EXHIBIT 10ss.

 

LOJACK CORPORATION

 

2003 STOCK INCENTIVE PLAN

 

  1. PURPOSE

 

The purpose of this 2003 Stock Incentive Plan (the “Plan”) is to encourage key
employees, directors, and consultants of LoJack Corporation (the “Company”) and
its Subsidiaries (as hereinafter defined) to continue their association with the
Company by providing favorable opportunities for them to participate in the
ownership of the Company and its Subsidiaries and in its future growth through
the granting of awards (“Awards”) of Common Stock (as hereinafter defined),
whether or not subject to restrictions (“Stock Grants”), stock options
(“Options”), and other rights to compensation in amounts determined by the value
of the Company’s Common Stock (together with Stock Grants, “Other Rights”). The
term “Subsidiary” as used in the Plan means a corporation, company, partnership
or other form of business organization of which the Company owns, directly or
indirectly through an unbroken chain of ownership, fifty percent (50%) or more
of the total combined voting power of all classes of stock or other form of
equity ownership or has a significant financial interest, as determined by the
Committee (as hereinafter defined). The LoJack Corporation Restated and Amended
Stock Incentive Plan (the “Prior Plan”), as most recently amended December 23,
2002, is terminated effective upon the date of approval of this Plan by the
stockholders of the Company; provided, however, that the terms of the Prior Plan
shall continue in full force and effect with respect to outstanding and
unexercised options granted under the Prior Plan and Common Stock issued under
the Prior Plan.

 

  2. ADMINISTRATION OF THE PLAN

 

The Plan shall be administered by the Compensation Committee of the Board of
Directors of the Company (the “Board”) or, in the discretion of the Board, by
another committee or subcommittee of the Board appointed by the Board and
composed of at least two (2) members of the Board (the “Committee”). In the
event that a vacancy on the Committee occurs on account of the resignation of a
member or the removal of a member by vote of the Board, a successor member shall
be appointed by vote of the Board. The Board may directly exercise the powers of
the Committee, except where prohibited by law. All references in the Plan to the
“Committee” shall be understood to refer to the Committee or the Board, whoever
shall administer the Plan.

 

For so long as Section 16 of the Securities Exchange Act of 1934, as amended
from time to time (the “Exchange Act”), is applicable to the Company, each
member of the Committee shall be a “non-employee director” or the equivalent
within the meaning of Rule 16b-3 under the Exchange Act and, for so long as
Section 162(m) of the Internal Revenue Code of 1986, as amended from time to
time (the “Code”), is applicable to the Company, an “outside director” within
the meaning of Section 162 of the Code and the regulations thereunder. The
Committee shall select those persons to receive Awards under the Plan
(“Optionees”) and determine the terms and conditions of all Awards.

 

The Committee shall select one of its members as Chairman and shall hold
meetings at such times and places as it may determine. A majority of the
Committee shall constitute a quorum, and acts of the Committee at which a quorum
is present, or acts reduced to or approved in writing by all the members of the
Committee, shall be the valid acts of the Committee. The Committee shall have
the authority to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan. All questions of
interpretation and application of such rules and regulations of the Plan and of
Awards granted hereunder shall be subject to the determination of the Committee,
which shall be final and binding.

 

With respect to persons subject to Section 16 of the Exchange Act (“Insiders”),
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successor under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed to be modified so as to be in compliance with such Rule or, if
such modification is not possible, it shall be deemed to be null and void, to
the extent permitted by law and deemed advisable by the Committee.

 

The Plan shall be administered in such a manner as to permit those Options
granted hereunder and specially designated under Section 5 as incentive stock
options as described in Section 422 of the Code (“ISOs”) to qualify as such.

 

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  3. STOCK SUBJECT TO THE PLAN

 

The total number of shares of the Company’s authorized Common Stock, $0.01 par
value per share (“Common Stock”), that may be subject to Award under the Plan
shall be 1,000,000, from either authorized but unissued shares or treasury
shares, plus the number of shares remaining available for issuance under the
Prior Plan on the date of its termination. Other Rights that fail to vest, and
shares of Common Stock subject to an Option or similar Other Right that is
neither fully exercised prior to its expiration or other termination nor
terminated by reason of the exercise of an SAR (as hereinafter defined) related
to the Option, whether issued under the Plan or under the prior Plan, shall
again become available for grant under the terms of the Plan.

