Common use of Employee Stock Options Clause in Contracts

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option that is then outstanding under the Company Option Plan, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Plan and the stock option agreement by which such Eligible Stock Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Option, as in effect immediately prior to the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6.

Employee Stock Options. (ai) At the Effective Time, each Eligible Stock Option that is then outstanding option to purchase Company Shares (a “Company Option”) under the Company Option PlanPlans identified in Section 2.12 of the Company Disclosure Letter as being the only Company Plans pursuant to which shares of Company Common Stock may be issued or benefits measured by the value of shares of Company Common Stock may be obtained (the “Company Stock Plans”), whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Plan and the stock option agreement by which such Eligible Stock Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect an option to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Option assumed by Parent may be exercised solely for acquire a number of shares of Parent Common StockStock equal to the product (rounded up to the nearest whole number) of (x) the number of shares of Company Common Stock subject to the Company Option immediately prior to the Effective Time and (y) the Exchange Ratio, at an exercise price per share (brounded down to the nearest whole cent) equal to (A) the exercise price per share of such Company Option immediately prior to the Effective Time divided by (B) the Exchange Ratio; provided, however, that the exercise price and the number of shares of Parent Common Stock purchasable pursuant to the Company Options shall be determined in a manner consistent with the requirements that must be met for Company Options to avoid classification as "deferred compensation" subject to each such assumed Eligible Stock Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”); provided, further, that in the case of any Company Option shall be equal to which Section 422 of the Code applies, the exercise price and the number of shares of Company Parent Common Stock that were purchasable pursuant to such option shall be determined in accordance with the foregoing, subject to such Eligible Stock adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. Except as specifically provided above, following the Effective Time, each Company Option shall continue to be governed by the same terms and conditions as were applicable under such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Option, as in effect immediately Time. At or prior to the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price up Company shall take all such action necessary to adopt appropriate amendments to the nearest whole centCompany Stock Plans, and (d) all restrictions on the exercise of each such assumed Eligible Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Option shall, including using its reasonable best efforts in accordance with Section 5.2 to cause its termsstockholders to approve such amendments, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be extent necessary (under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.61.6(d), and the Board of Directors of the Company shall adopt such other appropriate resolutions as may be necessary to effectuate the provisions of this Section 1.6(d). At or prior to the Effective Time, Parent shall take all actions as are necessary for the assumption of the Company Stock Plans pursuant to this Section 1.6(d), including the issuance (subject to Section 1.6(d)(ii)) and listing of Parent Common Stock as necessary to effect the transactions contemplated by this Section 1.6(d).

Employee Stock Options. (a) At Effective as of the Effective Time, each Eligible Stock Option that is then outstanding under the Company shall take all necessary action, including obtaining the consent of the individual option holders, if necessary, to (i) terminate the Company’s 1996 Stock Option Plan, whether vested or unvested2000 Long-Term Incentive Plan, shall be assumed by Parent in accordance with the terms (and 2007 Stock Incentive Plan, each as in effect as of amended through the date of this Agreement) of Agreement (the “Company Option Plan and the stock option agreement by which such Eligible Stock Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective TimePlans”), (aii) provide that each Eligible Stock Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject outstanding option to each such assumed Eligible Stock Option shall be equal to the number of purchase shares of Company Common Stock that were subject to such Eligible common stock granted under the Company Stock Option immediately prior to the Effective Time multiplied by the Exchange RatioPlans (each, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Option shall be determined by dividing the exercise price per share of a “Company Common Stock subject to such Eligible Stock Option, ”) that is outstanding and unexercised as in effect of immediately prior to the Effective Time, by whether or not vested or exercisable, shall become fully vested and exercisable as of the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole centEffective Time, and (diii) all restrictions on cancel as of the exercise of Effective Time each such assumed Eligible Company Stock Option shall continue in full force that is outstanding and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after unexercised at the Effective Time. The Each holder of a Company Stock Option that is outstanding and Parent unexercised at the Effective Time and that has an exercise price per Share that is less than the Merger Consideration shall take all action that may be necessary entitled (under the Company Option Plan and otherwise) subject to effectuate the provisions of this Section 1.63.07) to be paid by the Surviving Corporation immediately after the Effective Time, in exchange for the cancellation of such Company Stock Option, an amount in cash (subject to any applicable withholding taxes) with respect to each Share subject to the Company Stock Option equal to the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option (the “Option Payment”). Any such payment shall be subject to all applicable federal, state and local tax withholding requirements. The Company shall take all necessary action to approve the disposition of the Company Stock Options in connection with the transactions contemplated by this Agreement to the extent necessary to exempt such dispositions under Rule 16b-3 of the Exchange Act. Prior to the Effective Time, Parent shall cause to be wired to an account designated by the Company an amount sufficient to enable the Company to make the payments required pursuant to this Section 3.07.

Employee Stock Options. The Company's 2000 Stock Option Plan (athe "Company Option Plan") and all options to acquire Shares granted pursuant to the Company Option Plan that are issued and outstanding immediately before the Effective Time (collectively, the "Plan Options"), and options to acquire shares that are issued to directors of the Company and outstanding immediately before the Effective Time (the "Director Options" and together with the Plan Options, the "Options") shall be assumed by the Parent at the Effective Time and shall continue in effect, as an option plan of Parent and as options issued by Parent, respectively, in accordance with the terms and conditions by which they are governed immediately before the Effective Time (and each Option that prior to the Effective Time, is or as a result of the Merger becomes fully vested and exercisable as a result of the Merger shall continue as a fully vested and exercisable option of Parent), subject to the adjustments set forth in this Section 2.6. At the Effective Time, each Eligible Stock Option that is then outstanding under the Company Option Planshall, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as virtue of the date of this Agreement) Merger and without any action on the part of the Company Option Plan and the stock option agreement by which such Eligible Stock Option is evidenced. All rights with respect holder thereof, be automatically adjusted to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, provide that (a) each Eligible Stock the number and type of shares issuable upon exercise of such Option assumed by Parent may shall be exercised solely for shares of Parent Common Stock, (b) the that number of shares of Parent Common Stock subject (rounded off to each such assumed Eligible Stock Option shall be the nearest whole number of shares) equal to the number of shares Shares issuable upon exercise of Company Common Stock that were subject to such Eligible Stock Option immediately prior to before the Effective Time Time, multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, and (cb) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Option shall be determined by dividing the exercise price per share of Company Parent Common Stock subject to under such Eligible Stock Option, as in effect immediately prior to the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price Option shall be that amount (rounded up to the nearest whole cent, and (d) all restrictions on equal to the exercise of each price per Share under such assumed Eligible Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after immediately before the Effective Time. The Company and Parent shall take all action that may be necessary (under , divided by the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6Exchange Ratio.

