Exhibit 10.1

 

ENTERPRISE BANCORP, INC.

 

2009 STOCK INCENTIVE PLAN

 

SECTION 1.                                GENERAL PURPOSE OF THE PLAN;
DEFINITIONS

 

The name of this plan is the Enterprise Bancorp, Inc. 2009 Stock Incentive Plan
(the “Plan”).  The purpose of the Plan is to encourage and enable the officers,
employees, Non-Employee Directors and other key persons (including consultants
and prospective employees) of Enterprise Bancorp, Inc. (the “Company”) and its
Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company.  It is anticipated that providing such persons with a
direct stake in the Company’s welfare will assure a closer identification of
their interests with those of the Company and its stockholders, thereby
stimulating their efforts on the Company’s behalf and strengthening their desire
to remain with the Company.

 

The following terms shall be defined as set forth below:

 

“Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

 

“Administrator” means the compensation committee of the Board, which is
comprised of not less than three Non-Employee Directors, each of whom qualifies
as an “outside director” within the meaning of Section 162(m) of the Code and a
“non-employee director” within the meaning of Rule 16b-3 of the Exchange Act;
provided, however, that if and to the extent that the Board at any time assumes
the powers and responsibilities of the Administrator under the Plan, then all
references to the “Administrator” in the Plan shall refer to the Board under
such circumstances.

 

“Award” or “Awards” means, except where referring to a particular category of
grant under the Plan, any and all of the following:  Incentive Stock Options,
Non-Qualified Stock Options, Restricted Stock Awards, RSUs and SARs.

 

“Award Agreement” means a written or electronic agreement setting forth the
terms and provisions applicable to an Award granted under the Plan.  Each Award
Agreement is subject to the terms and conditions of the Plan.

 

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

 

“Change in Control” means the occurrence of either (i) a change in control of
the Company that the Company would be required to report in response to Item
5.01 of a Current Report on Form 8-K as filed by the Company with the Securities
and Exchange Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act or, if such reporting obligation is no longer
in effect, any regulations promulgated by the Securities and Exchange Commission
or any successor agency pursuant to the Exchange Act or any successor statute
that are intended to serve similar purposes, or (ii) a person (as such term is
used in Sections 13(d) and 14(d)(2) of the Exchange Act) becoming a beneficial
owner (as that term is

 

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defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing twenty-five percent or
more of the total number of votes that may be cast for the election of directors
of the Company, and in either such case the Board has not consented to the
occurrence of such event by a two-thirds vote of all of its members (unless
there is an Interested Stockholder, as that term is defined in the Company’s
articles of organization, as amended, in which case the affirmative vote of
two-thirds of the Continuing Directors, as that term is defined in the Company’s
articles of organization, as amended, shall also be required).  In addition to
the foregoing, a Change in Control shall be deemed to have occurred if as the
result of, or in connection with, any tender or exchange offer, merger or other
business combination, sale or other disposition of assets or any contested
election of directors of the Company or any combination of the foregoing
transactions, the persons who were directors of the Company before such
transaction or related series of transactions shall cease to constitute a
majority of the Board or of the board of directors of any successor entity.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
statute, and related rules, regulations and interpretations.

 

“Covered Employee” means an employee who is a “Covered Employee” within the
meaning of Section 162(m) of the Code.

 

“Disability” means a condition of total incapacity, mental or physical, for
further performance of duty with the Company and/or any Subsidiary, which the
Administrator shall have determined, on the basis of competent medical evidence,
is likely to be permanent.

 

“Effective Date” means the date on which the Plan is approved by the Board as
set forth in Section 15.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

 

“Fair Market Value” of the Stock on any given date means the closing price of
the Stock as reported on the Nasdaq Global Market or another national securities
exchange.  If there is no trading in the Stock on such date, the determination
shall be made by reference to the closing price of the Stock on the last date
preceding such date on which the Stock was traded.

 

“Incentive Stock Option” means any Stock Option designated and qualified as an
“incentive stock option” as defined in Section 422 of the Code.

 

“Non-Employee Director” means a member of the Board who is not also an employee
of the Company or any Subsidiary.

 

“Non-Qualified Stock Option” means any Stock Option that is not an Incentive
Stock Option.

