--------------------------------------------------------------------------------

 
Exhibit 10.1
IPG PHOTONICS CORPORATION
NON-EMPLOYEE DIRECTORS STOCK PLAN
(As amended April 2, 2010)
 
IPG Photonics Corporation has established this IPG Photonics Corporation
Non-Employee Directors Stock Plan to attract and retain Non-Employee Directors
of IPG Photonics Corporation.
 
1. DEFINITIONS
 
The following terms shall have the following meanings unless the context
indicates otherwise:
 
1.1.  
"Award" shall mean a Stock Option, a SAR, a Stock Award, a Stock Unit, or a Cash
Award.

 
1.2.  
"Award Agreement" shall mean a written agreement between the Company and a
Participant that establishes the terms, conditions, restrictions and/or
limitations applicable to an Award, in addition to those established by the Plan
and by the Board.

 
1.3.  
"Board" shall mean the Board of Directors of the Company.

 
1.4.  
"Cause" shall have the meaning set forth in any written agreement between the
Participant and the Company.  If there is no written agreement between the
Participant and the Company, or if such agreement does not define "Cause," then
"Cause" shall have the meaning specified in the Award Agreement; provided, that
if the Award Agreement does not so specify, "Cause" shall mean, as determined by
the Board in its sole discretion, the Participant:  (i) engages in conduct that
cause financial or reputational injury to the Company; (ii) engages in any act
of dishonesty or misconduct that results in damage to the Company, or its
business or reputation or that the Board determines to adversely affect the
value, reliability or performance of the Participant to the Company; (iii)
refuses or fails to substantially comply with the human resources rules,
policies, directions and/or restrictions relating to harassment and/or
discrimination, or with compliance or risk management rules, policies,
directions and/or restrictions of the Company; or (iv) fails to cooperate with
the Company in any internal investigation or administrative, regulatory or
judicial proceeding.  If any part of the definition of Cause set forth in
clauses (i) through (iv) above is deemed applicable to a Participant, this shall
not preclude or prevent the reliance by the Company or the Board on any other
part of the preceding sentence that also may be applicable.  An act or omission
is "willful" for this purpose if it was knowingly done, or knowingly omitted to
be done, by the Participant not in good faith and without reasonable belief that
the act or omission was in the best interest of the Company.

 
1.5.  
"Change in Control of the Company" shall mean the occurrence of any one or more
of the following:

 
(a)  
Any "person" (as such term is defined in Section 3(a)(9) of the Exchange Act and
as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), including a
"group" (as defined in Section 13(d)(3) of the Exchange Act), other than (i) the
Company, (ii) any wholly-owned subsidiary of the Company, or (iii) any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Affiliate, becomes a "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company having fifty
percent (50%) or more of the combined voting power of the then-outstanding
securities of the Company that may be cast for the election of directors of the
Company (other than as a result of an issuance of securities initiated by the
Company in the ordinary course of business) (the "Company Voting Securities");
provided, however, that the event described in this paragraph (a) shall not be
deemed to be a Change in Control by virtue of any underwriter temporarily
holding securities pursuant to an offering of such securities;

 
(b)  
During any period of two consecutive years, individuals who at the beginning of
any such period constitute the Board (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the Board, unless the election, or
the nomination for election by the stockholders of the Company, of each new
director of the Company during such period was approved by a vote of at least
two-thirds of the Incumbent Directors then still in office;

 
(c)  
As the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination, sale of all or substantially all of the
assets or contested election, or any combination of the foregoing transactions,
less than a majority of the combined voting power of the then-outstanding
securities of the Company or any successor corporation or entity entitled to
vote generally in the election of the directors of the Company or such other
corporation or entity after such transaction is held in the aggregate by the
holders of the securities of the Company entitled to vote generally in the
election of directors of the Company immediately prior to such transaction; or

 
(d)  
The shareholders of the Company approve a plan of complete liquidation of the
Company.

 
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any person acquires beneficial ownership of more than fifty
percent (50%) of the Company Voting Securities as a result of the acquisition of
Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, however, that if after such acquisition
by the Company such person becomes the beneficial owner of additional Company
Voting Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control transaction
shall then occur.
 