Employee Stock Options. (a) At the Effective TimeTime (or, each Eligible Stock Option that is then outstanding under the Company Option Planat Company's election, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as prior to expiration of the date of this AgreementAmended Offer) all outstanding Options to acquire Shares shall immediately vest and become fully exercisable. At the Effective Time (or, at Company's election, prior to expiration of the Amended Offer) Company shall take such actions as may be necessary to cause each Option Plan with an exercise price of less than the Merger Consideration (a "Lower Priced Option") to be amended to provide that the holder thereof need not tender any exercise price therefor and that upon exercise such holder shall receive an amount of cash equal to the stock option agreement product of (x) the amount by which the Merger Consideration exceeds the exercise price per Share subject to such Eligible Stock Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. AccordinglyLower Priced Option, from and after the Effective Time, (a) each Eligible Stock Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (by) the number of shares Shares issuable pursuant to the unexercised portion of Parent Common Stock subject to each such assumed Eligible Stock Option Lower Priced Option, less any required withholding of taxes. At such time, all Options other than Lower Price Options shall be converted into a right to receive, upon exercise of such options (including payment of the exercise price of such options), an amount in cash equal to the number product of shares of Company Common Stock that were subject to such Eligible Stock Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, (cx) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Option, as in effect immediately prior to the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole centMerger Consideration, and (dy) all restrictions on the exercise number of each such assumed Eligible Stock Option shall continue in full force and effect, and Shares issuable pursuant to the term, exercisability, vesting schedule and other provisions unexercised portion of such Eligible option, less any required withholding of taxes. Anything to the contrary in this Agreement notwithstanding, no payment shall be made pursuant to this Section 8.5 that would be inconsistent with and would violate Article 12 of Company's 1989 Stock Option Incentive Plan. Prior to the Expiration Date of the Amended Offer Company shall otherwise remain unchanged; providedcancel the converging options issued to Xxxxxxx Xxxxx, howeverXxxxx Xxxxxxx, that each such assumed Eligible Xxxxx Xxxxxxxx, Xxxxxx Xxxxx and Xxxxx Xxxxx under Company's 1989 Stock Option shall, in accordance with Incentive Plan and shall use its terms, be subject best efforts to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or cancel all other similar transaction effected by Parent after the Effective Timeconverging options issued under Company's 1989 Stock Incentive Plan. The Company and Parent shall take all action necessary to ensure that may be necessary (under following the Company Option Effective Time no participant in any Plan and otherwise) shall have any right thereunder to effectuate the provisions acquire equity securities of Parent, Company, Sub, Surviving Corporation or any subsidiary thereof or any cash payment with respect thereto, other than cash amounts payable to holders of Options pursuant to this Section 1.68.5.

Employee Stock Options. The Company shall (ai) At use its reasonable best efforts to, effective as of the Effective Time, terminate the Company Stock Option Plans, as amended through the date of this Agreement, (ii) use its reasonable best efforts to cause, effective at or prior to the Effective Time, each Eligible outstanding option to purchase Shares (each, a "Stock Option Option") granted under the 1987 Long-Term Incentive Plan that is then outstanding under the Company Option Plan, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Plan and the stock option agreement by which such Eligible Stock Option is evidenced. All rights with respect unexercised prior to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, to either (aA) each Eligible Stock Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Option immediately or terminated prior to the Effective Time multiplied by or (B) be cancelled as of the Exchange Ratio, rounded down Effective Time to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Option, as extent in effect immediately prior to the Effective TimeTime (subject to the obligations of the Surviving Corporation in the immediately following sentence), (iii) cause each Stock Option that is outstanding and unexercised prior to the Effective Time under the 1997 Long-Term Incentive Plan to become fully vested and exercisable prior to the Effective Time and be cancelled as of the Effective Time to the extent in effect immediately prior to the Effective Time (subject to the obligations of the Surviving Corporation in the immediately following sentence) and (iv) cause each Stock Option that is outstanding and unexercised prior to the Effective Time under the 2001 Long-Term Incentive Plan to become fully vested and exercisable prior to the Effective Time and either (A) be exercised or terminated prior to the Effective Time or (B) be cancelled as of the Effective Time to the extent in effect immediately prior to the Effective Time (subject to the obligations of the Surviving Corporation in the immediately following sentence). Each holder of a Stock Option that is outstanding and unexercised immediately prior to the Effective Time and that has an exercise price per share that is less than the per share Merger Consideration applicable to the Shares issuable to the holder of such Stock Option upon exercise shall be entitled (subject to the provisions of the last sentence of this Section 3.02) to be paid by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent Surviving Corporation immediately after the Effective Time, in exchange for the cancellation of such Stock Option, an amount in cash, with respect to each Share subject to the Stock Option, equal to the excess of the applicable per share Merger Consideration payable with respect to such Share over the applicable per share exercise price of such Stock Option. The Company and Parent shall take all action that may be necessary (under the Company Option Plan and otherwise) Any payments made pursuant to effectuate the provisions of this Section 1.63.02 shall be subject to all applicable federal, state and local Tax withholding requirements.

Employee Stock Options. The Company's Stock Option Plan (athe "Company Option Plan") At and all options to acquire Shares granted pursuant to the Company Option Plan that are issued and outstanding immediately before the Effective Time (collectively, the "Options"), shall be assumed by the Parent on the Effective Time and shall continue in effect, as an option plan of Parent and as options issued by Parent, respectively, in accordance with the terms and conditions by which they are governed immediately before the Effective Time (and each Option that prior to the Effective Time is, or as a result of the Merger becomes, fully vested and exercisable as a result of the Merger shall continue as a fully vested and exercisable option of Parent), subject to the adjustments set forth in the next sentence. On the Effective Time, each Eligible Stock Option that is then outstanding under the Company Option Planshall, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as virtue of the date of this Agreement) Merger and without any action on the part of the Company Option Plan and the stock option agreement by which such Eligible Stock Option is evidenced. All rights with respect holder thereof, be automatically adjusted to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, provide that (a) each Eligible Stock the number and type of shares issuable upon exercise of such Option assumed by Parent may shall be exercised solely for shares of Parent Common Stock, (b) the that number of shares of Parent Common Stock subject (rounded off to each such assumed Eligible Stock Option shall be the nearest whole number of shares) equal to the number of shares Shares issuable upon exercise of Company Common Stock that were subject to such Eligible Stock Option immediately prior to before the Effective Time Time, multiplied by the Exchange Ratio, and (b) the exercise price per share of Parent Common Stock under such Option shall be that amount (rounded down up to the nearest whole cent) equal to the exercise price per Share under such Option immediately before the Effective Time, divided by the Exchange Ratio. As soon as practicable (but in no event later than thirty days) after the Effective Time, Parent shall deliver to the holders of Company Options appropriate notices setting forth such holders' rights pursuant to the Company Option Plan and that the agreements evidencing the grants of such Options shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 2.6 after giving effect to the Merger). At or before the Effective Time, Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock, (c) the per share exercise price Stock for the Parent Common Stock issuable delivery upon exercise of each such Company Options assumed Eligible Stock Option in accordance with this Section 2.6. Within thirty business days after the Effective Time, Parent shall be determined by dividing file a registration statement on Form S-8 (or any successor or other appropriate forms) with respect to the exercise price per share shares of Company Parent Common Stock subject to such Eligible Stock Option, as in effect immediately prior any Company Options held by all persons with respect to whom registration on Form S-8 is available and shall use all commercially reasonable efforts to maintain the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions effectiveness of such Eligible Stock Option shall otherwise registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such Options remain unchanged; provided, however, that each such assumed Eligible Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6outstanding.

