EXHIBIT 10.1

 

CASUAL MALE RETAIL GROUP, INC.

 

1992 STOCK INCENTIVE PLAN, AS AMENDED

 

SECTION 1. General Purpose Of The Plan; Definitions.

 

The name of the plan is the Casual Male Retail Group, Inc. 1992 Stock Incentive
Plan (the “Plan”). The purpose of the Plan is to encourage and enable the
officers, employees and directors of Casual Male Retail Group, Inc. (the
“Company”) and its Subsidiaries, and other persons who are responsible for or
contribute to the management, growth or profitability of, or who provide
substantial services to, 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 Exchange Act of 1934, as amended.

 

“Award” or “Awards”, except where referring to a particular category of grant
under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Conditioned Stock Awards, Unrestricted Stock Awards and Performance
Share Awards.

 

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

 

“Cause” means and shall be limited to a vote of the Board of Directors at a
meeting of the Board of Directors resolving that the participant should be
dismissed as a result of (i) any material breach by the participant of any
agreement to which the participant and the Company or any Subsidiary are both
parties, (ii) any act (other then retirement) or omission to act by the
participant which may have a material and adverse effect on the business of the
Company or any Subsidiary or on the participant’s ability to perform services
for the Company or any Subsidiary, including, without limitation, the commission
of any crime (other than ordinary traffic violations), or (iii) any material
misconduct or neglect of duties by the participant in connection with the
business or affairs of the Company or any Subsidiary of the Company.

 

“Change of Control” shall have the meaning set forth in Section 13.

 

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

 

“Committee” shall have the meaning set forth in Section 2.

 

“Conditioned Stock Award” means Awards granted pursuant to Section 6.

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“Disability” means disability as set forth in Section 22(e)(3) of the Code.

 

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

 

“Fair Market Value” means the fair market value of Stock as determined by the
Committee or under procedures established by the Committee. Unless otherwise
determined by the Committee, Fair Market Value, on any given date, shall be the
last reported sale price at which Stock is traded on such date or, if no Stock
is traded on such date, the most recent date on which Stock was traded, as
reflected in the NASDAQ National Market System or, if applicable, any national
stock exchange on which the Stock is traded.

 

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

 

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

 

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

 

“Normal Retirement” means retirement from active employment with the Company and
its Subsidiaries in accordance with the retirement policies of the Company and
its Subsidiaries then in effect.

 

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

 

“Performance Share Award” means Awards granted pursuant to Section 8.

 

“Stock” means the Common Stock, $.01 par value per share, of the Company,
subject to adjustments pursuant to Section 3.

 

“Subsidiary” means any corporation or other entity (other than the Company) in
any unbroken chain of corporations or other entities, beginning with the Company
if each of the corporations or entities (other than the last corporation or
entity in the unbroken chain) owns stock or other interests possessing 50% or
more of the total combined voting power of all classes of stock or other
interests in one of the other corporations or entities in the chain.

 

“Unrestricted Stock Award” means Awards granted pursuant to Section 7.

 

SECTION 2. Administration Of Plan; Committee Authority To Select Participants
And Determine Awards.

 

(a) Committee. The Plan shall be administered by all of the Non-Employee
Director members of the Stock Option Committee of the Board, or any other
committee of not less than two Non-Employee Directors performing

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similar functions, as appointed by the Board from time to time (the
“Committee”). Each member of the Committee shall be an “outside director” within
the meaning of Section 162(m) of the Code and the regulations promulgated
thereunder and a “non-employee director” within the meaning of Rule 16-3b(3)(i)
promulgated under the Act, or any successor definition under said Rule.

 

(b) Powers of Committee. The Committee 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 officers, other employees of the Company and its Subsidiaries
and other eligible individuals to whom Awards may from time to time be granted;

 

(ii) to determine the time or times of grant, and the extent, if any, of
Incentive Stock Options, Non-Qualified Stock Options, Conditioned Stock,
Unrestricted Stock and Performance Shares, or any combination of the foregoing,
granted to any one or more participants.