 

“Option” or “Stock Option” means any option to purchase shares of Stock granted
pursuant to Section 5.

 

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“Restricted Stock Award” means an Award entitling the recipient to acquire, at
such purchase price (which may be zero) as determined by the Administrator,
shares of Stock, subject to such restrictions and conditions as the
Administrator may determine at the time of grant.

 

“RSU” means a restricted stock unit granted pursuant to Section 7.

 

“SAR” means a stock appreciation right granted pursuant to Section 7.

 

 “Section 409A” means Section 409A of the Code and the regulations and other
guidance promulgated thereunder.

 

“Stock” means the common stock, par value $0.01 per share, of the Company,
subject to adjustments pursuant to Section 3.

 

“Subsidiary” means any corporation or other entity (other than the Company) in
which the Company has at least a 50 percent interest, either directly or
indirectly.

 

“Ten Percent Owner” means an employee who owns or is deemed to own (by reason of
the attribution rules of Section 424(d) of the Code) more than 10 percent of the
combined voting power of all classes of stock of the Company or any parent
corporation or Subsidiary.

 

SECTION 2.                            ADMINISTRATION OF PLAN; ADMINISTRATOR
AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

 

(a)                                  Administration of Plan.  The Plan shall be
administered by the Administrator.

 

(b)                                 Powers of Administrator.  Subject to the
penultimate sentence of this subsection (b), the Administrator shall have the
power and authority to grant Awards consistent with the terms of the Plan,
including the power and authority:

 

(i)  to select the individuals to whom Awards may from time to time be granted;

 

(ii)  to determine the time or times of grant, and the extent, if any, of
Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards,
RSUs and SARs, or any combination of the foregoing, granted to any one or more
grantees;

 

(iii)  to determine the number of shares of Stock to be covered by any Award;

 

(iv)  to determine and modify from time to time the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of any
Award, which terms and conditions may differ among individual Awards and
grantees, and to approve the form of written instruments evidencing the Awards;

 

(v)  subject to the terms of the Plan, to accelerate at any time the
exercisability or vesting of all or any portion of any Award;

 

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(vi)  subject to the provisions of Section 5(c), to extend at any time the
period in which Stock Options may be exercised; and

 

(vii)  at any time to adopt, alter or repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and proceedings as
it shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related written instruments); to make all determinations it
deems advisable for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.

 

Notwithstanding any other provision contained in the Plan to the contrary, the
terms and conditions of each and every Award granted to the Company’s chairman,
president, and chief executive officer, to all other executive officers of the
Company or any Subsidiary, which shall include all officers who are subject to
the provisions of Section 16 of the Exchange Act and any other additional
officers as may be determined by the Board, and to any director of the Company,
shall be approved by the Board.  All decisions and interpretations of the
Administrator shall be binding on all persons, including the Company and Plan
grantees.

 

(c)                                  Delegation of Authority to Grant Awards. 
Subject to applicable law, the Administrator, in its discretion, may delegate to
the chief executive officer of the Company all or part of the Administrator’s
authority and duties with respect to the granting of Awards to persons other
than the chairman, the president, and the chief executive officer of the
Company, any other executive officer of the Company or any Subsidiary (as
determined pursuant to the penultimate sentence of Section 2(b) above), and any
director of the Company.  Any such delegation by the Administrator shall include
a limitation as to the amount or value of Awards that may be granted during the
period of the delegation and shall contain guidelines as to the determination of
any applicable exercise price and the vesting criteria.  The Administrator may
revoke or amend the terms of a delegation at any time, but such action shall not
invalidate any prior actions of the Administrator’s delegate or delegates that
were consistent with the terms of the Plan.

 

(d)                                 Award Agreement.  Awards under the Plan
shall be evidenced by Award Agreements that set forth the terms, conditions and
limitations for each Award, which may include, without limitation, the term of
an Award, the provisions applicable in the event employment or service
terminates, and the Company’s authority to unilaterally or bilaterally amend,
modify, suspend, cancel or rescind an Award.