 
Notwithstanding the foregoing, to the extent necessary to avoid subjecting
Participants to interest and additional tax under Section 409A of the Code, no
"Change in Control" will be deemed to occur unless and until paragraph (a), (b),
(c) or (d), above, and the preceding paragraph are satisfied and Section
409A(a)(2)(A)(v) of the Code is satisfied.

 
1.6.  
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.

 
1.7.  
"Committee" shall mean (i) the Board or (ii) a committee or subcommittee of the
Board appointed by the Board from among its members.  The Committee may be the
Board's Compensation Committee.  Unless the Board determines otherwise, the
Committee shall be comprised solely of not less than two members who each shall
qualify as a "Non-Employee Director" within the meaning of Rule 16b-3(b)(3) (or
any successor rule) under the Exchange Act.

 
1.8.  
"Common Stock" shall mean the voting, common stock, $0.0001 par value per share,
of the Company.

 
1.9.  
"Company" shall mean IPG Photonics Corporation, a Delaware corporation.

 
1.10.  
"Disability" means the total and permanent disability of a Participant (incurred
while in the active service of the Company) based on proof satisfactory to the
Board.  Total and permanent disability shall be as defined in the Company’s
long-term disability plan, if any, or as otherwise provided by the Company.

 
Notwithstanding the foregoing, to the extent necessary to avoid subjecting an
individual  to interest and additional tax under Section 409A of the Code, such
individual shall not be deemed to have a Disability unless and until Section
409A(a)(2)(C) is satisfied.
 
1.11.  
"Dividend Equivalent Right" shall mean the right to receive an amount equal to
the amount of any dividend paid with respect to a share of Common Stock
multiplied by the number of shares of Common Stock underlying or with respect to
a Stock Option, a SAR, or a Stock Unit, and which shall be payable in cash, in
Common Stock, or in the form of Stock Units, or a combination of any or all of
the foregoing.

 
1.12.  
"Effective Date" shall mean the date on which the Plan is adopted by the Board.

 
1.13.  
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time, including applicable regulations thereunder.

 
1.14.  
“Fair Market Value of the Common Stock" shall mean:

 
(a)  
if the Common Stock is readily tradeable on a national securities exchange or
other market system, the closing price of the Common Stock on the date of
calculation (or on the last preceding trading date if Common Stock was not
traded on such date), or

 
(b)  
if the Common Stock is not readily tradeable on a national securities exchange
or other market system, the value as determined in good faith by the Board.
 
 
 
 
 
 
 

 

--------------------------------------------------------------------------------

 
 
1.15.  
"Non-Employee Director" shall mean a member of the Board who is not an employee
of the Company or any of its affiliates.

 
1.16.  
"Nonqualified Stock Option" shall mean a Stock Option that does not qualify as
an "incentive stock option" as such term is used in Code Section 422.

 
1.17.  
“Nonvoting Stock” shall mean the capital stock of any class or classes having no
voting power to elect the directors of a corporation.

 
1.18.  
"Participant" shall mean any Non-Employee Director to whom an Award has been
granted by the Board under the Plan.

 
1.19.  
"Plan" shall mean the IPG Photonics Corporation Non-Employee Directors Stock
Plan, as amended.

 
1.20.  
"Recapitalization" shall mean any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company’s outstanding shares of capital stock as a class without the Company’s
receipt of consideration.

 
1.21.  
"Reorganization" shall mean any of the following:  (a) a merger or consolidation
in which the Company is not the surviving entity; (b) a sale, transfer or other
disposition of all or substantially all of the Company’s assets; (c) a reverse
merger in which the Company is the surviving entity but in which the Company’s
outstanding voting securities are transferred in whole or in part to a person or
persons different from the persons holding those securities immediately prior to
the merger; or (d) any transaction effected primarily to change the state in
which the Company is incorporated or to create a holding company structure.

