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EXHIBIT A
AMENDED AND RESTATED
FIRST AMENDMENT TO
INCENTIVE STOCK OPTION AGREEMENTS
FIRST AMENDMENT TO INCENTIVE STOCK OPTION AGREEMENTS (this
"Amendment") is entered into as of the 20th day of May, 2002, by and among
Heritage Financial Holding Corporation (the "Corporation"), Heritage Bank (the
"Bank") and Xxxxxxxx X. Xxxxxxx ("Xx. Xxxxxxx").
WHEREAS, the Board of Directors of the Bank, a predecessor-in-interest
to the Corporation, granted Xx. Xxxxxxx options to purchase shares of Bank
common stock pursuant to certain Incentive Stock Option Agreements (the
"Incentive Stock Option Agreements") dated as follows:
June 10, 1995 January 1, 1997 April 17, 1998
July 15, 1998 August 24, 1998 December 28,
1999;
WHEREAS, the Corporation, the Bank and Heritage Interim Corporation
entered into a Plan of Reorganization and Agreement of Merger (the
"Reorganization Agreement"), dated March 14, 2000, whereby the Corporation
became a bank holding company and all of the stockholders of the Bank became
stockholders of the Corporation;
WHEREAS, pursuant to Section 2.2 of the Reorganization Agreement, the
Corporation assumed the Heritage Bank Incentive Stock Compensation Plan, and the
Reorganization Agreement provided that all outstanding options to purchase
shares of Bank common stock were converted automatically into substitute options
to acquire the same number of shares of Corporation common stock;
WHEREAS, the Corporation has adopted, and the stockholders of the
Corporation have ratified, the Heritage Financial Holding Corporation Incentive
Stock Compensation Plan;
WHEREAS, in order to clarify that Xx. Xxxxxxx'x stock options under the
Incentive Stock Option Agreements are currently options to purchase shares of
common stock of the Corporation and not the Bank, the Corporation, the Bank and
Xx. Xxxxxxx each hereby desires to amend the Incentive Stock Option Agreements
to reflect that fact;
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WHEREAS, as of the date of this Amendment, all of Xx. Xxxxxxx'x options
to purchase shares of Corporation common stock pursuant to the Incentive Stock
Option Agreements are vested, with the specific exceptions of unvested stock
options totaling 360,000 shares of Corporation common stock under the August 24,
1998 Incentive Stock Option Agreement and the shares of Corporation common stock
covered by the June 10, 1995 Incentive Stock Option Agreement, all of which have
been acquired by Xx. Xxxxxxx upon exercise;
WHEREAS, in accordance with that certain Retirement, Release and
Settlement Agreement, dated March 25, 2002, by and among the parties hereto, Xx.
Xxxxxxx has voluntarily resigned as an officer and employee of the Corporation
and the Bank, and the Bank and Xx. Xxxxxxx each hereby desires to amend the
Incentive Stock Option Agreements to reflect certain new terms and conditions;
WHEREAS, the Corporation, the Bank and Xx. Xxxxxxx, after further
extensive discussions, each have further agreed in good faith to amend and
restate the Retirement, Release and Settlement Agreement, and carry out the
terms therein, in order to clarify and amend certain terms of such previous
agreement that will be in the best interest of the parties thereto and the
stockholders of the Corporation and the Bank, it being intended that such
amended and restated agreement will supersede and replace that certain
Retirement, Release and Settlement Agreement in its entirety;
WHEREAS, an Amended and Restated Retirement, Release and Settlement
Agreement is being executed on a date contemporaneously herewith by and among
the Corporation, the Bank and Xx. Xxxxxxx; and
WHEREAS, the Corporation, the Bank and Xx. Xxxxxxx each have agreed to
amend and restate the First Amendment to Incentive Stock Option Agreements in
order to conform the terms in such previous amendment to the terms in the
Amended and Restated Retirement, Release and Settlement Agreement, it being
intended that this Amendment will supersede and replace that certain First
Amendment to Incentive Stock Option Agreements in its entirety.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby further acknowledged and agreed to, the
Corporation, the Bank and Xx. Xxxxxxx each hereby agrees as follows:
1. All references to "Heritage Bank" throughout the Incentive Stock
Option Agreements, and any exhibits and attachments thereto, are hereby
substituted with "Heritage Financial Holding Corporation".
