Exhibit 10.2

 

PLC SYSTEMS INC.

 

2013 STOCK OPTION AND INCENTIVE PLAN

 

SECTION 1.                         GENERAL PURPOSE OF THE PLAN; DEFINITIONS

 

The name of the plan is the PLC Systems Inc.2013 Stock Option and 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 PLC Systems 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, 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” is defined in Section 2(a).

 

“Award” or “Awards,” except where referring to a particular category of grant
under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Deferred Stock Awards, Restricted Stock
Awards, Unrestricted Stock Awards and Dividend Equivalent Rights.

 

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

 

“Cash-Based Award” means an Award entitling the recipient to receive a
cash-denominated payment.

 

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

 

“Committee” means the Compensation Committee of the Board or a similar committee
performing the functions of the Compensation Committee and that is comprised of
not less than two Non-Employee Directors who are independent.

 

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

 

“Deferred Stock Award” means Awards granted pursuant to Section 8.

 

“Dividend Equivalent Right” means Awards granted pursuant to Section 12.

 

“Effective Date” means the date on which the Plan is approved by stockholders as
set forth in Section 19.

 

“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 fair market value
of the Stock determined in good faith by the Administrator; provided, however,
that if the Stock is traded on a national securities exchange the Fair Market
Value of the Stock will equal the closing sales price as reported on the
principal exchange or market for the Stock on such date. If there is no trading
on such date, the determination shall be made by reference to the last date
preceding such date for which there was trading.

 

“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.

 

“Performance Cycle” means one or more periods of time, which may be of varying
and overlapping durations, as the Administrator may select, over which the
attainment of one or more performance criteria will be measured for the purpose
of determining a grantee’s right to and the payment of a Restricted Stock Award
or Deferred Stock Award. Each such period shall not be less than three months.

 

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“Restricted Stock Award” means Awards 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 $0.0001 per share, of the Company,
subject to adjustments pursuant to Section 3.

 

“Stock Appreciation Right” means any Award granted pursuant to Section 6.

 

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

 

“Unrestricted Stock Award” means any Award granted pursuant to Section 9.

 

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

 

(a)                                 Committee.  The Plan shall be administered
by the Compensation Committee (the “Administrator”).

 

(b)                                 Powers of Administrator.  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,

 

(iii)                              Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, Deferred Stock Awards,
Unrestricted Stock Awards and Dividend Equivalent Rights, or any combination of
the foregoing, granted to any one or more grantees;

 

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

 

(v)                                 to determine and modify from time to time
the terms and conditions, including restrictions,

 

(vi)                              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;

 

(vii)                           to accelerate at any time the exercisability or
vesting of all or any portion of any Award;

 

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

 

(ix)                              at any time to adopt, alter and 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.

 

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. 
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 individuals who are not subject to
the reporting and other provisions of Section 16 of the Exchange Act or “covered
employees” within the meaning of Section 162(m) of the Code. Any such delegation
by the Administrator shall include a limitation as to the amount of Awards that
may be granted during the period of the delegation and shall contain guidelines
as to the determination of the exercise price of any Stock Option or Stock
Appreciation Right, the conversion ratio or price of other Awards 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)                                 Indemnification.  Neither the Board nor the
Committee, nor any member of either or any delegatee 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
Committee (and any delegatee 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 organizational documents or any directors’ and

 

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officers’ liability insurance coverage which may be in effect from time to time
and/or any indemnification agreement between such individual and the Company.

 

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

 

(a)                                 Stock Issuable.  Subject to adjustment as
provided in Section 3(b), the maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 11,382,600 shares of Stock.  For
purposes of this limitation, the shares of Stock underlying any Awards that are
forfeited, canceled or otherwise terminated (other than by exercise) shall be
added back to the shares of Stock available for issuance under the Plan. Shares
tendered or held back upon exercise of an Option or settlement of an Award to
cover the exercise price or tax withholding shall not be available for future
issuance under the Plan. In addition, upon exercise of Stock Appreciation
Rights, the gross number of shares exercised shall be deducted from the total
number of shares remaining available for issuance under the Plan.