Employee Stock Options. The Company will use its reasonable best efforts to obtain from each holder of a stock option (aa "Company Stock Option") At outstanding, whether or not exercisable at the Effective Time, each Eligible Stock Option that is then outstanding Time under the Company Option Plan, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Company's Stock Option Plan and the stock option agreement by which such Eligible Directors Stock Option is evidenced. All rights with respect to Plan (the "Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Option assumed by Parent may be exercised solely for shares of Parent Common StockPlans"), (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Option holder's agreement that such option shall be equal to canceled by the number of shares of Company Common Stock that were subject to such Eligible Stock Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number Time. Each holder of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible a canceled Company Stock Option shall be determined by dividing entitled to receive at the Effective Time or as soon as practicable thereafter from the Company in consideration for the cancellation of such Company Stock Option an amount (the "Option Spread") equal to the product of (i) the number of Shares previously subject to such Company Stock Option and (ii) the excess, if any, of the Per Share Amount over the exercise price per share of Company Common Stock previously subject to such Eligible Company Stock Option. Each holder of a Company Stock Option shall also be given the right to tender such options, whether or not exercisable, pursuant to the Offer and to receive the Option Spread pursuant to the Offer; and each holder of Warrants referred to in Section 3.3 shall also be given the right to tender such Warrants pursuant to the Offer and to receive an amount equal to the product of (i) the number of Shares which may be purchased on exercise of the Warrants and (ii) the excess, if any, of the Per Share Amount over the per share exercise price of the Warrants. In any such case, such payment, after reduction for applicable tax withholding, if any, shall be made in cash. Each holder of a Company Stock Option or Warrants shall be given an opportunity to submit a Form W-9 and/or whatever other forms may be necessary to prevent any tax from being withheld from the amounts otherwise payable to such holder hereunder. The Company shall take all actions necessary and appropriate so that all stock option or other equity based plans maintained with respect to the Shares, including the Company Plans, shall terminate as of the Effective Time and the provisions in effect immediately prior to any other Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company shall be deleted as of the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Ibex's 1992 Stock Option Plan, whether vested or unvestedunvested (a "Ibex Option"), shall be assumed by Parent Castelle in accordance with the terms (as in effect as of the date of this Agreement) of the Company Ibex's 1992 Stock Option Plan and the stock option agreement by which such Eligible Stock Ibex Option is evidenced. All rights with respect to Company Ibex Common Stock under outstanding Eligible Stock Ibex Options shall thereupon be converted into rights with respect to Parent Castelle Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Ibex Option assumed by Parent Castelle may be exercised solely for shares of Parent Castelle Common Stock, (b) the number of shares of Parent Castelle Common Stock subject to each such assumed Eligible Stock Ibex Option shall be equal to the number of shares of Company Ibex Common Stock that were subject to such Eligible Stock Ibex Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction (as hereinafter defined), rounded down to the nearest whole number of shares of Parent Castelle Common Stock, (c) the per share exercise price for the Parent Castelle Common Stock issuable upon exercise of each such assumed Eligible Stock Ibex Option shall be determined by dividing the exercise price per share of Company Ibex Common Stock subject to such Eligible Stock Ibex Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction (as hereinafter defined), and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Ibex Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Ibex Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Ibex Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent Castelle after the Effective Time. The Company Ibex and Parent Castelle shall take all action that may be necessary (under the Company Ibex's 1992 Stock Option Plan and otherwise) to effectuate the provisions of this Section 1.6. Following the Closing, Castelle will send to each holder of an assumed Ibex Option a written notice setting forth (i) the number of shares of Castelle Common Stock subject to such assumed Ibex Option, and (ii) the exercise price per share of Castelle Common Stock issuable upon exercise of such assumed Ibex Option. For purposes of this Section 1.6, the "Applicable Fraction" shall mean the exchange ratio identified in Section 1.5 which is utilized to convert each share of Ibex Common Stock outstanding immediately prior to the Merger into Castelle Common Stock.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option that is then outstanding under Company Option (as defined in Section 2.3(b)) and each other outstanding option to purchase Common Stock of the Company Option Planissued in accordance with the terms of this Agreement, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the such Company Stock Option Plan under which such Company Option Plan was issued and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common StockStock and cash. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange Ratio, subtracting an amount equal to the Cash Consideration and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, howeverPROVIDED HOWEVER, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the all Company Stock Option Plan Plans and otherwise) to effectuate the provisions of this Section 1.61.7.