 

(e)                                  Indemnification.  Neither the Board nor the
Administrator, nor any member of either or any delegate thereof, shall be liable
for any act, omission, interpretation, construction or determination made in
good faith in connection with the Plan, and the members of the Board and the
Administrator (and any delegate thereof) shall be entitled in all cases to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage or expense (including, without limitation, reasonable attorneys’ fees)
arising or resulting therefrom to the fullest extent permitted by law and/or
under the Company’s articles of organization or bylaws, each as amended, or any
directors’ and officers’ liability insurance coverage which may be in effect
from time to time and/or any indemnification agreement between such individual
and the Company.

 

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SECTION 3.                            STOCK ISSUABLE UNDER THE PLAN; MERGERS;
SUBSTITUTION

 

(a)                                  Stock Issuable.  The maximum number of
shares of Stock reserved and available for issuance under the Plan, subject to
adjustment as provided in Section 3(c), shall be 400,000 shares.  For purposes
of this limitation, the shares of Stock underlying any Awards that are
forfeited, canceled, held back upon exercise of an Option or settlement of an
Award to cover the exercise price or tax withholding, reacquired by the Company
prior to vesting, satisfied without the issuance of Stock or otherwise
terminated (other than by exercise) shall be added back to the shares of Stock
available for issuance under the Plan.  The shares available for issuance under
the Plan may be authorized but unissued shares of Stock or shares of Stock
reacquired by the Company.

 

(b)                                 Limitations on Size of Grants.  The total
number of shares of Stock with respect to which Options and Restricted Stock
Awards and any RSUs and/or SARs that may by their terms be settled in whole or
in part in shares of Stock may be granted under the Plan to any single person,
whether an employee of the Company or otherwise, shall not exceed in the
aggregate 120,000 (subject to adjustment pursuant to Section 3(c) below).

 

(c)                                  Changes in Capital Stock.  If, as a result
of any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in the Company’s capital
stock, the outstanding shares of Stock are increased or decreased or are
exchanged for a different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or other securities of
the Company are distributed with respect to such shares of Stock, the
Administrator shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, including the
limitation set forth in Section 3(b) above), (ii) the number and kind of shares
or other securities subject to any then outstanding Awards under the Plan,
(iii) the repurchase price, if any, per share subject to each outstanding
Restricted Stock Award, and (iv) the exercise price for each share subject to
any then outstanding Stock Options under the Plan, without changing the
aggregate exercise price (i.e., the exercise price multiplied by the number of
shares subject to such outstanding Stock Options) as to which such Stock Options
remain exercisable; provided, however, that no adjustment shall be made
hereunder with respect to any Incentive Stock Option that would constitute a
modification as defined under Section 424 of the Code.  Any adjustment by the
Administrator hereunder shall be final, binding and conclusive.  No fractional
shares of Stock shall be issued under the Plan resulting from any such
adjustment, but the Administrator in its discretion may make a cash payment in
lieu of fractional shares.

 

(d)                                 Change in Control or Liquidation.  Except as
the Administrator may otherwise specify with respect to particular Awards in the
relevant Award documentation, in the case of and subject to the consummation of
a Change in Control or a liquidation of the Company, all Options that are not
exercisable immediately prior to the effective time of the Change in Control or
liquidation shall become fully exercisable as of such effective time and all
Restricted Stock Awards, RSUs and SARs shall become fully vested and
nonforfeitable as of such effective time.  Upon the effective time of a Change
in Control or liquidation of the Company, the Plan and all outstanding Options
granted hereunder shall terminate, unless, in the case of a Change in Control,
provision is made in connection with the Change in Control in the sole
discretion of the parties thereto for the assumption or continuation of all
Options theretofore granted by the successor entity, or the substitution of such
Options with new stock options of the successor entity or parent thereof, with
appropriate adjustment as to the number and kind of shares and, if

 

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appropriate, the per share exercise prices, as such parties shall agree (after
taking into account any acceleration hereunder).  In the event of such
prospective termination of outstanding Options, the Company shall have the
option in its sole discretion to either (i) make or provide for a cash payment
to the holders of such Options, in exchange for the cancellation thereof, in an
amount equal to the difference between (A) the value on a per share basis as
determined by the Administrator of the consideration payable or otherwise to be
received by the Company’s shareholders in such Change in Control or liquidation
multiplied by the number of shares of Stock subject to such Options (to the
extent then exercisable (after taking into account any acceleration hereunder)
at prices not in excess of such value) and (B) the aggregate exercise price of
all such Options or (ii) permit the holders of such Options, within a specified
period of time prior to the consummation of the Change in Control or liquidation
as determined by the Administrator, to exercise the Options.