 

Subject to such overall limitations, shares of Stock may be issued up to such
maximum number pursuant to any type or types of Award; provided, however, that
Stock Options or Stock Appreciation Rights with respect to no more than a grant
date fair value equivalent of $1,000,000 of shares of Stock may be granted to
any one individual grantee during any one calendar year period. 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)                                 Changes in Stock.  Subject to Section 3(c)
hereof, 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 or other non-cash assets are
distributed with respect to such shares of Stock or other securities, or, if, as
a result of any merger or consolidation, sale of all or substantially all of the
assets of the Company, the outstanding shares of Stock are converted into or
exchanged for a different number or kind of securities of the Company or any
successor entity (or a parent or subsidiary thereof), the Administrator shall
make an appropriate or proportionate adjustment in i) the maximum number of
shares reserved for issuance under the Plan, including the maximum number of
shares that may be issued in the form of Unrestricted Stock Awards, Restricted
Stock Awards or Deferred Stock Awards, (ii) the number of Stock Options or Stock
Appreciation Rights that can be granted to any one individual grantee and the
maximum number of shares that may be granted under a Performance-based Award,
(iii) the number and kind of shares or other securities subject to any then
outstanding Awards under the Plan, (iv) the repurchase price, if any, per share
subject to each outstanding Restricted Stock Award, (v) the number of Stock
Options automatically granted to Non-Employee Directors, and (vi) the price for
each share subject to any then outstanding Stock Options and Stock Appreciation
Rights under the Plan, without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of Stock Options and Stock Appreciation
Rights) as to which such Stock Options and Stock Appreciation Rights remain
exercisable. The adjustment by the Administrator 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.

 

The Administrator shall also adjust the number of shares subject to outstanding
Awards and the exercise price and the terms of outstanding Awards to take into
consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Administrator that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided that no
such adjustment shall be made in the case of an Incentive Stock Option, without
the consent of the grantee, if it would constitute a modification, extension or
renewal of the Option within the meaning of Section 424(h) of the Code.

 

(c)                                  Mergers and Other Transactions.  In the
case of and subject to the consummation of (i) the dissolution or liquidation of
the Company, (ii) the sale of all or substantially all of the assets of the
Company on a consolidated basis to an unrelated person or entity, (iii) a
merger, reorganization or consolidation in which the outstanding shares of Stock
are converted into or exchanged for a different kind of securities of the
successor entity and the holders of the Company’s outstanding voting power
immediately prior to such transaction do not own a majority of the outstanding
voting power of the successor entity immediately upon completion of such
transaction, or (iv) the sale of all of the Stock of the Company to an unrelated
person or entity (in each case, a “Sale Event”), the Plan and all outstanding
Awards granted hereunder shall terminate, unless provision is made in connection
with the Sale Event in the sole discretion of the parties thereto for the
assumption or continuation of Awards theretofore granted by the successor
entity, or the substitution of such Awards with new Awards of the successor
entity or parent thereof, with appropriate adjustment as to the number and kind
of shares and, if appropriate, the per share exercise prices, as such parties
shall agree. In the event of such termination, all Options and Stock
Appreciation Rights that are not exercisable immediately prior to the effective
time of the Sale Event shall become fully exercisable as of the effective time
of the Sale Event and all other Awards shall become fully vested and
nonforfeitable as of the effective time of the Sale Event, except as the
Administrator may otherwise specify with respect to particular Awards in the
relevant Award documentation, and each grantee shall be permitted, within a
specified period of time prior to the consummation of the Sale Event as
determined by the Administrator, to exercise all outstanding Options and Stock
Appreciation Rights held by such grantee, including those that will become
exercisable upon the consummation of the Sale Event; provided, however, that the
exercise of Options and Stock Appreciation Rights not exercisable prior to the
Sale Event shall be subject to the consummation of the Sale Event.

 

Notwithstanding anything to the contrary in this Section 3(c), in the event of a
Sale Event pursuant to which holders of the Stock of the Company will receive
upon consummation thereof a cash payment for each share surrendered in the Sale
Event, the Company shall have the right, but not the obligation, to make or
provide for a cash payment to the grantees holding Options and Stock

 

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Appreciation Rights, in exchange for the cancellation thereof, in an amount
equal to the difference between (A) the value as determined by the Administrator
of the consideration payable per share of Stock pursuant to the Sale Event (the
“Sale Price”) times the number of shares of Stock subject to outstanding Options
and Stock Appreciation Rights (to the extent then exercisable at prices not in
excess of the Sale Price) and (B) the aggregate exercise price of all such
outstanding Options and Stock Appreciation Rights.