 

The total amount of the Common Stock with respect to which Awards may be granted
to any single person under the Plan shall not exceed in any year in the
aggregate 200,000 shares.

 

Each reference to a number of shares of Common Stock in this Section 3 shall be
subject to adjustment in accordance with the provisions of Section 11.

 

  4. ELIGIBILITY

 

The persons who shall be eligible for Awards under the Plan shall be key
employees, and directors of, and other persons who render services of special
importance to the management, operation or development of, the Company or a
Subsidiary, and who have contributed or may be expected to contribute materially
to the success of the Company or a Subsidiary. ISOs shall not be granted to any
person who is not an employee of the Company or an ISO Subsidiary. The term “ISO
Subsidiary” shall mean those Subsidiaries described in Section 424(e) or Section
424(f) of the Code.

 

  5. TERMS AND CONDITIONS OF OPTIONS

 

Every Option shall be evidenced by a written Stock Option Agreement in such form
as the Committee shall approve from time to time, specifying the number of
shares of Common Stock that may be purchased pursuant to the Option, the time or
times at which the Option shall become exercisable in whole or in part, whether
the Option is intended to be an ISO or a non-qualified stock option (“NSO”), and
such other terms and conditions as the Committee shall approve, and containing
or incorporating by reference the following terms and conditions.

 

(a) Duration. The duration of each Option shall be as specified by the Committee
in its discretion; provided, however, that no ISO shall expire later than ten
(10) years from its date of grant, and no ISO granted to an employee who owns
(directly or under the attribution rules of Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any ISO Subsidiary shall expire later than
five (5) years from its date of grant.

 

(b) Exercise Price. The exercise price of each Option shall be any lawful
consideration, as specified by the Committee in its discretion; provided,
however, that the exercise price with respect to an ISO shall be at least one
hundred percent (100%) of the Fair Market Value of the Common Stock on the date
of grant of the Option; and provided, further, that the exercise price with
respect to an ISO granted to an employee who at the time of grant owns (directly
or under the attribution rules of Section 424(d) of the Code) stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or of any ISO Subsidiary shall be at least one hundred ten percent
(110%) of the Fair Market Value of the Common Stock on the date of grant of the
ISO. For purposes of the Plan, except as may be otherwise explicitly provided in
the Plan or in any Stock Option Agreement, Restricted Stock Agreement, SAR
Agreement or similar document, the Fair Market Value of a share of Common Stock
at any particular date shall be determined according to the following rules: (i)
if the Common Stock is not at the time listed or admitted to trading on a stock
exchange or the Nasdaq National Market, Fair Market Value shall be the closing
asked price of the Common Stock on the day before the date in question in the
over-the-counter market, as such price is reported in a publication of general
circulation selected by the Board and regularly reporting the price of the
Common Stock in such market; provided, however, that if the price of the Common
Stock is not so reported, Fair Market Value shall be determined in good faith by
the Board, which may take into consideration (1) the price paid for the Common
Stock in the most recent trade of a substantial number of shares known to the
Board to have occurred at arm’s length between willing and knowledgeable
investors, (2) an appraisal by an independent party or (3) any other method of
valuation undertaken in good faith by the Board, or some or all of the above as
the Board shall in its discretion elect; or (ii) if the Common Stock is at the
time listed or admitted to trading on any stock exchange or the Nasdaq National
Market, then Fair Market Value shall be the closing price on the day before the
date in question on the principal exchange on which the Common Stock is then
listed or admitted to trading. If no reported sale of Common Stock takes place
on such date on the

 

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principal exchange or the Nasdaq National Market, as the case may be, then the
reported closing asked price of the Common Stock on such date on the principal
exchange or the Nasdaq National Market, as the case may be, shall be
determinative of Fair Market Value.

 

(c) Method of Exercise. To the extent that it has become exercisable under the
terms of the Stock Option Agreement, an Option may be exercised from time to
time by written notice to the Chief Financial Officer of the Company or his
designee stating the number of shares with respect to which the Option is being
exercised and accompanied by payment of the exercise price. Such notice shall be
delivered in person or by facsimile transmission to the Chief Financial Officer
of the Company or his designee or shall be sent by registered mail, return
receipt requested, to the Chief Financial Officer of the Company or his
designee, in which case delivery shall be deemed made on the date such notice is
deposited in the mail.