 

(e)                                  Substitute Awards.  The Administrator may
grant Awards under the Plan in substitution for stock and stock based awards
held by employees, directors or other key persons of another corporation in
connection with the merger or consolidation of the employing corporation with
the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation.  The Administrator may direct
that the substitute Awards be granted on such terms and conditions as the
Administrator considers appropriate in the circumstances. Any substitute Awards
granted under the Plan shall not count against the share limitation set forth in
Sections 3(a) and 3(b).

 

(f)                                    Interpretation.  Except as expressly
provided to the contrary in this Section 3, the issuance by the Company of
shares of capital stock of any class for cash or property or for services,
either upon direct sale or upon the exercise of rights or warrants, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect the number, class or price of shares of
Stock then subject to outstanding Options or Restricted Stock Awards.

 

SECTION 4.                            ELIGIBILITY

 

Grantees under the Plan will be such full or part-time officers and other
employees and Non-Employee Directors of the Company and its Subsidiaries, as
well as other key persons (including consultants and prospective employees), as
are selected from time to time by the Administrator in its sole discretion.

 

SECTION 5.                            STOCK OPTIONS

 

(a)                                  Stock Option Grants.  Any Stock Option
granted under the Plan shall be in such form as the Administrator may from time
to time approve.  Stock Options granted under the Plan may be either Incentive
Stock Options or Non-Qualified Stock Options.  Incentive Stock Options may be
granted only to employees of the Company or any Subsidiary that is a “subsidiary
corporation” within the meaning of Section 424(f) of the Code.  To the extent
that any Option does not qualify as an Incentive Stock Option, it shall be
deemed a Non-Qualified Stock Option. Stock Options granted pursuant to this
Section 5(a) shall be subject to the following terms and conditions contained in
this Section 5 and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable.

 

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(b)                                 Exercise Price.  The exercise price per
share for the Stock covered by a Stock Option granted pursuant to
Section 5(a) shall be determined by the Administrator at the time of grant, but
shall not be less than 100 percent of the Fair Market Value on the date of
grant.  In the case of an Incentive Stock Option that is granted to a Ten
Percent Owner, the option price of such Incentive Stock Option shall be not less
than 110 percent of the Fair Market Value on the grant date.

 

(c)                                  Option Term.  The term of each Stock Option
shall be fixed by the Administrator, but no Stock Option shall be exercisable
more than ten years after the date the Stock Option is granted.  In the case of
an Incentive Stock Option that is granted to a Ten Percent Owner, the term of
such Stock Option shall be no more than five years from the date of grant.

 

(d)                                 Exercisability; Rights of a Stockholder. 
Stock Options shall become exercisable at such time or times, whether or not in
installments, as shall be determined by the Administrator at the time of grant
and set forth in the applicable Option Award Agreement.  The Administrator may
not accelerate the exercisability of all or any portion of any Stock Option,
except in the case of a Change in Control or liquidation of the Company or upon
the death or Disability of the grantee.  A grantee of a Stock Option shall have
the rights of a stockholder only as to shares acquired upon the exercise of the
Stock Option and not as to any unexercised portion of the Stock Option.

 

(e)                                  Method of Exercise.  Stock Options may be
exercised in whole or in part by giving written notice of exercise to the
Company or to such third-party service provider as may be designated by the
Company for such purpose, specifying the number of shares to be purchased. 
Payment of the purchase price may be made by one or more of the following
methods to the extent provided in the Option Award Agreement:

 

(i)  In cash, by certified or bank check or other instrument acceptable to the
Administrator;

 

(ii)  Through the delivery (or attestation to the ownership) of shares of Stock
that have been purchased by the optionee on the open market or that are
beneficially owned by the optionee and are not then subject to restrictions
under any Company plan.  Such surrendered shares shall be valued at Fair Market
Value on the exercise date.  To the extent required to avoid variable accounting
treatment under FAS 123R or other applicable accounting rules, such surrendered
shares shall have been owned by the optionee for at least six months; or

 

(iii)  By the optionee delivering to the Company or its third-party designee a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company cash or a check payable and acceptable
to the Company for the purchase price; provided that in the event the optionee
chooses to pay the purchase price as so provided, the optionee and the broker
shall comply with such procedures and enter into such agreements of indemnity
and other agreements as the Administrator shall prescribe as a condition of such
payment procedure.