Employee Stock Options. (a) At the Effective Time, each Eligible stock option to acquire Company Common Stock Option that is then outstanding outstanding, including but not limited to those granted under each of (i) the Company's 2000 Equity Incentive Plan (ii) the Company's 1998-1999 Stock Option Plan and (iii) the Company's 1997-1999 Stock Option Plan (the "Company Stock Option PlanPlans"), whether vested or unvestedunvested (a "Company Option"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the applicable Company Stock Option Plan and and/or the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common StockStock as set forth below. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under each of the Company Stock Option Plan Plans and otherwise) to effectuate the provisions of this Section 1.6. Following the Closing, Parent will send to each holder of an assumed Company Option a written notice setting forth (i) the number of shares of Common Stock subject to such assumed Company Option, and (ii) the exercise price per share of Common Stock issuable upon exercise of such assumed Company Option. Parent shall file with the SEC, as soon as reasonably practical but in any event within thirty (30) days after the Closing Date, a registration statement on Form S-8 registering the exercise of the Company Options assumed by Parent pursuant to this Section 1.6.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option that is then outstanding under Company Option and each other outstanding option to purchase Common Stock of the Company Option Planissued in accordance with the terms of this Agreement, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement or, for options issued to new employees after the date of this Agreement, as in effect on the date of issuance) of the such Company Stock Option Plan under which such Company Option Plan was issued and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction, rounded down to the nearest whole number of shares of Parent Common Stock, and (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, provided however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Stock Option Plan and otherwise) to effectuate the provisions of this Section 1.6.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Company's 1991 Incentive Stock Option PlanPlan (the "COMPANY ISO PLAN") and the 1991 Non-Qualified Stock Option/Stock Issuance Plan (the "COMPANY NSO PLAN") (the "COMPANY OPTION PLANS"), whether vested or unvestedunvested (a "COMPANY OPTION"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Plan Plans and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction, rounded down to the nearest whole number of shares of Parent Common StockStock (collectively, the "OPTION SHARES"), (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan Plans and otherwise) to effectuate the provisions of this Section 1.6. It is the intention of the parties that the Company Options assumed by Parent qualify following the Effective Time as incentive stock options as defined in Section 422 of the Code to the extent such Company Options qualified as incentive stock options prior to the Effective Time, and this Section 1.6 shall be interpreted consistent with such intent. Following the Closing, Parent will send to each holder of an assumed Company Option a written notice setting forth (i) the number of shares of Parent Common Stock subject to such assumed Company Option, and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option. No later than February 1, 2000, Parent shall file a registration statement on Form S-8 for the shares of Parent Common Stock issuable with respect to assumed Company Options that are eligible for inclusion on Form S-8 and shall maintain the effectiveness of such registration statement thereafter for so long as any such options or other rights remain outstanding. The Company has not taken, and shall not take, any action that would result in the accelerated vesting, exercisability or payment of the Company Options as a consequence of the execution of, or consummation of the transactions contemplated by, this Agreement. Consistent with the terms of the Company Option Plans and the documents governing the outstanding options under the Company Option Plans, the Merger will not terminate any of the outstanding Company Options or accelerate the vesting, exercisability or payment of any Company Options or the shares of Parent Common Stock which will be subject to those options upon the Parent's assumption of the Company Options in the Merger.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Option Plan, whether vested or unvestedunvested (a “Company Option”), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Plan and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (ai) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (bii) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Number, rounded down to the nearest whole number of shares of Parent Common Stock, (ciii) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Number, and rounding the resulting exercise price up to the nearest whole cent, and (div) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent ; provided further, that in no event shall take all action that may be necessary (under the any assumed Company Option Plan and otherwise) to effectuate the provisions have a term in excess of this Section 1.6ten years.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option that is then all outstanding under the Company Option PlanOptions, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Plan Plans (as defined in Section 1.6(b)) and the stock option agreement agreements by which such Eligible Stock Option is Company Options are evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options assumed by Parent shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (ai) each Eligible Stock assumed Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (bii) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to determined by multiplying the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioOption Stock Fraction (as defined below), rounded and rounding down to the nearest whole number of shares of Parent Common Stock, (ciii) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioOption Stock Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (div) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction declared, made or effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan and otherwise) to effectuate the provisions For purposes of this Section 1.61.6(a), the “Option Stock Fraction” shall be the fraction having a numerator equal to the Residual Per Share Amount and having a denominator equal to the average of the closing sale prices of a share of Parent Common Stock as reported on the Nasdaq National Market for each of the five consecutive trading days ending on the second trading day prior to the Closing Date (with such average to be adjusted as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction declared, made or effected by Parent during the period from the first of said five consecutive trading days through the Effective Time). Following the Closing, Parent will send to each holder of an assumed Company Option a written notice setting forth (x) the number of shares of Parent Common Stock subject to such assumed Company Option, and (y) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option. Parent shall use commercially reasonable efforts to file with the SEC, within five business days after the Closing Date, a registration statement on Form S-8 registering the Parent Common Stock underlying the assumed Company Options.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company's 1995 Stock Option Plan (the "Company Option Plan"), whether vested or unvestedunvested (a "Company Option"), shall be assumed substituted by Parent with a stock option under Parent's 1999 Omnibus Equity Plan (or an equivalent plan) (the "Parent Plan") with a term, exercisability and vesting schedule equivalent to such Company Option and with all other terms in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Parent Plan and the stock option agreement by which such Eligible Stock Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to as set forth in this Section 1.6 (a "Parent Common StockSubstituted Option"). Accordingly, from and after the Effective Time, (a) each Eligible Stock Parent Substituted Option assumed by Parent substituted for a Company Option may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Parent Substituted Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Parent Substituted Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock substituted Company Option, as in effect immediately prior to the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent, and (d) the Parent Substituted Option shall contain all restrictions on the exercise of each such assumed Eligible Stock Option substituted Company Option, which shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Parent Substituted Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan Plan, the option agreements thereunder and otherwise) to effectuate the provisions of this Section 1.6. Following the Closing, Parent will send to each holder of a substituted Company Option a Stock Option Grant Notice and Stock Option Agreement under the Parent Plan reflecting the terms of the Parent Substituted Option for execution by such holder.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Option PlanCompany's Amended 1986 Incentive Stock Plan and 1994 Senior Executive Stock Plan (collectively, the "Stock Plans"), whether vested or unvestedunvested (a "Company Option"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreementthe Company Option) of the Company Option Plan Stock Plans and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio4 11 Applicable Fraction, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule schedule, status as an incentive or nonqualified option, and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan Stock Plans and otherwise) to effectuate the provisions of this Section 1.6.. Following the Closing, Parent will send to each holder of an assumed Company Option a written notice setting forth (i) the number of shares of Parent Common Stock subject to such assumed Company Option, and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option. (b) Parent will cause the Parent Common Stock issuable upon exercise of the assumed Company Options (the "Assumed Options") to be registered under the Securities Act of 1933, as amended (the "Securities Act"), on Form S-8 promulgated by the Securities and Exchange Commission ("SEC") and to be registered or qualified (or to have established that an exemption from such registration or qualification is available) under the "blue sky" laws of all states in which holders of Company Options reside, within seven (7) business days after the Effective Time, and Parent will use its best efforts to maintain the effectiveness of such registration statement or registration statements for so long as any such Assumed Options shall remain outstanding. With respect to any Company employee or director who subsequent to the Merger will be subject to the reporting requirements under Section 16(a) of the Exchange Act with respect to the securities of Parent beneficially owned by such person, Parent shall administer the Assumed Options (including the provisions of the Stock Plans incorporated in the Assumed Options) in a manner that complies with the disinterested administration requirements of Rule 16b-3 promulgated by the SEC under the Exchange Act. At or prior to the Effective Time, Parent will reserve a sufficient number of shares of Parent Common Stock for issuance upon exercise of the Assumed Options. (c) Ten percent (10%) of any amount of Parent Common Stock to be received by any holder of Vested Option Shares under Section 1.6(b) above shall become part of the General Escrow Amount pursuant to the General Escrow Agreement when such Vested Option Shares are issued. 1.7