 
1.22.  
"Retirement" means termination of Service (other than removal for Cause, death
or Disability) after completion of eight or more years of Service as a director,
only if the Non-Employee Director shall provide Services until the end of a full
one-year term (which for this purpose is until the next annual meeting of
shareholders) or, in the event of a classified board of directors in which a
class of directors is elected by shareholders and where a retiring director may
be serving a multi-year term, until the end of  a full year of such term (which
for this purpose is until the next annual meeting of shareholders).

 
1.23.  
"SAR" shall mean a grant by the Board to a Participant of a stock appreciation
right as described in Section 7 below.

 
1.24.  
"Service" shall mean the provision of services to the Company as a member of the
Board of Directors of the Company.

 
1.25.  
"Stock" shall mean the shares of capital stock of the Company.

 
1.26.  
"Stock Award" shall mean a grant by the Board to a Participant of an Award of
Common Stock as described in Section 8.1 below.

 
1.27.  
"Stock Option" shall mean a grant by the Board to a Participant of an option to
purchase Common Stock as described in Section 6 below.

 
1.28.  
"Stock Unit" shall mean a grant by the Board to a Participant of an Award as
described in Section 8.2 below.

 
1.29.  
"Treasury Regulations" shall mean the regulations promulgated under the Code by
the United States Department of the Treasury, as amended from time to time.

 
1.30.  
"Vest" shall mean:

 
(a)  
with respect to Stock Options and SARs, when the Stock Option or SAR (or a
portion of such Stock Option or SAR) first becomes exercisable and remains
exercisable subject to the terms and conditions of such Stock Option or SAR; or

 
(b)  
with respect to Awards other than Stock Options and SARs, when the Participant
has:

 
(i)  
an unrestricted right, title and interest to receive the compensation (whether
payable in Common Stock, cash or a combination of both) attributable to an Award
(or a portion of such Award) or to otherwise enjoy the benefits underlying such
Award; and

 
(ii)  
a right to transfer an Award subject to no Company-imposed restrictions or
limitations other than restrictions and/or limitations imposed by Section 10
below.

 
1.31.  
"Vesting Date" shall mean the date or dates on which an Award Vests.

 
1.32.  
"Voting Stock" shall mean the capital stock of any class or classes having
general voting power under ordinary circumstances, in the absence of
contingencies, to elect the directors of a corporation.

 
2. TERM OF PLAN.  The Plan shall be effective as of the Effective Date.  The
Plan shall terminate on the 10th anniversary of the Effective Date, unless
sooner terminated by the Board under Section 13.1 below.
 
3. ELIGIBILITY AND PARTICIPATION
 
3.1.  
Eligibility.  All Non-Employee Directors shall be eligible to participate in the
Plan and to receive Awards.

 
3.2.  
Participation.  Participants shall consist of such Non-Employee Directors as the
Board in its sole discretion designates to receive Awards under the Plan.

 
4. ADMINISTRATION
 
4.1.  
Responsibility.  The Board shall have the responsibility, in its sole
discretion, to control, operate, manage and administer the Plan in accordance
with its terms.

 
4.2.  
Award Agreement.  Each Award granted under the Plan shall be evidenced by an
Award Agreement; provided, however, that in the event of any conflict between a
provision of the Plan and any provision of an Award Agreement, the provision of
the Plan shall prevail.

 
4.3.  
Authority of the Board.  The Board shall have all the discretionary authority
that may be necessary or desirable to enable it to discharge its
responsibilities with respect to the Plan.

 
4.4.  
Delegation of Authority.  The Board may delegate to the Committee all or any
part of its authority under the Plan.  To the extent of any such delegation,
references in the Plan to the Board will be deemed to be references to the
Committee.

 
4.5.  
Determinations and Interpretations by the Board.  All determinations and
interpretations made by the Board shall be binding and conclusive on all
Participants and their heirs, successors, and legal representatives.

 
4.6.  
Liability.  No member of the Board, no member of the Committee and no employee
of the Company shall be liable for (a) any act or failure to act hereunder,
except in circumstances involving his or her gross negligence or willful
misconduct, or (b) any act or failure to act hereunder by any other member or
employee or by any agent to whom duties in connection with the administration of
the Plan have been delegated.
 