 

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

 

(iv) to determine and modify the terms and conditions, subject to the provisions
of Section 11, including restrictions, not inconsistent with the terms of the
Plan, of any Award, which terms and conditions may differ among individual
Awards and participants, and to approve the form of written instruments
evidencing the Awards;

 

(v) to accelerate the exercisability or vesting of all or any portion of any
Award;

 

(vi) subject to the provisions of Section 5(a)(ii), to extend the period in
which Stock Options may be exercised;

 

(vii) to determine whether, to what extent, and under what circumstances Stock
and other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the participant and whether and to what
extent the Company shall pay or credit amounts equal to interest (at rates
determined by the Committee) or dividends or deemed dividends on such deferrals;
and

 

(viii) 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; to decide all disputes arising in connection with the Plan; and to
otherwise supervise the administration of the Plan (including the power and
authority to waive the requirement set forth in Section 7(c) of the Plan that an
irrevocable written election to receive Unrestricted Stock, in lieu of
directors’ fees otherwise due, be delivered prior to the commencement of the
calendar year in which the Non-Employee Director serves on the Board.

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All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.

 

SECTION 3. Shares Issuable Under The Plan; Mergers; Substitution.

 

(a) Shares Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 6,930,000. For purposes of this
limitation, the shares of Stock underlying any Awards which are forfeited,
canceled, reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added back to the shares
of Stock available for issuance under the Plan. Subject to such overall
limitation, shares may be issued up to such maximum number pursuant to any type
or types of Award, including Incentive Stock Options. Shares issued under the
Plan may be authorized but unissued shares or shares reacquired by the Company.
No individual participant in the Plan may, during any fiscal year of the Company
(including all options granted during fiscal 2004), be granted one or more Stock
Options the sum of which cover more than 500,000 shares of Stock (such amount
being subject to adjustment in accordance with Section 3(b) hereof).

 

(b) Stock Dividends, Mergers, Etc. In the event that after approval of the Plan
by the stockholders of the Company in accordance with Section 15, the Company
effects a stock dividend, stock split or similar change in capitalization
affecting the Stock, the Committee shall make appropriate adjustments in (i) the
number and kind of shares of stock or securities on which Awards may thereafter
be granted, (ii) the number and kind of shares remaining subject to outstanding
Awards, and (iii) the option or purchase price in respect of such shares. In the
event of any merger, consolidation, dissolution or liquidation of the Company,
the Committee in its sole discretion may, as to any outstanding Awards, make
such substitution or adjustment in the aggregate number of shares reserved for
issuance under the Plan and in the number and purchase price (if any) of shares
subject to such Awards as it may determine and as may be permitted by the terms
of such transaction, or accelerate, amend or terminate such Awards upon such
terms and conditions as it shall provide (which, in the case of the termination
of the vested portion of any Award, shall require payment or other consideration
which the Committee deems equitable in the circumstances), subject, however, to
the provisions of Section 13.

 

(c) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who concurrently become employees of the Company or a Subsidiary as
the result of a 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 Committee may direct that
the substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances. The shares which may be delivered
under such substitute awards shall be in addition to the maximum number of
shares provided for in Section 3(a) only to the extent that the substitute
Awards are granted in substitution for awards issued under a plan approved by
the stockholders of the entity which issued such predecessor awards.

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SECTION 4. Eligibility.

 

Participants in the Plan will be such full or part-time officers and other
employees of the Company or any of its Subsidiaries, such Non-Employee Directors
and such other persons who are responsible for or contribute to the management,
growth or profitability of, or who provide substantial services to, the Company
and/or its Subsidiaries and who are selected from time to time by the Committee,
in its sole discretion, and any person who has been offered employment by the
Company or a Subsidiary, provided that such prospective employee may not receive
any payment or exercise any right to an Award until such person has commenced
employment with the Company or a Subsidiary. Notwithstanding the foregoing,
Incentive Stock Options only may be granted to employees of the Company.

 

An employee who is employed primarily to render services within the jurisdiction
of a labor union and whose compensation, hours of work, or condition of
employment are determined by collective bargaining with such union shall not be
an Eligible Employee for purposes of the Plan unless the applicable collective
bargaining agreement expressly provides that such employee shall be eligible to
participate in the Plan, in which event, however, such employee shall be
entitled to participate in the Plan only to the extent and on the terms and
conditions specified in such collective bargaining agreement.

 

SECTION 5. Stock Options.

 

Any Stock Option granted under the Plan shall be in such form as the Committee
may from time to time approve.

 

Stock Options granted under the Plan may be either Incentive Stock Options or
Non-Qualified Stock Options. To the extent that any option does not qualify as
an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.