 

(d)                                 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
Section 3(a).

 

SECTION 4.                         ELIGIBILITY

 

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

 

SECTION 5.                         STOCK OPTIONS

 

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.

 

(a)                                 Stock Options Granted to Employees and Key
Persons.  The Administrator in its discretion may grant Stock Options to
eligible employees and key persons of the Company or any Subsidiary. Stock
Options granted pursuant to this Section 5(a) shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable. If the Administrator so determines, Stock Options may be granted in
lieu of cash compensation at the optionee’s election, subject to such terms and
conditions as the Administrator may establish.

 

(i)                                     Exercise Price.  The exercise price per
share for the Stock covered by a Stock Option granted pursuant to this 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. If an
employee 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 or subsidiary corporation and an
Incentive Stock Option is granted to such employee, the option price of such
Incentive Stock Option shall be not less than 110 percent of the Fair Market
Value on the grant date.

 

(ii)                                  Option Term.  The term of each Stock
Option shall be fixed by the Administrator, but no Stock Option shall be
exercisable more than 10 years after the date the Stock Option is granted. If an
employee 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 or subsidiary corporation and an
Incentive Stock Option is granted to such employee, the term of such Stock
Option shall be no more than five years from the date of grant.

 

(iii)                               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 or after the grant
date. The Administrator may at any time accelerate the exercisability of all or
any portion of any Stock Option. An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of a Stock Option and
not as to unexercised Stock Options.

 

(iv)                              Method of Exercise.  Stock Options may be
exercised in whole or in part, by giving written notice of exercise to the
Company, 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:

 

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

 

(B)                               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 have been beneficially owned by the optionee for at least
six months 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; or

 

(C)                               By the optionee delivering to the Company 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 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 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.

 

(v)                                 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 its parent and subsidiary
corporations 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.

 

(b)                                 Non-transferability of Options.  No Stock
Option shall be transferable by the optionee otherwise than by will or by the
laws of descent and distribution and all Stock Options shall be exercisable,
during the optionee’s lifetime, only by the optionee, or by the optionee’s legal
representative or guardian in the event of the optionee’s incapacity.
Notwithstanding the foregoing, the Administrator, in its sole discretion, may
provide in the Award agreement regarding a given Option that the optionee may
transfer his Non-Qualified Stock Options to members of his immediate family, to
trusts for the benefit of such family members, or to partnerships in which such
family members are the only partners, provided that the transferee agrees in
writing with the Company to be bound by all of the terms and conditions of this
Plan and the applicable Option.

 

SECTION 6.                         STOCK APPRECIATION RIGHTS

 

(a)                                 Nature of Stock Appreciation Rights.  A
Stock Appreciation Right is an Award entitling the recipient to receive shares
of Stock having a value equal to the excess of the Fair Market Value of the
Stock on the date of exercise over the exercise price of the Stock Appreciation
Right, which price shall not be less than 100 percent of the Fair Market Value
of the Stock on the date of grant multiplied by the number of shares of Stock
with respect to which the Stock Appreciation Right shall have been exercised.

 

(b)                                 Grant and Exercise of Stock Appreciation
Rights.  Stock Appreciation Rights may be granted by the Administrator
independently of any Stock Option granted pursuant to Section 5 of the Plan.

 

(c)                                  Terms and Conditions of Stock Appreciation
Rights.  Stock Appreciation Rights shall be subject to such terms and conditions
as shall be determined from time to time by the Administrator, provided that all
Stock Appreciation Rights shall be exercisable during the grantee’s lifetime
only by the grantee or the grantee’s legal representative.

 

(d)                                 Stock Appreciation Rights Term.  The term of
each Stock Appreciation Right shall be fixed by the Administrator, but no Stock
Appreciation Right shall be exercisable more than ten years after the date the
Stock Appreciation Right is granted.