2. All references to "Heritage Bank Incentive Stock Compensation Plan"
throughout the Incentive Stock Option Agreements, and any exhibits and
attachments thereto, are hereby substituted with "Heritage Financial Holding
Corporation Incentive Stock Compensation Plan".
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3. The Incentive Stock Option Agreements are hereby amended to reflect
the fact that all of Xx. Xxxxxxx'x stock options are options to purchase shares
of common stock of the Corporation and not the Bank.
4. The August 24, 1998 Incentive Stock Option Agreement is hereby
amended as follows:
a. the Corporation hereby vests, in whole, on the Effective Date (as
defined in the Retirement, Release and Settlement Agreement), one year of
options to purchase common stock of the Corporation in the amount of 60,000
shares (the "April 1, 2002 Options");
b. the Corporation shall further cause to vest, in whole, on January
1, 2003, one year of options to purchase common stock of the Corporation in the
amount of 60,000 shares (the "January 1, 2003 Options"); and
c. excluding the vesting of those stock options provided for in Section
4(a) and (b) hereof, all remaining stock options under the August 24, 1998
Incentive Stock Option Agreement, an amount totaling 240,000 shares of
Corporation common stock, are hereby cancelled with no further rights
therein to be held by Xx.Xxxxxxx.
5. Notwithstanding any other provision relating to the expiration or
the termination of Xx. Xxxxxxx'x stock options under the Incentive Stock Option
Agreements or the Heritage Financial Holding Corporation Incentive Stock
Compensation Plan, the Incentive Stock Options Agreements are hereby further
amended to clarify that, with the exception of the April 1, 2002 Options and the
January 1, 2003 Options, all of the stock options covered thereby are vested
either currently or as of the Effective Date (as defined in the Amended and
Restated Retirement, Release and Settlement Agreement); as provided for herein,
and shall remain outstanding until June 23, 2002, (upon such date all such
options shall expire and be canceled) with the specific exception of (a) those
stock options cancelled as provided for in Section 4 (c) hereof, (b)those stock
options already exercised (c) the April 1, 2002 Options and (d) the January 1,
2003 Options.
6. Notwithstanding any other provision relating to the expiration or
the termination of Xx. Xxxxxxx'x stock options under the Incentive Stock Option
Agreements or the Heritage Financial Holding Corporation Incentive Stock
Compensation Plan, the August 24, 1998 Incentive Stock Option Agreement is
hereby further amended with regard to the April 1, 2002 Options to clarify that
these options are currently vested and to require Xx. Xxxxxxx to exercise all of
the such options within one year of April 1, 2002.
7. Notwithstanding any other provision relating to the expiration or
the termination of Xx. Xxxxxxx'x stock options under the Incentive Stock Option
Agreements or the Heritage Financial Holding Corporation Incentive Stock
Compensation Plan, the August 24, 1998 Incentive Stock Option Agreement is
hereby amended with regard to
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the January 1, 2003 Options to require Xx. Xxxxxxx
to exercise all of the such options within one year of January 1, 2003.
8. If Xx. Xxxxxxx does not exercise all of his stock options
within the prescribed time periods as provided for in the amendments herein,
then such options shall expire and be cancelled with no further rights therein
to be held by Xx. Xxxxxxx.
9. This Amendment shall be binding upon Xx. Xxxxxxx and any
assigns, heirs, executors and administrators thereof.
10. If there is a conflict between or among the Incentive Stock Option
Agreements, the Heritage Financial Holding Corporation Incentive Stock
Compensation Plan or this Amendment, the terms of this Amendment shall control.
11. Except as modified herein, all of the terms and conditions of
the Incentive Stock Option Agreements shall remain in full force and effect.
12. This Amendment may be executed in counterparts, each of which
shall be deemed an original and all of which shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
HERITAGE FINANCIAL HOLDING CORPORATION
By: _________________________
Its: _________________________
By: _________________________
Its: _________________________
HERITAGE BANK
By: _________________________
Its: _________________________
By:_________________________
Its: _________________________
_______________________________(L.S.)
Xxxxxxxx X. Xxxxxxx
348004.2
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