 
 
 
 
 
 

 
2
 

--------------------------------------------------------------------------------

 
4.7.  
Indemnification.  Each person who is or has been a member of the Committee or
the Board, and any individual or individuals to whom the Board has delegated
authority under this Section 4, will be indemnified and held harmless by the
Company from and against any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or as a
result of any claim, action, suit or proceeding to which he or she may be a
party or in which he or she may be involved by reason of any action taken, or
failure to act with respect to their duties on behalf of, under the Plan, except
in circumstances involving such person's gross negligence or willful
misconduct.  Each such person will also be indemnified and held harmless by the
Company from and against any and all amounts paid by him or her in a settlement
approved by the Company, or paid by him or her in satisfaction of any judgment,
of or in a claim, action, suit or proceeding against him or her and described in
the previous sentence, so long as he or she gives the Company an opportunity, at
its own expense, to handle and defend the claim, action, suit or proceeding
before he or she undertakes to handle and defend it.  The foregoing right of
indemnification will not be exclusive of or limit any other rights of
indemnification to which a person who is or has been a member of the Committee
or the Board may be entitled under the Articles of Incorporation or By-Laws of
the Company, as a matter of law, agreement or otherwise, including but not
limited to any indemnification agreement between an indemnified person hereunder
and the Company as it may be amended from time to time, or any power that the
Company may have to indemnify him or her or hold him or her harmless.  Any
person entitled to indemnification under this Section shall have the right to
elect to be indemnified under this Section or any other arrangement or agreement
pursuant to which such person is entitled to indemnification from the Company,
or any combination thereof.

 
5. SHARES SUBJECT TO PLAN
 
5.1.  
Available Shares.  At any given time, the maximum number of shares of Common
Stock that may be issued or transferred to Participants under the Plan will be
0.75% of the number of Company shares outstanding (on a fully-diluted basis) at
the end of the plan year preceding the then-current plan year, or on January 1,
2006, whichever is greater, subject to adjustments made in accordance with
Section 5.2 below.  Notwithstanding the foregoing, the maximum number of shares
of Common Stock that may be issued or transferred to Participants under the Plan
shall be 486,666 shares.   Shares of Common Stock issued or transferred under
the Plan may be either authorized or unissued shares, shares of issued stock
held in the Company's treasury, or a combination of both, at the discretion of
the Company.  Any shares of Common Stock underlying an Award which terminate by
reason of expiration, forfeiture, cancellation or otherwise without the issuance
of such shares shall again be available under the Plan.  Awards that are payable
only in cash are not subject to this Section 5.1.

 
5.2.  
Adjustment to Shares.  If there is any change in the Common Stock of the
Company, through merger, consolidation, Reorganization, Recapitalization, stock
dividend, stock split, reverse stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares, dividend in kind or other like change
in capital structure or distribution (other than normal cash dividends) to
stockholders of the Company, an adjustment shall be made to each outstanding
Award so that each such Award shall thereafter be with respect to or exercisable
for such securities, cash and/or other property as would have been received in
respect of the Common Stock subject to such Award had such Award been paid,
distributed or exercised in full immediately prior to such change or
distribution.  Such adjustment shall be made successively each time any such
change or distribution shall occur.  In addition, in the event of any such
change or distribution, in order to prevent dilution or enlargement of
Participants' rights under the Plan, the Board shall have the authority to
adjust, in an equitable manner, the number and kind of shares that may be issued
under the Plan, the number and kind of shares subject to outstanding Awards, the
exercise price applicable to outstanding Stock Options, and the Fair Market
Value of the Common Stock and other value determinations applicable to
outstanding Awards.  Appropriate adjustments may also be made by the Board in
the terms of any Awards granted under the Plan to reflect such changes or
distributions and to modify any other terms of outstanding Awards on an
equitable basis, including modifications of performance goals and changes in the
length of performance periods. In addition, the Board is authorized to make
adjustments to the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events affecting the Company or the
financial statements of the Company, or in response to changes in applicable
laws, regulations, or accounting principles.