 

Payment of the Exercise Price shall be made either (i) in cash) by a certified
check, bank draft or money order), (ii) with the consent of the Committee, by
delivering the Optionee’s duly executed promissory note and related documents,
(iii) with the consent of the Committee, by delivering Shares already owned by
the Optionee which have been held for more than six months valued at Fair Market
Value; provided that no Shares received upon exercise of that Option thereafter
may be exchanged to pay the Option price for additional Shares within the
following six months, or (iv) by a combination of the foregoing forms of
payment.

 

Alternatively, with the consent of the Committee, Options may be exercised by
means of a “cashless exercise” procedure in which a broker: (i) transmits the
exercise price to the Company in cash or acceptable cash equivalents either (1)
against the Optionee’s notice of exercise and the Company’s confirmation that it
will deliver to the broker stock certificates issued in the name of the broker
for at least that number of shares having a Fair Market Value equal to the
exercise price or (2) as the proceeds of a margin loan to the Optionee; or (ii)
agrees to pay the exercise price to the Company in cash or acceptable cash
equivalents upon the broker’s receipt from the Company of stock certificates
issued in the name of the broker for at least that number of shares having a
Fair Market Value equal to the exercise price. The Optionee’s notice of exercise
of an Option pursuant to a “cashless exercise” procedure must include the name
and address of the broker involved, a clear description of the procedure and
such other information or undertaking by the broker as the Committee shall
reasonably require.

 

(d) At the time specified in an Optionee’s notice of exercise, the Company
shall, without issue or transfer tax to the Optionee, deliver to him at the main
office of the Company, or such other place as shall be mutually acceptable, a
certificate for the shares as to which his Option is exercised. If the Optionee
fails to pay for or to accept delivery of all or any part of the number of
shares specified in his notice upon tender of delivery thereof, his right to
exercise the Option with respect to those shares shall be terminated, unless the
Company otherwise agrees.

 

(e) Vesting. An Option may be exercised so long as it is vested and outstanding
from time to time, in whole or in part, in the manner and subject to the
conditions that the Committee in its discretion may provide in the Stock Option
Agreement.

 

(f) Notice of ISO Stock Disposition. The Optionee shall notify the Company
promptly in the event that he sells, transfers, exchanges or otherwise disposes
of any shares of Common Stock issued upon exercise of an ISO before the later of
(i) the second anniversary of the date of grant of the ISO and (ii) the first
anniversary of the date the shares were issued upon his exercise of the ISO.

 

(g) Effect of Cessation of Employment or Service Relationship. Except as
otherwise determined by the Committee at the date of grant of an Option, upon
termination of a Optionee’s employment with the Company (including but not
limited to a termination for cause) the Option shall immediately terminate and
shall no longer be exercisable.

 

(i) in the case of termination as a result of retirement of the Optionee, an
Option shall remain exercisable by such Optionee for three (3) years (three (3)
months in the case of an ISO) after the date of termination (but in no event
after the normal expiration date of such Option or Right) to the extent that
such Optionee was entitled to exercise such Option at the date of such
termination. For this purpose, “retirement” shall mean voluntary retirement as
defined in a retirement plan or program of the Company or as determined by the
Committee;

 

(ii) in the case of termination as a result of death or disability of the
Optionee, an Option shall remain exercisable by such Optionee (or in the case of
death, by the persons to whom an Option is transferred by will or the laws of
descent and distribution) for three (3) years (one (1) year in the case of an
ISO) after the date of termination (but in no event after the normal expiration
date of such Option or Right) to the extent that such Optionee was

 

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entitled to exercise such Option at the date of such termination. For this
purpose, “disability” shall have the meaning set forth in Section 22 (e) (3) of
the Code;

 

(iii) in the case of termination by the Company other than for cause, an Option
shall remain exercisable for three months after the date of termination (but in
no event after the normal expiration date of such Option or Right) to the extent
that such Optionee was entitled to exercise such Option at the date of such
termination;

 

(iv) in the case of an NSO, an Option shall remain exercisable until the normal
expiration date of such Option or Right by an Optionee who is a director, or a
consultant or former consultant of the Company whose service as such was not
terminated for cause.

 

To the extent the Option is not exercised within the foregoing periods of time,
the Option shall automatically terminate at the end of the applicable period of
time. Notwithstanding the foregoing provisions, failure to exercise an ISO
within the periods of time prescribed under Section 421 and 422 of the Code
shall cause an ISO to cease to be treated as an incentive stock option for
purposes of Section 421 of the Code.