Employee Stock Options. (a) At Effective as of the Effective Time, each Eligible Stock Option that is then outstanding under the Company shall take all necessary action, including obtaining the consent of the individual option holders, if necessary, to (a) terminate the Company’s 1999 Stock Option Plan, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as of amended through the date of this Agreement) of Agreement (the “Company Option Plan and the stock option agreement by which such Eligible Stock Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Option assumed by Parent may be exercised solely for shares of Parent Common StockPlan”), (b) the number of shares of Parent Common Stock subject provide that each outstanding option to each such assumed Eligible Stock Option shall be equal to the number of purchase shares of Company Common Stock that were subject to such Eligible granted under the Company Stock Option Plan (each, a “Company Stock Option”) that is outstanding and unexercised as of immediately prior to the Effective Time multiplied by Time, whether or not vested or exercisable, shall become fully vested and exercisable as of the Exchange RatioEffective Time, rounded down to the nearest whole number of shares of Parent Common Stock, and (c) cancel as of the per share exercise price for the Parent Common Stock issuable upon exercise of Effective Time each such assumed Eligible Company Stock Option shall be determined by dividing that is outstanding and unexercised at the Effective Time. Each holder of a Company Stock Option that is outstanding and unexercised at the Effective Time and that has an exercise price per share of Company Common Stock that is less than the portion of the Merger Consideration allocated to each share of Company Common Stock pursuant to Schedule I hereto shall be entitled (subject to the provisions of this Section 3.05) to be paid by the Surviving Corporation from time to time after the Effective Time as the Merger Consideration is payable, in exchange for the cancellation of such Eligible Company Stock Option, as an amount in effect immediately prior cash (subject to any applicable withholding taxes) with respect to each share of Company Common Stock subject to the Company Stock Option equal to the excess, if any, of the portion of the Merger Consideration allocated to each share of Company Common Stock on Schedule I hereto over the applicable per share exercise price of such Company Stock Option (the aggregate amount so payable under this Section 3.05 being the “Option Payment”). Any such payment shall be subject to all applicable federal, state and local tax withholding requirements. Prior to the Effective Time, Parent shall cause to be wired to an account designated by the Exchange RatioCompany an amount sufficient to enable the Company to make the payments required pursuant to this Section 3.05, taking into account that portion of the Price Adjustment Escrow Fund, the Dissenters Indemnification Escrow Fund, the General Indemnification Escrow Fund and rounding the resulting exercise price up Stockholders’ Representative Expense Fund (together, the “Escrow Funds”) attributable to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Company Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6Options.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option option (if any) to purchase shares of capital stock of the Company that is then outstanding under the Company Option Planoutstanding, whether vested or unvestedunvested (a "Company Option"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Plan and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; providedPROVIDED, howeverHOWEVER, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6. Following the Closing, Parent will send to each holder (if any) of an assumed Company Option a written notice setting forth (i) the number of shares of Parent Common Stock subject to such assumed Company Option and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option. Parent shall file with the SEC, within 15 days after the Closing Date, a registration statement on Form S-8 registering the securities to be issued upon exercise of any Company Options assumed by Parent pursuant to this Section 1.6, and shall use reasonable efforts to maintain the effectiveness of such registration statement for so long as such Company Options remain outstanding.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option that is then outstanding under Company Option (as defined in Section 2.3(b)) and each other outstanding option to purchase Common Stock of the Company Option Planissued in accordance with the terms of this Agreement, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the such Company Stock Option Plan under which such Company Option Plan was issued and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction, rounded down down, to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, provided however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the all Company Stock Option Plan Plans and otherwise) to effectuate the provisions of this Section 1.6.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Company's 1999 Stock Option Plan, whether vested or unvestedunvested (a "COMPANY OPTION"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Company's 1999 Stock Option Plan and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common StockStock as set forth below. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Company's 1999 Stock Option Plan and otherwise) to effectuate the provisions of this Section 1.6. Following the Closing, Parent will send to each holder of an assumed Company Option a written notice setting forth (i) the number of shares of Parent Common Stock subject to such assumed Company Option, and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option. To the extent necessary, Parent shall file with the SEC, as soon as reasonably practical but in any event within thirty (30) days after the Closing Date, a registration statement on Form S-8 registering the exercise of the Company Options assumed by Parent pursuant to this Section 1.6.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Company's 1985 Nonqualified Stock Option Plan for Key Employees (the "1985 Stock Plan"), whether vested or unvestedunvested (a "Company Option"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Company's 1985 Stock Plan and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Class A Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common StockStock as set forth in the following clause "(b)" , (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Class A Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Class A Fraction, rounded down up to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Class A Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Class A Fraction, and rounding the resulting exercise price up down to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Company's 1985 Stock Plan and otherwise) to effectuate the provisions of this Section 1.6. Following the Closing, Parent will send to each holder of an assumed Company Option a written notice setting forth (i) the number of shares of Parent Common Stock subject to such assumed Company Option, and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option. Parent shall file with the SEC, within 30 days after the Closing Date, a registration statement on Form S-8 registering shares to be received upon the exercise of the Company Options assumed by Parent pursuant to this Section 1.6.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option that is then outstanding under Company Option and each other outstanding option to purchase Common Stock of the Company Option Planissued in accordance with the terms of this Agreement, whether vested or unvested, shall shall, as part of the Merger, be assumed by Parent in accordance with the terms (as in effect as of the date of this AgreementClosing Date) of the such Company Stock Option Plan under which such Company Option Plan was issued and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (ai) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (bii) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the sum of (A) the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Closing Fraction, rounded down to the nearest whole number of shares of Parent Common Stock, and (B) in the event any Contingent Payments are made, the number of shares of Company Common Stock that were subject to such Company Option immediately prior to the Effective Time multiplied by the Applicable Contingent Fraction, rounded down to the nearest whole number of shares of Parent Common Stock, (ciii) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, provided however, that (x) each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Stock Option Plan and otherwise) to effectuate the provisions of this Section 1.61.7, and (y) the conversion of each Company Option into an option to purchase Parent Common Stock pursuant to this Section 1.7 shall comply with the requirements of Treasury Regulation Section 1.409A-1(b)(5)(v)(D); provided that the conversion of each Company Option that is intended to be an incentive stock option under Section 422 of the Code into an option to purchase Parent Common Stock shall comply with the requirements of Treasury Regulation Section 1.424-1(a).

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Company's 1997 Stock Award Plan (the "Stock Option Plan"), whether vested or unvestedunvested (a "Company Option"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Company's Stock Option Plan and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Company's Stock Option Plan and otherwise) to effectuate the provisions of this Section 1.6. Following the Closing, Parent will send to each holder of an assumed Company Option a written notice setting forth (i) the number of shares of Parent Common Stock subject to such assumed Company Option, and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option. Parent shall file with the SEC, within ninety (90) days after the Closing Date, a registration statement on Form S-8 registering the exercise of the Company Options assumed by Parent pursuant to this Section 1.6. At or prior to the Effective Time, each Stock Appreciation Right that is then outstanding under the Company's Stock Option Plan shall be cashed out by Parent in accordance with Section 7.6 hereof and terminated.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Company's 1996 Nonqualified Stock Option Plan, whether vested or unvestedunvested (a "Company Option"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Company's 1996 Nonqualified Stock Option Plan and the stock option agreement by which such Eligible Stock Company Option is evidenced. The term "Company Option" shall not include any options described on Part 1.6 of the Disclosure Schedule. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common StockStock (subject to applicable withholding) in accordance with subsections (a), (b), (c), (d) and (e) of this Section 1.6. Accordingly, from From and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, ; (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Number, rounded down to the nearest whole number of shares of Parent Common Stock, ; (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Number, and rounding the resulting exercise price up to the nearest whole cent, and ; (d) except as set forth in subsection (e) below or as may result from the consummation of the transactions contemplated by this Agreement, all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; and (e) the Company's 1996 Nonqualified Stock Option Plan shall be amended, the applicable provisions waived or such other necessary action of the Company taken, to (i) clarify the rights of Parent, including under Section 5.3 of such Plan, to assume the Company's Options in accordance with this Agreement and upon the occurrence of certain corporate transactions; (ii) eliminate the Company's repurchase rights with respect to the Company's Options set forth in Section 6.9 of such Plan and the Company Common Stock issuable upon exercise of such Company Options under Article VII of such Plan; (iii) provide for a 90-day period after termination of employment, engagement and directorship, as the case may be, to exercise the Company Options; (iv) eliminate the provisions of Section 9.2 of such Plan (to the extent the ongoing effect of such provision would have an adverse effect on the holders of Company Options); and (v) make other conforming amendments as agreed upon by the Parent and the Company; provided, however, that, except for the Company Options listed on Part 1.6 of the Disclosure Schedule, all such Company Options shall immediately vest and become exercisable at the Effective Time; and provided, further, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. In addition, as of the Effective Time, each holder of an assumed Company Option shall be entitled to receive a cash payment equal to the product of the Applicable Cash Payment and the number of shares of Company Common Stock that were subject to such assumed Company Option immediately prior to the Effective Time (the "Company Option Cash Payment"), subject to applicable withholding. The Company and Parent shall take all action that may be necessary (under the Company Company's 1996 Nonqualified Stock Option Plan and otherwise) to effectuate the provisions of this Section 1.6. Following the Closing, Parent will send or deliver to each holder of an assumed Company Option (A) a written notice setting forth (i) the number of shares of Parent Common Stock subject to such assumed Company Option, and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option, and (B) the applicable Company Option Cash Payment. Parent shall file with the SEC, not later than the earlier of (y) forty-five (45) days following the Closing Date, or (z) five (5) days following the filing of any current report on Form 8-K required to be filed by Parent after the Closing with respect to the transactions contemplated herein (which report shall include all financial statements required to be included in such report), a registration statement on Form S-8 (or any successor or appropriate form) registering the exercise of the Company Options assumed by Parent pursuant to this Section 1.6 and shall use its reasonable best efforts to maintain the effectiveness of such registration statement, including the prospectus or prospectuses contained therein, for so long as such Company Options remain outstanding.