 
6. STOCK OPTIONS
 
6.1.  
In General.  The Board may, in its sole discretion, grant Stock Options to
Non-Employee Directors on or after the Effective Date.  The Stock Options so
granted shall be Nonqualified Stock Options.  The Board shall, in its sole
discretion, determine the Non-Employee Directors who will receive Stock Options
and the number of shares of Common Stock underlying each Stock Option.  Each
Stock Option shall be subject to such terms and conditions consistent with the
Plan as the Board may impose from time to time.  In addition, each Stock Option
shall be subject to the terms and conditions set forth in Sections 6.2 through
6.6 below.

 
6.2.  
Exercise Price.  The Board shall specify the exercise price of each Stock Option
in the Award Agreement which exercise price shall not be less than 100 percent
of the Fair Market Value of the Common Stock on the date of grant.

 
6.3.  
Term of Stock Option.  The Board shall specify the term of each Stock Option in
the Award Agreement; provided, however, that no Stock Option shall be
exercisable after the 10th anniversary of the date of grant of such Stock
Option.  Each Stock Option shall terminate at such earlier times and upon such
conditions or circumstances as the Board shall, in its sole discretion, set
forth in the Award Agreement on the date of grant.

 
6.4.  
Vesting Date.  The Board shall specify in the Award Agreement the Vesting Date
for each Stock Option.  The Board may grant Stock Options that are Vested,
either in whole or in part, on the date of grant.  If the Board fails to specify
a Vesting Date in the Award Agreement, 25 percent of such Stock Option shall
become exercisable on each of the first four one-year anniversaries of the date
of grant and shall remain exercisable following such anniversary date until the
Stock Option expires in accordance with its terms under the Award Agreement or
under the terms of the Plan.  The Vesting of a Stock Option may be subject to
such other terms and conditions as shall be determined by the Board.

 
6.5.  
Exercise of Stock Options.  The Stock Option exercise price may be paid in cash
or, in the sole discretion of the Board, by delivery to the Company of shares of
Common Stock then owned by the Participant, or by the Company's withholding a
portion of the shares of Common Stock for which the Stock Option is exercisable,
or by a combination of these methods.  If the Common Stock is readily tradeable
on a national securities exchange or other market system, payment may also be
made by delivering a properly executed exercise notice to the Company and
delivering a copy of irrevocable instructions to a broker directing the broker
to promptly deliver to the Company the amount of sale or loan proceeds to pay
the exercise price.  To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms.  The
Board may prescribe any other method of paying the exercise price that it
determines to be consistent with applicable law and the purpose of the Plan,
including, without limitation, in lieu of the delivery to the Company of shares
of Common Stock then owned by the Participant, providing the Company with a
notarized statement attesting to the number of shares owned by the Participant,
where, upon verification by the Company, the Company would issue to the
Participant only the number of incremental shares to which the Participant is
entitled upon exercise of the Stock Option.  In determining which methods a
Participant may utilize to pay the exercise price, the Board may consider such
factors as it determines are appropriate.

 
6.6.  
Additional Terms and Conditions.  The Board may, by way of the Award Agreements
or otherwise, establish such other terms, conditions, restrictions and/or
limitations, if any, of any Stock Option, provided they are not inconsistent
with the Plan.

 
7. SARS
 
7.1.  
In General.  The Board may, in its sole discretion, grant SARs to Non-Employee
Directors.  A SAR is a right to receive a payment in cash, Common Stock or a
combination of both, in an amount equal to the excess of (x) the Fair Market
Value of the Common Stock, or other specified valuation, of a specified number
of shares of Common Stock on the date the SAR is exercised over (y) the Fair
Market Value of the Common Stock, or other specified valuation (which shall be
no less than the Fair Market Value of the Common Stock), of such shares of
Common Stock on the date the SAR is granted, all as determined by the Board;
provided, however, that if a SAR is granted retroactively in tandem with or in
substitution for a Stock Option, the designated Fair Market Value of the Common
Stock in the Award Agreement may be the Fair Market Value of the Common Stock on
the date such Stock Option was granted.  Each SAR shall be subject to such terms
and conditions, including, but not limited to, a provision that automatically
converts a SAR into a Stock Option on a conversion date specified at the time of
grant, as the Board shall impose from time to time in its sole discretion and
subject to the terms of the Plan.