 

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Payment instruments will be received subject to collection.  The transfer to the
optionee on the records of the Company or of the Company’s transfer agent of the
shares of Stock to be purchased pursuant to the exercise of a Stock Option will
be contingent upon receipt from the optionee (or a purchaser acting in his or
her stead in accordance with the provisions of the Stock Option) by the Company
of the full purchase price for such shares and the fulfillment of any other
requirements contained in the Option Award Agreement or applicable provisions of
laws (including the satisfaction of any withholding taxes that the Company is
obligated to withhold with respect to the optionee).  In the event an optionee
chooses to pay the purchase price by previously-owned shares of Stock through
the attestation method, the number of shares of Stock transferred to the
optionee upon the exercise of the Stock Option shall be net of the number of
attested shares.  In the event that the Company establishes, for itself or using
the services of a third party, an automated system for the exercise of Stock
Options, such as a system using an internet website or interactive voice
response, then the paperless exercise of Stock Options may be permitted through
the use of such an automated system.

 

(f)                                    Annual Limit on Incentive Stock Options. 
To the extent required for “incentive stock option” treatment under Section 422
of the Code, the aggregate Fair Market Value (determined as of the time of
grant) of the shares of Stock with respect to which Incentive Stock Options
granted under this Plan and any other plan of the Company or of its parent
corporation or any Subsidiary become exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000.  To the extent that
any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock
Option.

 

SECTION 6.                            RESTRICTED STOCK AWARDS

 

(a)                                  Nature of Restricted Stock Awards.  The
Administrator shall determine the restrictions and conditions applicable to each
Restricted Stock Award at the time of grant.  Conditions may be based on
continuing employment (or other service relationship) and/or achievement of
pre-established performance goals and objectives.  The grant of a Restricted
Stock Award is contingent on the grantee executing a Restricted Stock Award
Agreement.  The terms and conditions of each such Restricted Stock Award
Agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and grantees.

 

(b)                                 Rights as a Stockholder.  Upon execution of
a Restricted Stock Award Agreement and payment of any applicable purchase price,
a grantee shall have the rights of a stockholder with respect to the voting of
the Restricted Stock, subject to such conditions contained in the Restricted
Stock Award Agreement.  Unless the Administrator shall otherwise determine,
(i) uncertificated Restricted Stock shall be accompanied by a notation on the
records of the Company or the Company’s transfer agent to the effect that they
are subject to forfeiture until such Restricted Stock are vested as provided in
Section 6(d) below, and (ii) certificated Restricted Stock shall remain in the
possession of the Company until such Restricted Stock is vested as provided in
Section 6(d) below, and the grantee shall be required, as a condition of the
grant, to deliver to the Company such instruments of transfer as the
Administrator may prescribe.

 

(c)                                  Restrictions.  Restricted Stock may not be
sold, assigned, transferred, pledged or otherwise encumbered or disposed of
except as specifically provided herein or in the applicable Restricted Stock
Award Agreement.  Except in the case of a Change in Control or liquidation of

 

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the Company or upon the death or Disability of the grantee, if a grantee’s
employment (or other service relationship) with the Company and its Subsidiaries
terminates for any reason, any Restricted Stock that has not vested at the time
of termination shall automatically and without any requirement of notice to such
grantee from, or other action by or on behalf of, the Company be deemed to have
been reacquired by the Company at its original purchase price (if any) from such
grantee or such grantee’s legal representative simultaneously with such
termination of employment (or other service relationship), and thereafter shall
cease to represent any ownership of the Company by the grantee or rights of the
grantee as a stockholder.  Following such deemed reacquisition of shares of
unvested Restricted Stock that are represented by physical certificates, a
grantee shall surrender such certificates to the Company upon request without
consideration.