 

SECTION 7.                         RESTRICTED STOCK AWARDS

 

(a)                                 Nature of Restricted Stock Awards.  A
Restricted Stock Award is 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 (“Restricted Stock”). 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 the Restricted Stock Award
agreement. The terms and conditions of each such 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 written instrument setting forth the Restricted Stock Award 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 written instrument evidencing the Restricted Stock Award.
Unless the Administrator shall otherwise determine, (i) uncertificated
Restricted Stock shall be accompanied by a notation on the records of the
Company or the transfer agent to the effect that they are subject to forfeiture
until such Restricted Stock are vested as provided in Section 7(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 7(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 Restricted Stock Award
agreement. Except as may otherwise be provided by the

 

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Administrator either in the Award agreement or, subject to Section 15 below, in
writing after the Award agreement is issued, if any, 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 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 shareholder. Following such deemed reacquisition of unvested Restricted
Stock that are represented by physical certificates, 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 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 as may otherwise be
provided by the Administrator either in the Award agreement or, subject to
Section 15 below, in writing after the Award agreement is issued, 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 7(c) above.

 

SECTION 8.                         DEFERRED STOCK AWARDS

 

(a)                                 Nature of Deferred Stock Awards.  A Deferred
Stock Award is an Award of phantom stock units to a grantee, subject to
restrictions and conditions as the Administrator may determine 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 Deferred Stock Award is contingent on the grantee
executing the Deferred Stock Award agreement. The terms and conditions of each
such agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and grantees. At the end of the
deferral period, the Deferred Stock Award, to the extent vested, shall be paid
to the grantee in the form of shares of Stock. To the extent that a Deferred
Stock Award is subject to Section 409A, it may contain such additional terms and
conditions as the Administrator shall determine in its sole discretion in order
for such Award to comply with the requirements of Section 409A.

 

(b)                                 Election to Receive Deferred Stock Awards in
Lieu of Compensation.  The Administrator may, in its sole discretion, permit a
grantee to elect to receive a portion of the cash compensation or Restricted
Stock Award otherwise due to such grantee in the form of a Deferred Stock Award.
Any such election shall be made in writing and shall be delivered to the Company
no later than the date specified by the Administrator and in accordance with
Section 409A and such other rules and procedures established by the
Administrator. The Administrator shall have the sole right to determine whether
and under what circumstances to permit such elections and to impose such
limitations and other terms and conditions thereon as the Administrator deems
appropriate.

 

(c)                                  Rights as a Stockholder.  During the
deferral period, a grantee shall have no rights as a stockholder; provided,
however, that the grantee may be credited with Dividend Equivalent Rights with
respect to the phantom stock units underlying his Deferred Stock Award, subject
to such terms and conditions as the Administrator may determine.

 

(d)                                 Restrictions.  A Deferred Stock Award may
not be sold, assigned, transferred, pledged or otherwise encumbered or disposed
of during the deferral period.

 

(e)                                  Termination.  Except as may otherwise be
provided by the Administrator either in the Award agreement or, subject to
Section 15 below, in writing after the Award agreement is issued, a grantee’s
right in all Deferred Stock Awards that have not vested shall automatically
terminate upon the grantee’s termination of employment (or cessation of service
relationship) with the Company and its Subsidiaries for any reason.

 

SECTION 9.                         UNRESTRICTED STOCK AWARDS

 

The Administrator may, in its sole discretion, grant (or sell at par value or
such higher purchase price determined by the Administrator) an Unrestricted
Stock Award to any grantee pursuant to which such grantee may receive shares of
Stock free of any restrictions (“Unrestricted Stock”) under the Plan.
Unrestricted Stock Awards may be granted in respect of past services or other
valid consideration, or in lieu of cash compensation due to such grantee.

 

SECTION 10.                  CASH-BASED AWARDS

 

The Administrator may, in its sole discretion, grant Cash-Based Awards to any
grantee in such number or amount and upon such terms, and subject to such
conditions, as the Administrator shall determine at the time of grant. The
Administrator shall determine the maximum duration of the Cash-Based Award, the
amount of cash to which the Cash-Based Award pertains, the conditions upon which
the Cash-Based Award shall become vested or payable, and such other provisions
as the Administrator shall determine. Each Cash-Based Award shall specify a
cash-denominated payment amount, formula or payment ranges as determined by the
Administrator. Payment, if any, with respect to a Cash-Based Award shall be made
in accordance with the terms of the Award and may be made in cash or in shares
of Stock, as the Administrator determines.