 

No Incentive Stock Option shall be granted under the Plan after April 2, 2007.

 

(a) Discretionary Stock Options. The Committee in its discretion may grant Stock
Options to employees of the Company or any Subsidiary or any other individual
eligible to receive such an Award pursuant to Section 4. 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 Committee shall deem desirable:

 

(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
Committee at the time of grant but shall be not less than 100% of Fair Market
Value on the date of grant whether such Stock Option be an Incentive Stock
Option or a Non-Qualified Stock Option. If an employee

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owns or is deemed to own (by reason of the attribution rules applicable under
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation and an
Incentive Stock Option is granted to such employee, the option price shall be
not less than 110% of Fair Market Value on the grant date.

 

(ii) Option Term. The term of each Stock Option shall be fixed by the Committee,
but no Incentive Stock Option shall be exercisable more than ten years after the
date the 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% of the
combined voting power of all classes of stock of the Company or any Subsidiary
or parent corporation and an Incentive Stock Option is granted to such employee,
the term of such option shall be no more than five years from the date of grant.

 

(iii) Exercisability; Rights of a Shareholder. Stock Options shall become vested
and exercisable at such time or times, whether or not in installments, as shall
be determined by the Committee at or after the grant date. The Committee may at
any time accelerate the exercisability of all or any portion of any Stock
Option. An optionee shall have the rights of a shareholder 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:

 

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

 

(B) In the form of shares of Stock that are not then subject to restrictions
under any Company plan, if permitted by the Committee, in its discretion. 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 to pay 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 Committee shall prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection.

 

The delivery of certificates representing 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 Stock
Option or applicable provisions of laws.

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(v) Termination by Death. If any optionee’s employment by the Company and its
Subsidiaries terminates by reason of death, the Stock Option may thereafter be
exercised, to the extent exercisable at the date of death, by the legal
representative or legatee of the optionee, for a period of 180 days (or such
longer period as the Committee shall specify at any time) from the date of
death, or until the expiration of the stated term of the Option, if earlier.

 

(vi) Termination by Reason of Disability or Normal Retirement.

 

(A) Any Stock Option held by an optionee whose employment by the Company and its
Subsidiaries has terminated by reason of Disability may thereafter be exercised,
to the extent it was exercisable at the time of such termination, for a period
of 180 days (or such longer period as the Committee shall specify at any time)
from the date of such termination of employment, or until the expiration of the
stated term of the Option, if earlier.

 

(B) Any Stock Option held by an optionee whose employment by the Company and its
Subsidiaries has terminated by reason of Normal Retirement may thereafter be
exercised, to the extent it was exercisable at the time of such termination, for
a period of 90 days (or such longer period as the Committee shall specify at any
time) from the date of such termination of employment, or until the expiration
of the stated term of the Option, if earlier.

 

(C) The Committee shall have sole authority and discretion to determine whether
a participant’s employment has been terminated by reason of Disability or Normal
Retirement.

 

(D) Except as otherwise provided by the Committee at the time of grant, the
death of an optionee during a period provided in this Section 5(a)(vi) for the
exercise of a Non-Qualified Stock Option, shall extend such period for 180 days
from the date of death, subject to termination on the expiration of the stated
term of the Option, if earlier.

 

(vii) Termination for Cause. If any optionee’s employment by the Company and its
Subsidiaries has been terminated for Cause, any Stock Option held by such
optionee shall immediately terminate and be of no further force and effect;
provided, however, that the Committee may, in its sole discretion, provide that
such stock option can be exercised for a period of up to 30 days from the date
of termination of employment or until the expiration of the stated term of the
Option, if earlier.

 

(viii) Other Termination. Unless otherwise determined by the Committee, if an
optionee’s employment by the Company and its Subsidiaries terminates for any
reason other than death, Disability, Normal Retirement or for Cause, any Stock
Option held by such optionee may thereafter be exercised, to the extent it was
exercisable on the date of termination of employment, for 30 days (or such
longer period as the Committee shall specify at any time) from the date of
termination of employment or until the expiration of the stated term of the
Option, if earlier.

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(ix) 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 Stock with respect
to which incentive stock options granted under this Plan and any other plan of
the Company or its Subsidiaries become exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000.

