termination. If an
optionee whose employment terminates for reasons other than death or disability
dies during the three-month period described above, such optionee's Options
shall expire one year from the date of termination of employment, during which
time they may be exercised to the extent exercisable on the date of
termination.
7. Exercise of Options.
7.l Each Option granted hereunder shall be exercisable in
such installment or installments as may be determined by the Board of Directors
at the time of the grant. The right to purchase shares shall be cumulative
so that when the right to purchase any shares has accrued such shares or any
part thereof may be purchased at any time thereafter until the expiration or
termination of the Option.
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7.2 A person entitled to exercise an Option may, subject to
the terms and conditions of the Stock Option Agreement executed in connection
therewith, exercise such Option from time to time by delivery to this
Corporation at its principal office of written notice of his or her intention
to exercise such Option setting forth the number of shares with respect to
which the Option is to be exercised and accompanied by (l) payment in full of
the purchase price of the shares to be purchased, (2) payment in full of all
local, state or federal taxes due on account of the exercise of such Option,
and (3) such other documents and materials as may be required by this
Corporation under the terms of this Plan, the Stock Option Agreement, or
otherwise. As promptly as practicable thereafter, this Corporation shall
deliver to the purchaser certificates for the number of shares purchased.
7.3 The date of actual receipt by this Corporation of
notice of intention to exercise an Option shall be deemed the date of exercise
of the Option with respect to the shares then purchased. Delivery of shares
purchased shall be deemed effective when a stock transfer agent shall have
deposited certificates therefor with the United States mail for delivery to
the purchaser at the address specified in the notice of exercise provided to
this Corporation.
7.4 During the life of a holder of an Option issued
pursuant to this Plan, such Option may be exercised only by the holder.
7.5 No person, estate or other entity shall have any of
the rights of a shareholder of this Corporation with respect to shares subject
to an Option until a certificate or certificates for such shares shall have
been delivered by this Corporation to such person or entity. Upon delivery of
such a certificate to the purchaser thereof for the number of shares of Stock
purchased, the owner thereof shall have all the rights of a shareholder of such
shares of Stock, including the right to vote the same and receive dividends
thereon, subject, however, to the terms, conditions and restrictions contained
in this Plan and in the Stock Option Agreement executed in connection with the
Option exercised with respect to such shares.
8. Miscellaneous.
8.l The grant of an Option to an Employee pursuant hereto
shall not confer upon such Employee a right to continued employment, nor shall
it limit the right of this Corporation or any Subsidiary to terminate the
employment of any such Employee.
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8.2 The Board of Directors may modify, amend or terminate
this Plan or any provision thereof at any time and from time to time; provided,
however, that no amendment to this Plan shall be made which shall: (l) increase
the total number of shares of Stock for which Options under this Plan may be
issued, except as provided in Section 4.3 hereof, (2) increase the total
number of shares of Stock which may be acquired by an Employee pursuant to
Options issued under this Plan except as provided in Section 4.3 hereof, (3)
extend the maximum period during which any Option may be exercised as set forth
in Section 6.2 hereof, (4) change the class of employees entitled to receive
awards, (5) reduce the purchase price of Stock subject to any Option, or (6)
extend the termination date of this Plan, without in each case the prior
approval of the holders of at least a majority of the Stock of this
Corporation of all classes voting together. No amendment to this Plan shall
alter or impair any Option previously granted pursuant hereto without the
consent of the holder thereof.
8.3 The effective date of this Plan shall be December 22,
1998. No Option may be granted pursuant hereto subsequent to the date which
is ten years after the date on which the Plan shall be adopted by the Board of
Directors.
8.4 This Plan, and all rights and obligations hereunder,
including matters of construction, validity and performance, shall be governed
by the laws of the Commonwealth of Massachusetts.
8.5 Notice to this Corporation pursuant to Sections 7.2 or
8.5 hereof or for any other purpose may be given by delivery in hand or first
class mail, postage prepaid, and addressed as follows:
Beverly National Corporation
240 Cabot Street
Beverly, Massachusetts 01915
Notice to an Employee to whom an Option shall be granted hereunder may
be given by delivery in hand or first class mail, postage prepaid, to the
address listed by such Employee in the Stock Option Agreement executed by such
Employee.