 

(d)                                 Vesting of Restricted Stock.  The
Administrator at the time of grant shall specify and include in the applicable
Restricted Stock Award Agreement the date or dates and/or the attainment of
pre-established performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company’s right of
repurchase or forfeiture shall lapse.  Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed “vested”.  Except in the case of a Change
in Control or liquidation of the Company or upon the death or Disability of the
grantee, a grantee’s rights in any shares of Restricted Stock that have not
vested shall automatically terminate upon the grantee’s termination of
employment (or other service relationship) with the Company and its Subsidiaries
and such shares shall be subject to the provisions of Section 6(c) above.

 

SECTION 7.                            RESTRICTED STOCK UNITS AND STOCK
APPRECIATION RIGHTS

 

The Administrator may grant RSUs and SARs in respect of such number of shares of
Stock subject to the Plan as it shall determine in its sole discretion.  The
terms and conditions of any such RSUs or SARs shall be contained in an RSU
Agreement or SAR Agreement as the case may be.

 

SECTION 8.                            TRANSFERABILITY OF AWARDS

 

(a)                                  Transferability.  Except as provided in
Section 8(b) below, during a grantee’s lifetime, his or her Awards shall be
exercisable only by the grantee, or by the grantee’s legal representative or
guardian in the event of the grantee’s incapacity.  No Awards shall be sold,
assigned, transferred or otherwise encumbered or disposed of by a grantee other
than by will or by the laws of descent and distribution.  No Awards shall be
subject, in whole or in part, to attachment, execution, or levy of any kind, and
any purported transfer in violation hereof shall be null and void.

 

(b)                                 Administrator Action.  Notwithstanding
Section 8(a), the Administrator, in its discretion, may provide either in the
Award Agreement regarding a given Award or by subsequent written approval that
the grantee may transfer his or her Awards (other than any Incentive Stock
Options) to his or her immediate family members, to trusts for the benefit of
such family members, or to partnerships or limited liability companies in which
such family members are the only partners or members, provided that the
transferee agrees in writing with

 

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the Company to be bound by all of the terms and conditions of the Plan and the
applicable Award.

 

(c)                                  Family Member.  For purposes of
Section 8(b), “family member” shall mean a grantee’s child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the grantee’s household (other than a tenant or employee of the
grantee), a trust in which these persons (or the grantee) have more than 50
percent of the beneficial interest, a foundation in which these persons (or the
grantee) control the management of assets, and any other entity in which these
persons (or the grantee) own more than 50 percent of the voting interests.

 

(d)                                 Designation of Beneficiary.  Each grantee to
whom an Award has been made under the Plan may designate a beneficiary or
beneficiaries to exercise any Award or receive any payment under any Award
payable on or after the grantee’s death.  Any such designation shall be on a
form provided for that purpose by the Administrator and shall not be effective
until received by the Administrator.  If no beneficiary has been designated by a
deceased grantee, or if the designated beneficiaries have predeceased the
grantee, the beneficiary shall be the grantee’s estate.

 

SECTION 9.                            TAX WITHHOLDING

 

(a)                                  Payment by Grantee.  Each grantee shall, no
later than the date as of which the value of an Award or of any Stock or other
amounts received thereunder first becomes includable in the gross income of the
grantee for federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
federal, state, or local taxes of any kind required by law to be withheld by the
Company with respect to such income.  The Company and its Subsidiaries shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the grantee.  The Company’s obligation to
deliver evidence of book entry (or stock certificates) to any grantee is subject
to and conditioned on tax withholding obligations being satisfied by the
grantee.

 

(b)                                 Payment in Stock.  Subject to approval by
the Administrator, a grantee may elect to have the Company’s minimum required
tax withholding obligation (and not more than such amount) satisfied, in whole
or in part, by authorizing the Company to withhold from shares of Stock to be
issued pursuant to any Award a number of shares with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.

 

SECTION 10.                      SECTION 409A AWARDS

 

To the extent that any Award is determined to constitute “nonqualified deferred
compensation” within the meaning of Section 409A (a “409A Award”), the Award
shall be subject to such additional rules and requirements as specified by the
Administrator from time to time in order to comply with Section 409A.  In this
regard, if any amount under a 409A Award is payable upon a “separation from
service” (within the meaning of Section 409A) to a grantee who is then
considered a “specified employee” (within the meaning of Section 409A), then no
such

 

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payment shall be made prior to the date that is the earlier of (i) six months
and one day after the grantee’s separation from service, or (ii) the grantee’s
death, but only to the extent such delay is necessary to prevent such payment
from being subject to interest, penalties and/or additional tax imposed pursuant
to Section 409A.  Further, the settlement of any such Award may not be
accelerated except to the extent permitted by Section 409A.