 

(x) Form of Settlement. Shares of Stock issued upon exercise of a Stock Option
shall be free of all restrictions under the Plan, except as otherwise provided
in this Plan.

 

(b) Reload Options. At the discretion of the Committee, Options granted under
this Section 5(a) may include a so-called “reload” feature pursuant to which an
optionee exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with the same expiration
date as the original Option being exercised, and with such other terms as the
Committee may provide) to purchase that number of shares of Stock equal to the
number delivered to exercise the original Option.

 

(c) Stock Options Granted to Non-Employee Directors.

 

(i) Grant of Options Upon Election to Board. Each Non-employee Director who is
elected by the stockholders of the Company to the Board on or subsequent to
October 8, 1999 shall automatically be granted, upon such election, a
Non-Qualified Stock Option to purchase 15,000 shares of Stock. Each Non-Employee
Director who is re-elected by the stockholders of the Company to the Board on or
subsequent to October 8, 1999 shall automatically be granted, upon each such
re-election, a Non-qualified Stock Option to purchase 15,000 shares of Stock.

 

(ii) Exercise Price. The exercise price per share for the Stock covered by a
Stock Option granted pursuant to this Section 5(c) shall be equal to the Fair
Market Value of the Stock on the date the Stock Option is granted.

 

(iii) Exercise; Termination; Non-transferability.

 

(A) Options granted under this Section 5(c) shall be vested at the rate of
33 1/3% of such options shall be exercisable on the date of grant, an additional
33 1/3% of such options shall be exercisable on the first anniversary of the
grant thereof, and an additional 33 1/3% of such options shall become
exercisable on the second anniversary of grant thereof; subject to the
provisions of Section 5(c)(iii)(B), any Option so granted shall be exercisable
after the termination of service of the Non-Employee Director, whether because
of death, disability or otherwise. No Option issued under this Section 5(c)
shall be exercisable after the expiration of ten years from the date upon which
such Option is granted.

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(B) The rights of a Non-Employee Director in an Option granted under Section
5(c) shall terminate 90 days after such Director ceases to be a Director of the
Company or the specified expiration date, if earlier; provided, however, that if
the Non-Employee ceases to be a Director for Cause, the rights shall terminate
immediately on the date on which he ceases to be a Director.

 

(C) Any Option granted to a Non-Employee Director and outstanding on the date of
his or her death may be exercised by the legal representative or legatee of the
optionee for a period of 180 days from the date of death or until the expiration
of the stated term of the option, if earlier.

 

(D) Options granted under this Section 5(c) may be exercised only by written
notice to the Company specifying the number of shares to be purchased. Payment
of the full purchase price of the shares to be purchased may be made by one or
more of the methods specified in Section 5(a)(iv). An optionee shall have the
rights of a shareholder only as to shares acquired upon the exercise of a Stock
Option and not as to unexercised Stock Options.

 

(iv) Limited to Non-Employee Directors. The provisions of this Section 5(c)
shall apply only to Options granted or to be granted to Non-Employee Directors,
and shall not be deemed to modify, limit or otherwise apply to any other
provision of this Plan or to any Option issued under this Plan to a participant
who is not a Non-Employee Director of the Company. To the extent inconsistent
with the provisions of any other Section of this Plan, the provisions of this
Section 5(c) shall govern the rights and obligations of the Company and
Non-Employee Directors respecting Options granted or to be granted to
Non-Employee Directors pursuant to this Section 5(c).

 

(d) 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. Notwithstanding the foregoing, the Committee may permit the
optionee to transfer, without consideration for the 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 terms and conditions of the Plan and the applicable Stock
Option.

 

SECTION 6. Conditioned Stock Awards.

 

(a) Nature of Conditioned Stock Award. The Committee may grant Conditioned Stock
Awards to any employees of the Company or any Subsidiary or any other individual
eligible to receive such an Award pursuant to Section 4. A Conditioned Stock
Award is an Award entitling the recipient to acquire, at no cost or for a
purchase price determined by the Committee, shares of Stock subject to such
restrictions and conditions as the Committee may determine at the time of grant
(“Conditioned Stock”). Conditions may be based on continuing employment and/or
achievement of pre-established performance goals and objectives. In addition, a
Conditioned Stock Award may be granted to an employee by the Committee in lieu
of a cash bonus due to such employee pursuant to any other plan of the Company.