 
 
 
 
 
 
3
 

--------------------------------------------------------------------------------

 
 
8. STOCK AWARDS AND STOCK UNITS
 
8.1.  
Stock Awards.  The Board may, in its sole discretion, grant Stock Awards to
Non-Employee Directors as additional compensation or in lieu of other
compensation for services to the Company.  A Stock Award shall consist of shares
of Common Stock which shall be subject to such terms and conditions as the Board
in its sole discretion determines appropriate including, without limitation,
restrictions on the sale or other disposition of such shares and the Vesting
Date with respect to such shares.  The Board may require the Participant to
deliver a duly signed stock power, endorsed in blank, relating to the Common
Stock covered by such Stock Award and/or that the stock certificates evidencing
such shares be held in custody or bear restrictive legends until the
restrictions thereon shall have lapsed.  With respect to shares of Common Stock
subject to a Stock Award, the Participant shall have all of the rights of a
holder of shares of Common Stock, including the right to receive dividends and
to vote the shares, unless the Board determines otherwise on the date of grant.

 
8.2.  
Stock Units.  The Board may, in its sole discretion, grant Stock Units to
Non-Employee Directors as additional compensation or in lieu of other
compensation for services to the Company.  A Stock Unit is a hypothetical share
of Common Stock represented by a notional account established and maintained (or
caused to be established or maintained) by the Company for such Participant who
receives a grant of Stock Units.  Stock Units shall be subject to such terms and
conditions as the Board, in its sole discretion, determines appropriate
including, without limitation, determinations of the Vesting Date with respect
to such Stock Units and the criteria for the Vesting of such Stock
Units.  Subject to Section 8.3, a Stock Unit granted by the Board shall provide
for payment in cash or shares of Common Stock at such time or times as the Award
Agreement shall specify.  The Board shall determine whether a Participant who
has been granted a Stock Unit shall also be entitled to a Dividend Equivalent
Right.

 
8.3.  
Payout of Stock Units.  Subject to a Participant's election to defer in
accordance with Section 13.3 below, upon the Vesting of a Stock Unit, the shares
of Common Stock representing the Stock Unit shall be distributed to the
Participant, unless the Board, in its sole discretion, provides for the payment
of the Stock Unit in cash (or partly in cash and partly in shares of Common
Stock) equal to the value of the shares of Common Stock which would otherwise be
distributed to the Participant.

 
9. CHANGE IN CONTROL
 
9.1.  
Accelerated Vesting.  Notwithstanding any other provision of this Plan to the
contrary, if there is a Change in Control of the Company, all outstanding Awards
shall accelerate, including, without limitation, acceleration of the Vesting
Date and/or payout of such Awards.

 
9.2.  
Cashout.  The Board, in its sole discretion, may determine that, upon the
occurrence of a Change in Control of the Company, all or a portion of certain
outstanding Awards shall terminate within a specified number of days after
notice to the holders, and each such holder shall receive an amount equal to the
value of such Award on the date of the Change in Control, and with respect to
each share of Common Stock subject to a Stock Option or SAR, an amount equal to
the excess of the Fair Market Value of such shares of Common Stock immediately
prior to the occurrence of such Change in Control of the Company over the
exercise price per share of such Stock Option or SAR.  Such amount shall be
payable in cash, in one or more kinds of property (including the property, if
any, payable in the transaction) or in a combination thereof, as the Board, in
its sole discretion, shall determine.

 
9.3.  
Assumption or Substitution of Awards.  Notwithstanding anything contained in the
Plan to the contrary, the Board may, in its sole discretion, provide that an
Award may be assumed by any entity which acquires control of the Company or may
be substituted by a similar award under such entity's compensation plans.