 

(h) Transferability of Options. During the life of the Optionee, an Option shall
be exercisable only by him, by a conservator or guardian duly appointed for him
by reason of his incapacity or by the person appointed by the Optionee in a
durable power of attorney acceptable to the Company’s counsel. Notwithstanding
the preceding sentences of this Section 5(i), the Committee may in its
discretion permit the Optionee of an NSO to transfer the Option to a member of
the Immediate Family (as hereinafter defined) of the Optionee, to a trust solely
for the benefit of the Optionee and the Optionee’s Immediate Family or to a
partnership or limited liability company whose only partners or members are the
Optionee and members of the Optionee’s Immediate Family. “Immediate Family”
shall mean, with respect to any Optionee, the Optionee’s child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, and
shall include adoptive relationships.

 

(i) No Rights as Stockholder. An Optionee shall have no rights as a stockholder
with respect to any shares covered by an Option until the date of issuance of a
certificate to him for the shares. No adjustment shall be made for dividends or
other rights for which the record date is earlier than the date the certificate
is issued, other than as required or permitted pursuant to Section 11.

 

  6. STOCK APPRECIATION RIGHTS

 

Among the “Other Rights” available under the Plan are stock appreciation rights
(“SARs”), which may be granted by the Committee in respect of such number of
shares of Common Stock subject to the Plan as it shall determine, in its
discretion, and may grant SARs either separately or in connection with Options,
as described in the following sentence. An SAR granted in connection with an
Option may be exercised only to the extent of the surrender of the related
Option, and to the extent of the exercise of the related Option the SAR shall
terminate. Shares of Common Stock covered by an Option that terminates upon the
exercise of a related SAR shall cease to be available under the Plan. The terms
and conditions of an SAR related to an Option shall be contained in the Stock
Option Agreement, and the terms of an SAR not related to any Option shall be
contained in an SAR Agreement.

 

Upon exercise of an SAR, the Optionee shall be entitled to receive from the
Company an amount equal to the excess of the Fair Market Value, on the exercise
date, of the number of shares of Common Stock as to which the SAR is exercised
over the exercise price for those shares under a related Option, or if there is
no related Option, over the base value stated in the SAR Agreement. The amount
payable by the Company upon exercise of an SAR shall be paid in the form of cash
or other property (including Common Stock of the Company), as provided in the
Stock Option Agreement or SAR Agreement governing the SAR.

 

All grants of SARs to Insiders shall be capable of being settled only for cash
and may not be granted in connection with an Option. If an SAR is awarded to a
person who is not an Insider at the time of award but subsequently becomes an
Insider, it shall be deemed to be amended to provide that it may be settled only
in cash while such person is an Insider.

 

  7. STOCK GRANTS

 

The Committee may grant or award shares of Common Stock, with or without
restrictions. In the event restrictions are imposed on a Stock Grant, such
restrictions shall be set forth by the Committee in a Restricted Stock
Agreement.

 

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A holder of a Stock Grant, including a Stock Grant subject to restrictions,
shall have all of the rights of a stockholder of the Company, including the
right to vote the shares and the right to receive any cash dividends, unless the
Committee shall otherwise determine. Certificates representing Common Stock
subject to restrictions shall be imprinted with a legend to the effect that the
shares represented may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms of the
Restricted Stock Agreement, and, if the Committee so determines, the Optionee
may be required to deposit the certificates with an escrow agent designated by
the Committee, together with a stock power or other instrument of transfer
appropriately endorsed in blank.

 

  8. SPECIAL BONUS GRANTS AND LOANS

 