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(b) Acceptance of Award. A participant who is granted a Conditioned Stock Award
shall have no rights with respect to such Award unless the participant shall
have accepted the Award within 60 days (or such shorter date as the Committee
may specify) following the award date by making payment to the Company, if
required, by certified or bank check or other instrument or form of payment
acceptable to the Committee in an amount equal to the specified purchase price,
if any, of the shares covered by the Award and by executing and delivering to
the Company a written instrument that sets forth the terms and conditions of the
Conditioned Stock in such form as the Committee shall determine.

 

(c) Rights as a Shareholder. Upon complying with Section 6(b) above, a
participant shall have all the rights of a shareholder with respect to the
Conditioned Stock, including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase or forfeiture rights
described in this Section 6 and subject to such other conditions contained in
the written instrument evidencing the Conditioned Award. Unless the Committee
shall otherwise determine, certificates evidencing shares of Conditioned Stock
shall remain in the possession of the Company until such shares are vested as
provided in Section 6(e) below.

 

(d) Restrictions. Shares of Conditioned Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment by the
Company and its Subsidiaries for any reason (including death, Disability, Normal
Retirement and for Cause), the Company shall have the right, at the discretion
of the Committee, to repurchase shares of Conditioned Stock with respect to
which conditions have not lapsed at their purchase price, or to require
forfeiture of such shares to the Company if acquired at no cost, from the
participant or the participant’s legal representative. The Company must exercise
such right of repurchase or forfeiture not later than the 90th day following
such termination of employment (unless otherwise specified in the written
instrument evidencing the Conditioned Award).

 

(e) Vesting of Conditioned Stock. The Committee 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 nontransferability of the
Conditioned 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 Conditioned Stock and
shall be deemed “vested.” The Committee at any time may accelerate such date or
dates and otherwise waive or, subject to Section 11, amend any conditions of the
Award.

 

(f) Waiver, Deferral and Reinvestment of Dividends. The written instrument
evidencing the Conditioned Stock Award may require or permit the immediate
payment, waiver, deferral or investment of dividends paid on the Restricted
Stock.

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SECTION 7. Unrestricted Stock Awards.

 

(a) Grant or Sale of Unrestricted Stock. The Committee may, in its sole
discretion, grant (or sell at a purchase price determined by the Committee which
shall in no event be less than 85% of Fair Market Value) to any employees of the
Company or any Subsidiary or any other individual eligible to receive such an
Award pursuant to Section 4, shares of Stock free of any restrictions under the
Plan (“Unrestricted Stock”). Shares of Unrestricted Stock may be granted or sold
as described in the preceding sentence in respect of past services or other
valid consideration.

 

(b) Elections to Receive Unrestricted Stock in Lieu of Compensation. Upon the
request of an employee and with the consent of the Committee, each employee may,
pursuant to an irrevocable written election delivered to the Company no later
than the date or dates specified by the Committee, receive a portion of the cash
compensation otherwise due to him in Unrestricted Stock (valued at Fair Market
Value on the date or dates the cash compensation would otherwise be paid). Such
Unrestricted Stock may be paid to the employee at the same time as the cash
compensation would otherwise be paid, or at a later time, as specified by the
employee in the written election.

 

(c) Elections to Receive Unrestricted Stock in Lieu of Directors’ Fees. Each
Non-Employee Director may, pursuant to an irrevocable written election delivered
to the Company no later than December 31 of any calendar year, receive all or a
portion of the directors’ fees otherwise due to him in the subsequent calendar
year in Unrestricted Stock (valued at Fair Market Value on the date or dates the
directors’ fees would otherwise be paid). Such Unrestricted Stock may be paid to
the Non-Employee Director at the same time the directors’ fees would otherwise
have been paid, or at a later time, as specified by the Non-Employee Director in
the written election.

 

(d) Restrictions on Transfers. The right to receive Unrestricted Stock may not
be sold, assigned, transferred, pledged or otherwise encumbered, other than by
will or the laws of descent and distribution.

 

SECTION 8. Performance Share Awards.