 

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SECTION 11.                  PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

 

Notwithstanding anything to the contrary contained herein, if any Restricted
Stock Award, Cash-Based Award or Deferred Stock Award granted to a Covered
Employee is intended to qualify as “Performance-based Compensation” under
Section 162(m) of the Code and the regulations promulgated thereunder (a
“Performance-based Award”), such Award shall comply with the provisions set
forth below:

 

(a)                                 Performance Criteria.  The Administrator
shall define in an objective fashion the manner of calculating the Performance
Criteria it selects to use for any Performance Cycle. The Administrator, in its
discretion, may adjust or modify the calculation of Performance Goals for such
Performance Cycle in order to prevent the dilution or enlargement of the rights
of an individual (x) in the event of, or in anticipation of, any unusual or
extraordinary corporate item, transaction, event or development, (y) in
recognition of, or in anticipation of, any other unusual or nonrecurring events
affecting the Company, or the financial statements of the Company, or (z) in
response to, or in anticipation of, changes in applicable laws, regulations,
accounting principles, or business conditions provided however, that the
Administrator may not exercise such discretion in a manner that would increase
the Performance-Based Award granted to a Covered Employee. The performance
criteria used in performance goals governing Performance-based Awards granted to
Covered Employees may include any or all of the following: (i) return on equity,
assets, capital or investment: (ii) pre-tax or after-tax profit levels; (iii)
cash flow, funds from operations or similar measure; (iv) total shareholder
return; (v) changes in the market price of the Stock; (vi) revenues, sales or
market share; (vii) net income (loss) or earnings per share; (viii) computer
support availability; (ix) expense margins or operating efficiency (including
budgeted spending limits) or (x) project development milestones, any of which
may relate to the Company or any Subsidiary, division, operating unit or
business segment of the Company, or any combination of the foregoing, and may be
measured either in absolute terms or as compared to any incremental increase or
as compared to results of a peer group and, for financial measures, may be based
on numbers calculated in accordance with U.S. generally accepted accounting
principles or on an as adjusted basis.

 

(b)                                 Grant of Performance-based Awards.  With
respect to each Performance-based Award granted to a Covered Employee, the
Committee shall select, within the first 90 days of a Performance Cycle (or, if
shorter, within the maximum period allowed under Section 162(m) of the Code) the
performance criteria for such grant, and the achievement targets with respect to
each performance criterion (including a threshold level of performance below
which no amount will become payable with respect to such Award). Each
Performance-based Award will specify the amount payable, or the formula for
determining the amount payable, upon achievement of the various applicable
performance targets. The performance criteria established by the Committee may
be (but need not be) different for each Performance Cycle and different goals
may be applicable to Performance-based Awards to different Covered Employees.

 

(c)                                  Payment of Performance-based Awards. 
Following the completion of a Performance Cycle, the Committee shall meet to
review and certify in writing whether, and to what extent, the performance
criteria for the Performance Cycle have been achieved and, if so, to also
calculate and certify in writing the amount of the Performance-based Awards
earned for the Performance Cycle. The Committee shall then determine the actual
size of each Covered Employee’s Performance-based Award, and, in doing so, may
reduce or eliminate the amount of the Performance-based Award for a Covered
Employee if, in its sole judgment, such reduction or elimination is appropriate.

 

(d)                                 Maximum Award Payable.  The maximum
Performance-based Award payable to any one Covered Employee under the Plan for a
Performance Cycle is a grant date fair value number of Shares (subject to
adjustment as provided in Section 3(b) hereof) equal to $1,000,000 or $1,000,000
in the case of a Performance-Based Award that is a Cash-Based Award.