 

SECTION 11.                      TRANSFER, LEAVE OF ABSENCE, ETC.

 

For purposes of the Plan, the following events shall not be deemed a termination
of employment:  (i) a transfer to the employment of the Company from a
Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to
another; or (ii) an approved leave of absence for military service or sickness,
or for any other purpose approved by the Company, if the employee’s right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.

 

SECTION 12.                      AMENDMENTS AND TERMINATION

 

The Board may, at any time, amend or discontinue the Plan and the Administrator
may, at any time, amend or cancel any outstanding Award for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Award without the holder’s
consent.  To the extent required under the rules of any securities exchange or
market system on which the Stock is listed, to the extent determined by the
Administrator to be required by the Code to ensure that Incentive Stock Options
granted under the Plan are qualified under Section 422 of the Code or to ensure
that compensation earned under Awards qualifies as performance-based
compensation under Section 162(m) of the Code, or to the extent determined by
the Administrator to be required to ensure the availability to the Plan of the
protections of Section 16(b) of the Exchange Act or for any other reason under
applicable law, Plan amendments shall be subject to the approval of the
Company’s stockholders entitled to vote at a meeting of stockholders.  Nothing
in this Section 12 shall limit the Administrator’s authority to take any action
permitted pursuant to Section 3(c) or 3(d).

 

SECTION 13.                      STATUS OF PLAN

 

With respect to the portion of any Award that has not been exercised and any
payments in cash, Stock or other consideration not received by a grantee, a
grantee shall have no rights greater than those of a general creditor of the
Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards.  In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company’s
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

 

SECTION 14.                      GENERAL PROVISIONS

 

(a)                                  No Distribution.  The Administrator may
require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.

 

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(b)                                 Delivery of Stock Certificates.  Stock
certificates to grantees under this Plan shall be deemed delivered for all
purposes when the Company or a transfer agent of the Company shall have mailed
such certificates in the United States mail, addressed to the grantee, at the
grantee’s last known address on file with the Company.  Uncertificated Stock
shall be deemed delivered for all purposes when the Company or a transfer agent
of the Company shall have given to the grantee by electronic mail (with proof of
receipt) or by United States mail, addressed to the grantee, at the grantee’s
last known address on file with the Company, notice of issuance and recorded the
issuance in its records (which may include electronic “book entry” records). 
Notwithstanding anything herein to the contrary, the Company shall not be
required to issue or deliver any certificates evidencing shares of Stock
pursuant to the exercise of any Award, unless and until the Administrator has
determined, with advice of counsel (to the extent the Administrator deems such
advice necessary or advisable), that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange on
which the shares of Stock are listed, quoted or traded.  All stock certificates
delivered pursuant to the Plan shall be subject to any stop-transfer orders and
other restrictions as the Administrator deems necessary or advisable to comply
with federal, state or foreign jurisdiction, securities or other laws, and the
rules, regulations and requirements of any stock exchange on which the Stock is
listed or traded.  The Administrator may place legends on any stock certificate
to reference restrictions applicable to the Stock.  In addition to the terms and
conditions provided herein, the Administrator may require that an individual
make such reasonable covenants, agreements, and representations as the
Administrator, in its discretion, deems necessary or advisable in order to
comply with any such laws, rules, regulations or requirements.  The
Administrator shall have the right to require any individual to comply with any
timing or other restrictions with respect to the settlement or exercise of any
Award, including a window-period limitation, as may be imposed in the discretion
of the Administrator.

 

(c)                                  Stockholder Rights.  Until Stock is deemed
delivered in accordance with Section 14(b), no right to vote or receive
dividends or any other rights of a stockholder will exist with respect to shares
of Stock to be issued in connection with an Award, notwithstanding the exercise
of a Stock Option or any other action by the grantee with respect to an Award.

 

(d)                                 Other Compensation Arrangements; No
Employment Rights.  Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, including trusts, and
such arrangements may be either generally applicable or applicable only in
specific cases.  The adoption of this Plan and the grant of Awards do not confer
upon any employee or other person any right to continued employment or other
service relationship with the Company or any Subsidiary.