 
10. TERMINATION OF SERVICE
 
10.1.  
Termination of Service Due to Death, Disability or Retirement.  Subject to any
written agreement between the Company and a Participant, if a Participant's
Service is terminated due to death, disability or Retirement:

 
(a)  
all non-Vested portions of Awards held by the Participant on the date of the
Participant's death or the date of the termination of his or her Service for
disability or Retirement, as the case may be, shall immediately become vested;
and

 
(b)  
all Vested portions of Awards held by the Participant on the date of the
Participant's death or the date of the termination of his or her Service for
disability or Retirement, as the case may be, shall remain exercisable until the
earlier of:

 
 
(i)
the end of the 12-month period following the date of the Participant's death or
the date of the termination of his or her Service for disability or Retirement,
as the case may be, or

 
 
(ii)
the date the Award would otherwise expire.

 
10.2.  
Termination of Service for Cause.  Subject to any written agreement between the
Company and a Participant, if a Participant's Service is terminated by the
Company because of a removal for Cause, all Awards held by the Participant on
the date of the termination of Service, whether Vested or non-Vested, shall
immediately be forfeited by the Participant as of such date.  A Participant's
Service shall be deemed to have removed for Cause if, after the Participant's
Service has terminated, facts and circumstances are discovered that would have
justified a removal for Cause.

 
10.3.  
Other Terminations of Service.  Subject to any written agreement between the
Company and a Participant, if a Participant's Service is terminated for any
reason other than for Cause, death, disability or Retirement:

 
(a)  
all non-Vested portions of Awards held by the Participant on the date of the
termination of his or her Service shall immediately be forfeited by such
Participant as of such date; and

 
(b)  
all Vested portions of Awards held by the Participant on the date of the
termination of his or her Service shall remain exercisable until the earlier of
(i) the end of the 90-day period following the date of the termination of the
Participant's Service or (ii) the date the Award would otherwise expire.

 
11. TAXES
 
11.1.  
Withholding Taxes.  The Company will have the power and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy federal, state, and local taxes, domestic or foreign, required by law
or regulation to be withheld with respect to any taxable event arising under the
Plan.

 
11.2.  
Use of Common Stock to Satisfy Withholding Obligation.  With respect to
withholding required upon the exercise of Stock Options or SARs, upon the lapse
of restrictions on a Stock Award, or upon any other taxable event arising as a
result of Awards granted hereunder, the Company may satisfy the minimum
withholding requirement for supplemental wages, in whole or in part, by
withholding shares of Stock having a Fair Market Value (determined on the date
the Participant recognizes taxable income on the Award) equal to the minimum
withholding tax required to be collected on the transaction.  The Participant
may elect, subject to the approval of the Board, to deliver the necessary funds
to satisfy the withholding obligation to the Company, in which case there will
be no reduction in the shares of Common Stock otherwise distributable to the
Participant.

 
 
 
 
 
4
 

--------------------------------------------------------------------------------

 
 
12. AMENDMENT AND TERMINATION
 
12.1.  
Termination of Plan.  The Board may suspend or terminate the Plan at any time
with or without prior notice; provided, however, that no action authorized by
this Section 12.1 shall reduce the amount of any outstanding Award or change the
terms and conditions thereof without the Participants' consent.

 
12.2.  
Amendment of Plan.  The Board may amend the Plan at any time with or without
prior notice; provided, however, that no action authorized by this Section 12.2
shall reduce the amount of any outstanding Award or change the terms and
conditions thereof without the Participants' consent.  No amendment of the Plan
shall, without the approval of the stockholders of the Company:

 
(a)  
increase the total number of shares which may be issued under the Plan by
amending the formula and/or limit contained in Section 5.1 hereof; or

 
(b)  
modify the requirements as to eligibility for Awards under the Plan.

 
In addition, the Plan shall not be amended without the approval of such
amendment by the Company's stockholders if such amendment is required under the
rules and regulations of the stock exchange or national market system on which
the Common Stock is listed.
 
12.3.  
Amendment or Cancellation of Award Agreements.  The Board may amend or modify
any Award Agreement at any time by mutual agreement between the Company and the
Participant or such other persons as may then have an interest therein.  In
addition, by mutual agreement between the Company and a Participant or such
other persons as may then have an interest therein, Awards may be granted to a
Non-Employee Director in substitution and exchange for, and in cancellation of,
any Awards previously granted to such Non-Employee Director under the Plan, or
any award previously granted to such Non-Employee Director under any other
present or future plan of the Company or any present or future plan of an entity
which (i) is purchased by the Company, (ii) purchases the Company, or (iii)
merges into or with the Company.