In its discretion, the Committee may grant in connection with any NSO or Stock
Grant a special cash bonus in an amount not to exceed the lesser of (a) the
combined federal, state, and local income and employment tax liability incurred
by the Optionee as a consequence of his acquisition of stock pursuant to the
exercise of the NSO or the grant or vesting of Stock Grant and the related
special bonuses, or (b) thirty percent (30%) of the imputed income realized by
the Optionee on account of such exercise or vesting and the related special
bonus. The Committee may in its discretion estimate the amount of the tax
liability described in clause (a) of the immediately preceding sentence, using
formulae or methods uniformly applied to Optionees in similar circumstances,
without regard to the particular circumstances of an individual Optionee. A
special bonus shall be payable solely to federal, state, and local taxing
authorities for the benefit of the Optionee at such time or times as withholding
payments of income tax may be required. A special bonus may be granted
simultaneously with a related NSO Stock Grant or separately with respect to an
outstanding NSO or Stock Grant at an earlier date. In the event that an NSO with
respect to which a special bonus has been granted becomes exercisable by the
personal representative of the estate of the Optionee, or that a Stock Grant
with respect to which a special bonus has been granted shall vest after the
death of an Optionee, the bonus shall be payable to or for the benefit of the
estate in the same manner and to the same extent as it would have been payable
for the benefit of the Optionee had he survived to the date of exercise or
vesting.

 

In the Committee’s discretion, a Stock Option Agreement or Restricted Stock
Agreement may provide that to the extent that an Optionee does not receive a
special bonus of the maximum amount permissible under this Section 8, the
Company shall lend the Optionee an amount no greater than the excess of such
maximum over the special bonus (if any) paid to the Optionee, for such term and
at such rate of interest (or no interest) and on such further terms and
conditions as the Committee determines.

 

  9. OPTIONS AND OTHER RIGHTS VOIDABLE

 

If a person to whom a grant has been made fails to execute and deliver to the
Committee a Stock Option Agreement, Restricted Stock Agreement, SAR Agreement or
similar document within thirty (30) days after it is submitted to him, the Award
granted under the agreement shall be voidable by the Company at its election,
without further notice to the Optionee.

 

  10. REQUIREMENTS OF LAW

 

The Company shall not be required to transfer any Common Stock or to sell or
issue any shares upon the exercise of any Option or Other Right if the issuance
of the shares will result in a violation by the Optionee or the Company of any
provisions of any law, statute or regulation of any governmental authority.
Specifically, in connection with the Securities Act, upon the transfer of Common
Stock or the exercise of any Option or Other Right the Company shall not be
required to issue shares unless the Board has received evidence satisfactory to
it to the effect that the holder of the Option or Other Right will not transfer
the shares except pursuant to a registration statement in effect under the
Securities Act or unless an opinion of counsel satisfactory to the Company has
been received by the Company to the effect that such registration is not
required. Any determination in this connection by the Board shall be conclusive.
The Company shall not be obligated to take any other affirmative action in order
to cause the transfer of Common Stock or the exercise of an Option or Other
Right to comply with any law or regulations of any governmental authority,
including, without limitation, the Securities Act or applicable state securities
laws.

 

  11. CHANGES IN CAPITAL STRUCTURE

 

In the event that the outstanding shares of Common Stock are hereafter changed
for a different number or kind of shares or other securities of the Company, by
reason of a reorganization, recapitalization, exchange of shares, stock split,
combination of shares or dividend payable in shares or other securities, a
corresponding adjustment shall be made by the Committee in the number and kind
of shares or other securities covered by outstanding Options and Other Rights,
and for which Options or Other Rights may be granted under the Plan. Any such
adjustment in outstanding Options or Other Rights

 

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shall be made without change in the total price applicable to the unexercised
portion of the Option, but the price per share specified in each Stock Option
Agreement, Restricted Stock Agreement, SAR Agreement or similar agreement shall
be correspondingly adjusted; provided, however, that no adjustment shall be made
with respect to an ISO that would constitute a modification as defined in
Section 424 of the Code without the consent of the Optionee. Any such adjustment
made by the Committee shall be conclusive and binding upon all affected persons,
including the Company and all Optionees.

 

If while unexercised Options or Other Rights remain outstanding under the Plan
the Company merges or consolidates with a wholly-owned subsidiary for the
purpose of reincorporating itself under the laws of another jurisdiction, the
Optionees will be entitled to acquire shares of Common Stock of the
reincorporated Company upon the same terms and conditions as were in effect
immediately prior to such reincorporation (unless such reincorporation involves
a change in the number of shares or the capitalization of the Company, in which
case proportional adjustments shall be made as provided above) and the Plan,
unless otherwise rescinded by the Board, will remain the Plan of the
reincorporated Company.