Employee Stock Options. (a) At Prior to the Effective Time, each Eligible the Seller shall take all such action as is necessary to terminate The UST Corp. Stock Option that is then outstanding under the Company Compensation Plan, The 1993 Main Street Community Bancorp, Inc. Stock Option Plan, The 1995 Afxxxxxxxx Xxxxxxxty Bancorp. Inc. Stock Option Plan, The 1986 Lexington Savings Bank Stock Option and Stock Appreciation Rights Plan, The 1994 Lexington Savings Bank Stock Option Plan, The Somerset Savings Bank 1986 Incentive Stock Option Plan, The Somerset Savings Bank 1995 Equity Incentive Plan, The 1995 UST Director's Stock Option Plan and The 1996 UST Director's Stock Option Plan, each as amended to date (collectively, the "Seller Stock Option Plans"), and shall provide written notice to each holder of a then outstanding stock option to purchase shares of Seller Common Stock pursuant to the Seller Stock Option Plans (whether or not such stock option is then vested or unvestedexercisable), that such stock option shall be assumed by Parent in accordance with the terms (be, as in effect as of at the date of this Agreement) of the Company Option Plan such notice, exercisable in full and the that such stock option agreement by which shall terminate at the Effective Time and that, if such Eligible Stock Option stock option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after not exercised or otherwise terminated before the Effective Time, (a) each Eligible Stock Option assumed such holder shall be entitled to receive in cancellation of such option a cash payment from the Seller at the Closing in an amount equal to the excess of the Merger Consideration over the per share exercise price of such stock option, multiplied by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Seller Common Stock covered by such stock option, subject to any required withholding of taxes. Subject to the foregoing, the Seller Stock Option Plans and all options issued thereunder shall terminate at the Effective Time. The Seller hereby represents and warrants to the Buyer that the maximum number of shares of Seller Common Stock subject to each such assumed Eligible issuance pursuant to the exercise of stock options issued and outstanding under the Seller Stock Option Plans is not and shall not be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Option immediately at or prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Option, as in effect immediately prior to the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6more than 2,386,818.

Employee Stock Options. (a) At the Effective Time, each Eligible all rights with respect to Seller Common Stock Option pursuant to Seller Employee Stock Options that is then are outstanding under at the Company Option PlanEffective Time, whether vested or unvestednot then exercisable, shall be assumed by Parent converted into and become rights with respect to Buyer Common Stock, and Buyer shall assume all Seller Employee Stock Options in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Seller Stock Plan under which it was issued and the stock option agreement Seller Employee Stock Option Agreement by which such Eligible Stock Option it is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from From and after the Effective Time, (ai) each Eligible Seller Employee Stock Option assumed by Parent may Buyer shall be exercised solely for shares of Parent Buyer Common Stock, (bii) the number of shares of Parent Buyer Common Stock subject to each such assumed Eligible Seller Employee Stock Option shall be equal to the number of shares of Company Seller Common Stock that were subject to such Eligible Seller Employee Stock Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down Ratio (subject to the nearest whole number of shares of Parent Common Stock, adjustment pursuant to Section 1.12 hereof) and (ciii) the per share exercise price for the Parent Common Stock issuable upon exercise of under each such assumed Eligible Seller Employee Stock Option shall be determined adjusted by dividing the per share exercise price per share of Company Common under such Seller Employee Stock subject to such Eligible Stock Option, as in effect immediately prior to the Effective Time, Option by the Exchange Ratio, Ratio (subject to adjustment pursuant to Section 1.12 hereof) and rounding the resulting exercise price up down to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that the terms of each such assumed Eligible Seller Employee Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization recapitalization, exchange of shares or other similar transaction effected by Parent after subsequent to the Effective Time. The Company and Parent It is intended that the foregoing shall take all action be undertaken in a manner that may be necessary (will not constitute a "modification" as defined in the Code, as to any Seller Employee Stock Option that is an "incentive stock option" as defined under the Company Code. In addition to the above, Seller shall enter into an Amended and Restated Option Agreement with Joxx X. Xxxxxx, President and Chief Executive Officer of Seller, and Jexxxxxxx Xxxxxx, Executive Vice President of Seller, to permit them to exercise their options until the expiration of ten years from the original date of grant of such options, and Buyer acknowledges that Seller may cause the Seller Stock Option Plan and otherwise) to effectuate be amended as necessary, consistent with the provisions of this Section 1.6foregoing.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option that is then outstanding under the Company Option Planand Company Warrant and each other outstanding option to purchase Company Common Stock issued in accordance with the terms of this Agreement, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the such Company Stock Option Plan under which such Company Option Plan was issued and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options and with respect to any Company capital stock under outstanding Company Warrants shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (ai) each Eligible Stock Company Option and Company Warrant assumed by Parent may be exercised solely for shares of Parent Common Stock, (bii) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option and Company Warrant shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option and the number of shares of Company capital stock that were subject to such Company Warrant immediately prior to the Effective Time multiplied by the Company Option Exchange Ratio, Ratio (as defined below) rounded down to the nearest whole number of shares of Parent Common Stock, and (ciii) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option or Company Warrant shall be determined by dividing the exercise price per share of Company Common Stock or Company capital stock, as applicable, subject to such Eligible Stock OptionCompany Option or Company Warrant, as in effect immediately prior to the Effective Time, by the such Company Option Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option or Company Warrant shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option or Company Warrant shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option or Company Warrant shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under It is the Company Option Plan and otherwise) to effectuate intention of the provisions of this Section 1.6.parties

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option option that is then outstanding under the Company Company's 1995 Stock Option Plan (the "Stock Plan"), whether vested or unvestedunvested (a "Company Option"), shall be assumed by Parent Wavetech in accordance with the terms (as in effect as of on the date of this Agreementhereof) of the Company Option Stock Plan and the stock option agreement agreement, if any, by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted converted, subject to the provisions hereof, into rights with respect to Parent Wavetech Common Stock. Accordingly, from From and after the Effective Time, (ai) each Eligible Stock Company Option assumed by Parent Wavetech (collectively, the "Assumed Options") may be exercised solely for shares of Parent Wavetech Common Stock, (bii) the number of shares of Parent Wavetech Common Stock subject to each such assumed Eligible Stock Assumed Option shall be equal to the number of shares of Wavetech Common Stock which the holder of such Assumed Option would have received pursuant to Section 1.6 in exchange for the shares of Company Common Stock that were subject to such Eligible Stock Assumed Option if such Assumed Option had been exercised immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common StockTime, (ciii) the per share exercise price for the Parent Wavetech Common Stock issuable upon exercise of each such assumed Eligible Stock Assumed Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Assumed Option, as in effect immediately prior to the Effective Time, by a fraction the Exchange Rationumerator of which is the number of shares of Wavetech Common Stock subject to such Assumed Option immediately after the Effective Time and the denominator of which is the number of shares of Company Common Stock subject to such Assumed Option immediately prior to the Effective Time, and rounding the resulting exercise price up to the nearest whole cent, and (div) all restrictions on the exercise of each such assumed Eligible Stock Assumed Option shall continue in full force and effect, effect and the term, exercisability, vesting schedule schedule, status as an incentive or nonqualified option, and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; providedPROVIDED, howeverHOWEVER, that each such assumed Eligible Stock Assumed Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent Wavetech after the Effective Time. The Company and Parent Wavetech shall take all action that may be necessary (under the Company Option Stock Plan and otherwise) to effectuate the provisions of this Section 1.61.12.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Company's 1996 Stock Option Plan, whether vested or unvestedunvested (a "Company Option"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Company's 1996 Stock Option Plan and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions (including methods of exercise) of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. In the case of any options which are "incentive stock options" (as defined in Section 422 of the Code), the exercise price, number of shares purchasable thereunder and the terms and conditions of exercise shall comply with Section 424(a) of the Code. The Company and Parent shall take all action that may be necessary (under the Company Company's 1996 Stock Option Plan and otherwise) to effectuate the provisions of this Section 1.6. Following the Closing, Parent will send to each holder of an assumed Company Option a written notice setting forth (i) the number of shares of Parent Common Stock subject to such assumed Company Option, and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option. Parent shall file with the SEC, within sixty (60) days after the Closing Date, a registration statement on Form S-8 registering the shares of Parent Common Stock issuable upon exercise of the Company Options assumed by Parent pursuant to this Section 1.6 unless such shares of Parent Common Stock are already registered.