 

(e)                                  Insider Trading Policy Restrictions. 
Option exercises and other Awards under the Plan shall be subject to the
Company’s insider trading policy and procedures, as in effect from time to time.

 

(f)                                    Forfeiture of Awards under Sarbanes-Oxley
Act.  If the Company is required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of misconduct, with any
financial reporting requirement under the federal securities laws, then any
grantee of an Award who is included among the individuals subject to automatic
forfeiture

 

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under Section 304 of the Sarbanes-Oxley Act of 2002 shall reimburse the Company
for the amount of any Award received by such individual under the Plan during
the 12-month period following the first public issuance or filing with the
Securities and Exchange Commission, as the case may be, of the financial
document embodying such financial reporting requirement.

 

(g)                                 Forfeiture of Awards for Dishonesty. 
Notwithstanding anything to the contrary in the Plan or in any Award Agreement,
if the Administrator determines, after full consideration of the facts presented
on behalf of both the Company and a grantee of an Award, that the grantee has
been engaged in fraud, embezzlement, theft, commission of a felony or proven
dishonesty in the course of his or her employment by or performance of services
for the Company or a Subsidiary that has damaged the Company or a Subsidiary in
any way, or has disclosed trade secrets or other proprietary information of the
Company or a Subsidiary or has otherwise violated the terms of his or her
employment by, or any other agreement or understanding with, the Company or any
Subsidiary, (i) the grantee shall forfeit all unexercised Options and/or
unvested Restricted Stock, RSUs and SARs and all exercised Options and vested
Restricted Stock, RSUs and SARs to the extent that the Company has not yet
delivered or otherwise released the shares or other payments in question,
(ii) the Company shall have the right to repurchase all or any part of the
shares of Stock acquired by the grantee upon the earlier exercise of any Option
or vesting of Restricted Stock or vesting of any RSU or SAR, at a price equal to
the amount, if any, paid to the Company by the grantee upon the exercise of such
Option, receipt of such Restricted Stock or vesting of such RSU or SAR,,  and
(iii) the Company shall have the right to recoup the full amount of all cash
payments previously paid to the grantee under any vested RSU or SAR and to
recoup the full amount of any profit realized by the grantee upon the sale of
any Restricted Stock that has previously vested or any shares of Stock acquired
upon the grantee’s earlier exercise of any Option or vesting of any RSU or SAR,
which recoupment shall be reduced by an amount equal to the price, if any, paid
to the Company by the grantee upon the earlier issuance of such Restricted
Stock, exercise of such Option or vesting of such RSU or SAR.  The decision of
the Administrator as to the cause of a grantee’s discharge and the damage done
to the Company or a Subsidiary shall be final, binding and conclusive.  No
decision of the Administrator, however, shall affect in any manner the finality
of the discharge of a grantee by the Company or a Subsidiary.

 

SECTION 15.                      EFFECTIVE DATE OF PLAN

 

The Plan shall become effective on the date on which it is adopted by the Board
(the “Effective Date”), but no Award granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the Company’s
shareholders.  If such shareholder approval is not obtained within twelve months
after the Effective Date, the Awards previously granted under the Plan shall not
vest and shall terminate and no Awards shall be granted under the Plan
thereafter.  Amendments to the Plan not requiring shareholder approval shall
become effective when adopted by the Board; amendments requiring shareholder
approval (as provided in Section 12) shall become effective when adopted by the
Board, but no Award granted after the date of such amendment shall become
exercisable (to the extent that such amendment to the Plan was required to
enable the Company to grant such Award to a particular person) unless and until
such amendment shall have been approved by the Company’s shareholders.  If such
shareholder approval is not obtained within twelve months of the Board’s
adoption of such amendment, any Awards granted on or after the date of such
amendment shall terminate to the extent that such

 

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amendment was required to enable the Company to grant  such Award to a
particular grantee.  Subject to this limitation, Awards may be granted under the
Plan at any time during the period from and including the Effective Date through
and including the day next preceding the tenth anniversary of the Effective
Date.

 

SECTION 16.                      GOVERNING LAW

 

The Plan and all Awards and actions taken thereunder shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts,
applied without regard to conflict of law principles.

 

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