 

SECTION 12.                  DIVIDEND EQUIVALENT RIGHTS

 

(a)                                 Dividend Equivalent Rights.  A Dividend
Equivalent Right is an Award entitling the grantee to receive credits based on
cash dividends that would have been paid on the shares of Stock specified in the
Dividend Equivalent Right (or other award to which it relates) if such shares
had been issued to and held by the grantee. A Dividend Equivalent Right may be
granted hereunder to any grantee only as a component of an Unrestricted Stock
Award, a Restricted Stock Award or a Deferred Stock Award. The terms and
conditions of Dividend Equivalent Rights shall be specified in the Award
agreement. Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of reinvestment or such
other price as may then apply under a dividend reinvestment plan sponsored by
the Company, if any. Dividend Equivalent Rights may be settled in cash or shares
of Stock or a combination thereof, in a single installment or installments. A
Dividend Equivalent Right granted as a component of another Award may provide
that such Dividend Equivalent Right shall be settled upon exercise, settlement,
or payment of,

 

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or lapse of restrictions on, such other award, and that such Dividend Equivalent
Right shall expire or be forfeited or annulled under the same conditions as such
other award. A Dividend Equivalent Right granted as a component of another Award
may also contain terms and conditions different from such other award.

 

(b)                                 Interest Equivalents.  Any Award under this
Plan that is settled in whole or in part in cash on a deferred basis may provide
in the grant for interest equivalents to be credited with respect to such cash
payment. Interest equivalents may be compounded and shall be paid upon such
terms and conditions as may be specified by the grant.

 

(c)                                  Termination.  Except as may otherwise be
provided by the Administrator either in the Award agreement or, subject to
Section 15 below, in writing after the Award agreement is issued, a grantee’s
rights in all Dividend Equivalent Rights or interest equivalents granted as a
component of another Award that has not vested shall automatically terminate
upon the grantee’s termination of employment (or cessation of service
relationship) with the Company and its Subsidiaries for any reason.

 

SECTION 13.                  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 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 stock
certificates to any grantee is subject to and conditioned on tax obligations
being satisfied by the grantee.

 

(b)                                 Payment in Stock.  Subject to approval by
the Administrator, a grantee may elect to have the minimum required tax
withholding obligation satisfied, in whole or in part, by (i) 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, or (ii)
transferring to the Company shares of Stock owned by the grantee with an
aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the withholding amount due.

 

SECTION 14.                  TRANSFER, LEAVE OF ABSENCE, ETC.

 

For purposes of the Plan, the following events shall not be deemed a termination
of employment:

 

(a)                                 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

 

(b)                                 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 15.                  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. Except as provided in Section 3(b) or 3(c), in no event may the
Administrator exercise its discretion to reduce the exercise price of
outstanding Stock Options or Stock Appreciation Rights or effect repricing
through cancellation and re-grants or by exchanging a Stock Option or Stock
Appreciation Right for any other Award. 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, Plan amendments
shall be subject to approval by the Company stockholders entitled to vote at a
meeting of stockholders. Nothing in this Section 15 shall limit the
Administrator’s authority to take any action permitted pursuant to Section 3(c).

 

SECTION 16. 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 17. 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

 

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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 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 18.                  GENERAL PROVISIONS

 

(a)                                 No Distribution; Compliance with Legal
Requirements.  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.

 

No shares of Stock shall be issued pursuant to an Award until all applicable
securities law and other legal and stock exchange or similar requirements have
been satisfied. The Administrator may require the placing of such stop-orders
and restrictive legends on certificates for Stock and Awards as it deems
appropriate.

 

(b)                                 Delivery of Stock Certificates.  Stock
certificates to grantees under this Plan shall be deemed delivered for all
purposes when the Company or a stock 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 Stock 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, rules and
quotation system on which the Stock is listed, quoted 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, 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 18(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 any right to continued employment with the Company or any
Subsidiary.

 

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

 

(f)                                   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 19.                  EFFECTIVE DATE OF PLAN

 

This Plan shall become effective upon approval by the holders of a majority of
the votes cast at a meeting of stockholders at which a quorum is present.
Subject to such approval by the stockholders and to the requirement that no
Stock may be issued hereunder prior to such approval, Stock Options and other
Awards may be granted hereunder on and after adoption of this Plan by the Board.
No Incentive Stock Option may be granted under the Plan after the 10-year
anniversary of the most recent prior date on which the Plan was approved by the
Board of Directors (provided that the Plan was approved by stockholders

 

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within one year of such date) and no other Award may be granted under the Plan
after the 10-year anniversary of the most recent prior date on which the Plan
was approved by stockholders.

 

SECTION 20.                  GOVERNING LAW

 

This 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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