Employee Stock Options. (a) At the Effective TimeClosing Date, each Eligible Stock Option stock option that is then outstanding under the Company Option PlanCompany's 1995 Stock Option/Issuance Plan or any other plan, whether vested or unvestedunvested (a "Company Option"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company's 1995 Stock Option/Issuance Plan or any other plan, whether vested or unvested (a "Company Option Option"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company's 1995 Stock Option/Issuance Plan or any other plan and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective TimeClosing Date, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to as set forth on the number of shares of Company Common Stock that were subject to such Eligible Stock Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stockattached Schedule 1.6, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing as set forth on the exercise price per share of Company Common Stock subject to such Eligible Stock Option, as in effect immediately prior to the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole centattached Schedule 1.6, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6Closing Date.

Employee Stock Options. (a) At Prior to the Effective Time, each Eligible the Seller shall take all such action as is necessary to terminate The UST Corp. Stock Option that is then outstanding under the Company Compensation Plan, The 1993 Main Street Community Xxxxxxx, Xxx. Xxock Option Plan, The 1995 Affiliated Community Bancorp. Inc. Stock Option Plan, The 1986 Lexington Savings Bank Stock Option and Stock Appreciation Rights Plan, The 1994 Lexington Savings Bank Stock Option Plan, The Somerset Savings Bank 1986 Incentive Stock Option Plan, The Somerset Savings Bank 1995 Equity Incentive Plan, The 1995 UST Director's Stock Option Plan and The 1996 UST Director's Stock Option Plan, each as amended to date (collectively, the "Seller Stock Option Plans"), and shall provide written notice to each holder of a then outstanding stock option to purchase shares of Seller Common Stock pursuant to the Seller Stock Option Plans (whether or not such stock option is then vested or unvestedexercisable), that such stock option shall be assumed by Parent in accordance with the terms (be, as in effect as of at the date of this Agreement) of the Company Option Plan such notice, exercisable in full and the that such stock option agreement by which shall terminate at the Effective Time and that, if such Eligible Stock Option stock option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after not exercised or otherwise terminated before the Effective Time, (a) each Eligible Stock Option assumed such holder shall be entitled to receive in cancellation of such option a cash payment from the Seller at the Closing in an amount equal to the excess of the Merger Consideration over the per share exercise price of such stock option, multiplied by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Seller Common Stock covered by such stock option, subject to any required withholding of taxes. Subject to the foregoing, the Seller Stock Option Plans and all options issued thereunder shall terminate at the Effective Time. The Seller hereby represents and warrants to the Buyer that the maximum number of shares of Seller Common Stock subject to each such assumed Eligible issuance pursuant to the exercise of stock options issued and outstanding under the Seller Stock Option Plans is not and shall not be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Option immediately at or prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Option, as in effect immediately prior to the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6more than 2,386,818.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Option Company's 1998 Stock Incentive Plan, whether vested or unvestedunvested (a "COMPANY OPTION"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Company's 1998 Stock Incentive Plan and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common StockStock as set forth below. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Company's 1998 Stock Incentive Plan and otherwise) to effectuate the provisions of this Section 1.6. Following the Closing, Parent will send to each holder of an assumed Company Option a written notice setting forth (i) the number of shares of Parent Common Stock subject to such assumed Company Option, and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option. To the extent necessary, Parent shall file with the SEC, as soon as reasonably practical but in any event within thirty (30) days after the Closing Date, a registration statement on Form S-8 registering the exercise of the Company Options assumed by Parent pursuant to this Section 1.6.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Option Company's 1998 Stock Plan, whether vested or unvestedunvested (a "Company Option"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Company's 1998 Stock Plan and the stock option agreement by which such Eligible Stock Company Option is evidencedevidenced and the Company's repurchase right with respect to any unvested shares acquired by the exercise of Company Options shall be assigned to Parent. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) each assumed Company Option designated an "incentive stock option" as defined in Section 422 of the Code ("ISO") immediately prior to the Effective Time shall remain an ISO; and (e) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Company's 1998 Stock Plan and otherwise) to effectuate the provisions of this Section 1.6. Each holder of a Company Option will receive credit for time served as an employee of the Company for the purposes of the vesting schedule of such Company Option assumed by the Parent. Following the Closing, Parent will send to each holder of an assumed Company Option a written notice setting forth (i) the number of shares of Parent Common Stock subject to such assumed Company Option, and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option. As soon as reasonably practicable, and in any event within 60 days after the Closing Date, unless such 60 day period is impracticable, Parent shall file with the SEC, a registration statement on Form S-8 registering the shares of Parent Common Stock issuable upon exercise of the Company Options assumed by Parent pursuant to this Section 1.6.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Company's 1997 Stock Option PlanPlan (the "COMPANY OPTION PLAN"), whether vested or unvestedunvested (a "COMPANY OPTION"), shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Plan and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction, rounded down to the nearest whole number of shares of Parent Common StockStock (collectively, the "OPTION SHARES"), (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6. It is the intention of the parties that the Company Options assumed by Parent qualify following the Effective Time as incentive stock options as defined in Section 422 of the Code to the extent such Company Options qualified as incentive stock options prior to the Effective Time, and this Section 1.6 shall be interpreted consistent with such intent. Following the Closing, Parent will send to each holder of an assumed Company Option a written notice setting forth (i) the number of shares of Parent Common Stock subject to such assumed Company Option, and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such assumed Company Option. No later than February 1, 2000, Parent shall file a registration statement on Form S-8 for the shares of Parent Common Stock issuable with respect to assumed Company Options that are eligible for inclusion on Form S-8 and shall maintain the effectiveness of such registration statement thereafter for so long as any such options or other rights remain outstanding.