 

Except as otherwise provided in the preceding paragraph, if while unexercised
Options or Other Rights remain outstanding under the Plan the Company merges or
consolidates with one or more corporations (whether or not the Company is the
surviving corporation) or is liquidated or sells or otherwise disposes of
substantially all of its assets to another entity, or upon a Change of Control
(as defined herein), then, except as otherwise specifically provided to the
contrary in an Optionee’s Stock Option Agreement, Restricted Stock Agreement,
SAR Agreement or similar agreement, the Committee may in its discretion amend
the terms of all outstanding Options and Other Rights so that either:

 

(a) After the effective date of such merger, consolidation, sale or Change of
Control, as the case may be, each Optionee shall be entitled upon exercise of an
Option or Other Right to receive in lieu of shares of Common Stock the number
and class of shares of such stock or other securities to which he would have
been entitled pursuant to the terms of the merger, consolidation, sale or Change
of Control if he had been the holder of record of the number of shares of Common
Stock as to which the Option or Other Right is being exercised, or shall be
entitled to receive from the successor entity a new stock grant, stock option or
stock appreciation right of comparable value; or

 

(b) All outstanding Options and Other Rights shall be cancelled as of the
effective date of any such merger, consolidation, liquidation, sale or Change of
Control, as the case may be, provided that each Optionee shall have the right to
exercise his Option or Other Right according to its terms during the period of
twenty (20) days ending on the day preceding the effective date of such merger,
consolidation, liquidation, sale or Change of Control; or

 

(c) All outstanding Options and Other Rights shall be cancelled as of the
effective date of any such merger, consolidation, liquidation, sale or Change of
Control, as the case may be, in exchange for consideration in cash or in kind,
which consideration in both cases shall be equal in value to the value of those
shares of stock or other securities the Optionee would have received had the
Option or Other Right been exercised (to the extent then exercisable) and no
disposition of the shares acquired upon such exercise had been made prior to
such merger, consolidation, liquidation, sale or Change in Control, less the
exercise price therefor. Upon receipt of such consideration by the Optionee, his
Option or Other Right shall immediately terminate and be of no further force and
effect. The value of the stock or other securities the Optionee would have
received if the Option had been exercised shall be determined in good faith by
the Committee, and in the case of shares of the Common Stock of the Company, in
accordance with the provisions of Section 5(b).

 

In addition to the foregoing, the Committee may in its discretion amend the
terms of an Option or Other Right by cancelling some or all of the restrictions
on its exercise to permit its exercise to a greater extent than that permitted
under its existing terms.

 

A “Change of Control” of the Company shall be deemed to have occurred if any
person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act)
other than a trust related to an employee benefit plan maintained by the Company
becomes the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of fifty percent (50%) or more of the Company’s outstanding Common
Stock, and within the period of twenty-four (24) consecutive months immediately
thereafter, individuals other than (a) individuals who at the beginning of such
period constitute the entire Board or (b) individuals whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of the period, become a majority of the Board.

 

Except as expressly provided to the contrary in this Section 11, the issuance by
the Company of shares of stock of any class for cash or property or for
services, either upon direct sale or upon the exercise of rights or warrants, or
upon conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect the number, class or price of
shares of Common Stock then subject to outstanding Options or Other Rights.

 

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  12. FORFEITURE FOR DISHONESTY

 

Notwithstanding anything to the contrary in the Plan, if the Board determines,
after full consideration of the facts presented on behalf of both the Company
and an Optionee, that the Optionee has been engaged in fraud, embezzlement,
theft, commission of a felony or proven dishonesty in the course of his
employment or other service relationship with the Company or a Subsidiary, which
damaged the Company or Subsidiary, or has disclosed trade secrets or other
proprietary information of the Company or a Subsidiary:

 

(a) The Optionee shall forfeit all unexercised Options and Other Rights and all
exercised Options and Other Rights under which the Company has not yet delivered
the certificates; and

 

(b) The Company shall have the right to repurchase all or any part of the shares
of Common Stock acquired by the Optionee upon the earlier exercise of any Option
or Other Rights at a price equal to the amount paid to the Company upon such
exercise, increased by an amount equal to the interest that would have accrued
in the period between the date of exercise and the date of such repurchase upon
a debt in the amount of the exercise price, at the prime rate(s) announced from
time to time during such period in the Federal Reserve Statistical Release
Selected Interest Rates.

 

The decision of the Board as to the cause of an Optionee’s discharge and the
damage done to the Company or a Subsidiary shall be final, binding, and
conclusive. No decision of the Board, however, shall affect in any manner the
finality of the discharge of an Optionee by the Company or a Subsidiary.