 
13. MISCELLANEOUS
 
13.1.  
Other Provisions.  Awards granted under the Plan may also be subject to such
other provisions (whether or not applicable to an Award granted to any other
Participant) as the Company determines on the date of grant to be appropriate,
including, without limitation, for the forfeiture of, or restrictions on resale
or other disposition of, Common Stock acquired under any Stock Option, for the
acceleration of Vesting of Awards in the event of a Change in Control of the
Company, for the payment of the value of Awards to Participants in the event of
a Change in Control of the Company, or to comply with federal and state
securities laws.

 
13.2.  
Transferability.  Each Award granted under the Plan to a Participant shall not
be transferable otherwise than by will or the laws of descent and distribution,
and Stock Options and SARs shall be exercisable, during the Participant's
lifetime, only by the Participant.  In the event of the death of a Participant,
each Stock Option or SAR theretofore granted to him or her shall be exercisable
during such period after his or her death as the Board shall, in its sole
discretion, set forth in the Award Agreement on the date of grant and then only
by the executor or administrator of the estate of the deceased Participant or
the person or persons to whom the deceased Participant's rights under the Stock
Option or SAR shall pass by will or the laws of descent and
distribution.  Notwithstanding the foregoing, the Board, in its sole discretion,
may permit the transferability of a Stock Option by a Participant solely to
members of the Participant's immediate family or trusts or family partnerships
or other similar entities for the benefit of such persons, and subject to such
terms, conditions, restrictions and/or limitations, if any, as the Board may
establish and include in the Award Agreement.

 
13.3.  
Election to Defer Compensation Attributable to Award.  The Board may, in its
sole discretion and subject to Code Section 409A, allow a Participant to elect
to defer the receipt of any compensation attributable to an Award under
guidelines and procedures to be established by the Board after taking into
account the advice of the Company's tax counsel.

 
13.4.  
Listing of Shares and Related Matters.  If at any time the Board shall determine
that the listing, registration or qualification of the shares of Common Stock
subject to an Award on any securities exchange or under any applicable law, or
the consent or approval of any governmental regulatory authority, is necessary
or desirable as a condition of, or in connection with, the granting of an Award
or the issuance of shares of Common Stock thereunder, such Award may not be
exercised, distributed or paid out, as the case may be, in whole or in part,
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Board.

 
13.5.  
No Right to Continued Service or to Grants.  A Participant's rights, if any, to
continue to serve the Company as a director shall not be enlarged or otherwise
affected by his or her designation as a Participant under the Plan.  The
adoption of the Plan shall not be deemed to give any Non-Employee Director or
any other individual any right to be selected as a Participant or to be granted
an Award.

 
13.6.  
Governing Law.  The Plan, all Awards granted hereunder, and all actions taken in
connection herewith shall be governed by and construed in accordance with the
laws of the State of Delaware without reference to principles of conflict of
laws, except as superseded by applicable federal law.  Participants and the
Company each submit and consent to the jurisdiction of the courts in the
Commonwealth of Massachusetts, County of Worcester, including the Federal Courts
located therein, should Federal jurisdiction requirements exist in any action
brought to enforce (or otherwise relating to) this Plan or an Award Agreement.

 
13.7.  
Other Benefits.  No Award granted under the Plan shall be considered
compensation for purposes of computing benefits under any retirement plan of the
Company nor affect any benefits or compensation under any other benefit or
compensation plan of the Company, now or subsequently in effect.

 
13.8.  
No Fractional Shares.  No fractional shares of Common Stock shall be issued or
delivered pursuant to the Plan or any Award.  The Board shall determine whether
cash, Common Stock, Stock Options, or other property shall be issued or paid in
lieu of fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.

 
13.9.  
Compliance With Code Section 409A.  Any provision of the Plan that becomes
subject to Code Section 409A, will be interpreted and applied consistent with
that Section and the applicable Treasury Regulations.
 
 
 
 

 

 
5 
 

--------------------------------------------------------------------------------