Employee Stock Options. Prior to the Effective Time, the Company shall permit the exercise of vested Company Options (aas defined below) by either the payment of the exercise price in cash or through a cashless net exercise, and in no event shall the Company permit the exercise of vested Company Options by a promissory note. At the Effective Time, each Eligible Stock Option stock option that is then outstanding under the Company Company's 1998 Stock Option Plan, whether vested or unvestedunvested (a "COMPANY OPTION"), shall be assumed by converted into an option to purchase shares of Parent in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Plan and the stock option agreement by which such Eligible Stock Option is evidencedCommon Stock. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights stock options with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock converted Company Option shall be equal to the number of shares of Company Common Parent Stock that were subject the holder of such Company Option would have received pursuant to Section 1.6(a)(i) hereof if such Eligible Stock Company Option had been fully vested and exercised immediately prior to the Effective Time multiplied by the Exchange RatioTime, rounded down up or down, as the case may be, to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock converted Company Option shall be determined by dividing $1 per share, (d) each converted Company Option designated an "incentive stock option" as defined in Section 422 of the exercise price per share of Company Common Stock subject to such Eligible Stock Option, as in effect Code ("ISO") immediately prior to the Effective TimeTime shall remain an ISO, by (e) each converted Company Option shall be subject to the Exchange Ratioterms and conditions of, and rounding the resulting exercise price up to the nearest whole centrestrictions on transfer set forth in, Parent's 1999 Stock Incentive Plan, and (df) all restrictions on the exercise of each such assumed Eligible converted Company Option as set forth in each option holder's employment agreement or stock option agreement or pursuant to the Company's 1998 Stock Option Plan, shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock converted Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the Company Company's 1998 Stock Option Plan and otherwise) to effectuate the provisions of this Section 1.61.7. Each holder of a Company Option will receive credit for time served as an employee of the Company for the purposes of the vesting schedule of such Company Option converted by the Parent. Following the Closing, Parent will send to each holder of a converted Company Option a written notice setting forth (i) the number of shares of Parent Common Stock issuable upon exercise of such converted Company Option and (ii) the exercise price per share of Parent Common Stock issuable upon the exercise of such converted Company Option.

Employee Stock Options. (a) At the Effective Time, each Eligible all rights with respect to Seller Common Stock Option pursuant to Seller Employee Stock Options that is then are outstanding under at the Company Option PlanEffective Time, whether vested or unvestednot then exercisable, shall be assumed by Parent converted into and become rights with respect to Unified Common Stock, and Unified shall assume all Seller Employee Stock Options in accordance with the terms (as in effect as of the date of this Agreement) of the Company Option Seller Stock Plan under which it was issued and the stock option agreement Seller Employee Stock Option Agreement by which such Eligible Stock Option it is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from From and after the Effective Time, (ai) each Eligible Seller Employee Stock Option assumed by Parent may Unified shall be exercised solely for shares of Parent Unified Common Stock, (bii) the number of shares of Parent Unified Common Stock subject to each such assumed Eligible Seller Employee Stock Option shall be equal to the number of shares of Company Seller Common Stock that were subject to such Eligible Seller Employee Stock Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, Ratio and (ciii) the per share exercise price for the Parent Common Stock issuable upon exercise of under each such assumed Eligible Seller Employee Stock Option shall be determined adjusted by dividing the per share exercise price per share of Company under such Seller Employee Stock Option by the Exchange Ratio and rounding down to the nearest cent; provided, however, except for that certain two-for-one stock split with respect to the Unified Common Stock subject Stock, which is to such Eligible Stock Option, as in effect immediately be effected prior to the Effective Time, by that the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise terms of each such assumed Eligible Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Seller Employee Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after subsequent to the Effective Time. The Company and Parent It is intended that the foregoing assumption shall take all action be undertaken in a manner that may be necessary (will not constitute a "modification" as defined in the Code, as to any Seller Employee Stock Option that is an "incentive stock option" as defined under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6Code.

Employee Stock Options. (a) At the Effective Time, each Eligible Stock Option that is then outstanding under Company Option (as defined in Section 2.3(b)) and each other outstanding option to purchase Common Stock of the Company Option Planissued in accordance with the terms of this Agreement, whether vested or unvested, shall be assumed by Parent in accordance with the terms (as in effect as of the date of this Agreement) of the such Company Stock Option Plan under which such Company Option Plan was issued and the stock option agreement by which such Eligible Stock Company Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Company Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Company Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Company Option immediately prior to the Effective Time multiplied by the Exchange RatioApplicable Fraction, rounded down to the nearest whole number of shares of Parent Common Stock, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Company Option shall be determined by dividing the exercise price per share of Company Common Stock subject to such Eligible Stock Company Option, as in effect immediately prior to the Effective Time, by the Exchange RatioApplicable Fraction, and rounding the resulting exercise price up to the nearest whole cent, and (d) all restrictions on the exercise of each such assumed Eligible Stock Company Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Company Option shall otherwise remain unchanged; provided, provided however, that each such assumed Eligible Stock Company Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time. The Company and Parent shall take all action that may be necessary (under the all Company Stock Option Plan Plans and otherwise) to effectuate the provisions of this Section 1.6. It is the intention of the parties that the Company Options assumed by Parent qualify following the Effective Time as incentive stock options as defined in Section 422 of the Code to the extent the Company Options qualified as incentive stock options immediately prior to the Effective Time.

Employee Stock Options. (a) At On the Effective TimeDate, each Eligible the Holding Company ---------------------- will assume the Bank's rights and obligations under the Bank's 1999 Stock Option that is then Plan (the "1999 Plan") and under each of the outstanding stock options to purchase common stock of the Bank previously granted under the Company Option Plan, whether vested or unvested, shall be assumed by Parent in accordance with the terms 1999 Plan (as in effect as of the date of this Agreement) of the Company Option Plan and the each such stock option agreement by which such Eligible Stock Option is evidenced. All rights with respect to Company Common Stock under outstanding Eligible Stock Options shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the Effective Time, (a) each Eligible Stock Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (b) the number of shares of Parent Common Stock subject to each such assumed Eligible Stock Option shall be equal to the number of shares of Company Common Stock that were subject to such Eligible Stock Option existing immediately prior to the Effective Time multiplied Date being called an "Existing Option" and each such stock option so assumed by the Exchange RatioHolding Company being called an "Assumed Option"). By reason of such assumption, rounded down each option agreement that evidenced the right to purchase Bank common stock shall thereafter represent, and each holder of an Existing Option shall have, the nearest whole number right to purchase one share of Holding Company common stock for each share of Bank common stock which such holder was entitled to purchase under his or her Existing Option and the right to exercise the Existing Option into shares of Parent Common StockBank common stock shall automatically terminate without the necessity of any action on the part of the Bank, (c) the per share exercise price for the Parent Common Stock issuable upon exercise of each such assumed Eligible Stock Option shall be determined by dividing the exercise Bancorp or any optionee. The price per share of Holding Company Common Stock subject common stock at which an Assumed Option may be exercised shall be the same price per share that was applicable to such Eligible Stock Optionthe purchase of Bank common stock pursuant to the Existing Options, as in effect immediately prior to the Effective TimeDate. Each Assumed Option, by subject to such modification as set forth hereinafter, shall constitute a continuation of the Exchange RatioExisting Option, on the same terms and rounding conditions set forth in the resulting exercise price up 1999 Plan in each optionee's stock option agreement that formerly evidenced the right to purchase Bank common stock, except as follows: (i) shares of Holding Company Common Stock will be substituted for the nearest whole centshares of Bank common stock into which the existing options had been exercisable, (ii) the Holding Company shall be substituted for the Bank as the issuer of shares under the 1999 Plan and (diii) all restrictions the Holding Company shall be authorized under the 1999 Plan to issue options to purchase Holding Company shares not only to directors, officers and key employees of the Bank, but also to directors, officers and key employees of the Holding Company and any other subsidiaries it may establish in the future. In addition, each option granted under the 1999 Plan on the exercise of each such assumed Eligible Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Eligible Stock Option shall otherwise remain unchanged; provided, however, that each such assumed Eligible Stock Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective TimeDate shall evidence the right to purchase shares of common stock of the Holding Company rather than shares of common stock of the Bank and the Plan shall be modified to so provide. The Company and Parent In all other respects, the 1999 Plan shall take all action that may be necessary (under the Company Option Plan and otherwise) to effectuate the provisions of this Section 1.6unchanged.