 

  13. MISCELLANEOUS

 

(a) Nonassignability of Other Rights. No Other Rights shall be assignable or
transferable by the Optionee except by will or the laws of descent and
distribution. During the life of the Optionee, Other Rights shall be exercisable
only by the Optionee.

 

(b) No Guarantee of Employment or Continuation of Service Relationship. Neither
the Plan nor any Stock Option Agreement, Restricted Stock Agreement, SAR
Agreement or similar agreement shall give an employee or other service provider
the right to continue in the employment of or to continue to provide services to
the Company or a Subsidiary, or give the Company or a Subsidiary the right to
require continued employment or services.

 

(c) Tax Withholding. To the extent required by law, the Company (or a
Subsidiary) shall withhold or cause to be withheld income and other taxes with
respect to any income recognized by an Optionee by reason of the exercise or
vesting of an Option or Other Right, or a cash bonus paid in connection with
such exercise or vesting, and as a condition to the receipt of any Option or
Other Right or related cash bonus the Optionee shall agree that if the amount
payable to him by the Company and any Subsidiary in the ordinary course is
insufficient to pay such taxes, then he shall upon the request of the Company
pay to the Company an amount sufficient to satisfy its tax withholding
obligations.

 

Without limiting the foregoing, the Committee may in its discretion permit any
Optionee’s withholding obligation to be paid in whole or in part in the form of
shares of Common Stock by withholding from the shares to be issued or by
accepting delivery from the Optionee of shares already owned by him; provided,
however, that payment of withholding obligation in the form of shares shall not
be made with respect to an amount in excess of the minimum required withholding.
The Fair Market Value of the shares for such purposes shall be determined as set
forth in Section 5(b). If payment of withholding taxes is made in whole or in
part in shares of Common Stock, the Optionee shall deliver to the Company
certificates registered in his name representing shares of Common Stock legally
and beneficially owned by him, fully vested and free of all liens, claims, and
encumbrances of every kind, duly endorsed or accompanied by stock powers duly
endorsed by the record holder of the shares represented by such certificates. If
the Optionee is subject to Section 16(a) of the Exchange Act, his ability to pay
his withholding obligation in the form of shares of Common Stock shall be
subject to such additional restrictions as may be necessary to avoid any
transaction that might give rise to liability under Section 16(b) of the
Exchange Act.

 

(d) Use of Proceeds. The proceeds from the sale of Common Stock pursuant to
Options or Other Rights shall constitute general funds of the Company.

 

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(e) Awards to Non-United States Persons. Awards may be made to Optionees who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or to comply with
applicable laws. The Board shall have the right to amend the Plan, consistent
with its authority to amend the Plan as set forth in Section 14, to obtain
favorable tax treatment for Optionees, and any such amendments shall be
evidenced by an Appendix to the Plan. The Board may delegate this authority to
the Committee.

 

(f) Governing Law. The granting of Awards and the issuance of Common Stock under
the Plan shall be subject to all applicable laws and regulations and to such
approvals by any governmental agency or national securities exchanges as may be
required. To the extent not preempted by Federal law, the Plan and all
agreements hereunder shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts, without regard to the principles of
conflicts of law.

 

  14. EFFECTIVE DATE, DURATION, AMENDMENT AND TERMINATION OF PLAN

 

The Plan shall be effective as of April 1, 2003 if, and only if, the holders of
a majority of the outstanding shares of capital stock present, or represented,
and entitled to vote thereon (voting as a single class) at a duly held meeting
of the stockholders of the Company approve the Plan within twelve (12) months
after such date. If so approved by the stockholders, the Committee may grant
Options and Other Rights under the Plan from time to time until the close of
business on March 31, 2013. The Board may at any time amend the Plan; provided,
however, that without approval of the Company’s stockholders there shall be no:
(a) increase in the total number of shares covered by the Plan, except by
operation of the provisions of Section 11, or the aggregate number of shares of
Common Stock that may be issued to any single person; (b) change in the class of
persons eligible to receive Awards under the Plan; or (c) other change in the
Plan that requires stockholder approval under applicable law. No amendment shall
adversely affect outstanding Options or Other Rights without the consent of the
Optionee. The Plan may be terminated at any time by action of the Board, but any
such termination will not terminate Options and Other Rights then outstanding,
without the consent of the Optionee.