 

(a) Nature of Performance Shares. A Performance Share Award is an award
entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any employees of
the Company or any Subsidiary, including those who qualify for awards under
other performance plans of the Company and any other individual eligible to
receive such an Award pursuant to Section 4. The Committee in its sole
discretion shall determine whether and to whom Performance Share Awards shall be
made, the performance goals applicable under each such Award, the periods during
which performance is to be measured, and all other limitations and conditions
applicable to the awarded Performance Shares; provided, however, that the
Committee may rely on the performance goals and other standards applicable to
other performance-based plans of the Company in setting the standards for
Performance Share Awards under the Plan.

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(b) Restrictions of Transfer. Performance Share Awards and all rights with
respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.

 

(c) Rights as a Shareholder. A participant receiving a Performance Share Award
shall have the rights of a shareholder only as to shares actually received by
the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Committee).

 

(d) Termination. Except as may otherwise be provided by the Committee at any
time prior to termination of employment, a participant’s rights in all
Performance Share Awards shall automatically terminate upon the participant’s
termination of employment by the Company and its Subsidiaries for any reason
(including death, Disability, Normal Retirement and for Cause).

 

(e) Acceleration, Waiver, Etc. At any time prior to the participant’s
termination of employment by the Company and its Subsidiaries, the Committee may
in its sole discretion accelerate, waive or, subject to Section 11, amend any or
all of the goals, restrictions or conditions imposed under any Performance Share
Award.

 

SECTION 9. Tax Withholding.

 

(a) Payment by Participant. Each participant 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 participant for Federal
income tax purposes, pay to the Company, or make arrangements satisfactory to
the Committee 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 participant.

 

(b) Payment in Shares. With the approval of the Committee, a participant may
elect to have such 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 with respect to such Award, or (ii) transferring to the Company
shares of Stock owned by the participant with an aggregate Fair Market Value (as
of the date the withholding is effected) that would satisfy the withholding
amount due.

 

SECTION 10. Transfer, Leave Of Absence, Etc.

 

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

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(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;

 

(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 Committee otherwise so provides
in writing.

 

SECTION 11. Amendments And Termination.

 

The Board may at any time amend or discontinue the Plan and the Committee may at
any time amend or cancel any outstanding Award (or provide substitute Awards at
the same or reduced exercise price or with no exercise or purchase price, but
such price, if any, must satisfy the requirements which would apply to the
substitute or amended Award if it were then initially granted under this Plan)
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. However, no such repricing shall be effective
unless approved by the stockholders of the Company, nor shall such amendment,
unless approved by the stockholders of the Company, be effective if it would
cause the Plan to fail to satisfy the incentive stock option requirements of the
Code or if it would increase the limitation set forth in Section 3(a) on the
number of shares of Stock covered by Options that may be granted to any
individual participant during any fiscal year.

 

SECTION 12. Status Of Plan.

 

With respect to the portion of any Award which has not been exercised and any
payments in cash, Stock or other consideration not received by a participant, a
participant shall have no rights greater than those of a general creditor of the
Company unless the Committee shall otherwise expressly determine in connection
with any Award or Awards. In its sole discretion, the Committee 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
provision of the foregoing sentence.

 

SECTION 13. Change Of Control Provisions.

 

(a) Upon the occurrence of a Change of Control as defined in this Section 13:

 

(i) Each Stock Option shall automatically become fully exercisable
notwithstanding any provision to the contrary hereof.

 

(ii) Restrictions and conditions on Awards of Conditioned Stock shall
automatically be deemed waived, and the recipients of such Awards shall become
entitled to receipt of the stock subject to such Awards.

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(b) The Committee may at any time prior to a Change of Control accelerate the
exercisability of any Stock Options, Conditioned Stock, and Performance Share
Awards to the extent it shall in its sole discretion determine.

 

(c) “Change of Control” shall mean the occurrence of any one of the following
events:

 

(i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Act) becomes a “beneficial owner” (as such term is defined in Rule 13d-3
promulgated under the Act) (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company), directly or indirectly, of securities of the Company representing
thirty-five percent (35%) or more of the combined voting power of the Company’s
then outstanding securities; or, in the case of any person which as of October
20, 2000, is the beneficial owner, directly or indirectly, of securities of the
Company representing more than [10%] of the combined voting power of the
Company’s then outstanding securities, such person shall become the beneficial
owner, directly or indirectly, of securities of the Company representing
[thirty-five percent (35%)] or more of the combined voting power of the
Company’s then outstanding securities in addition to the securities beneficially
owned, directly or indirectly, by such person as of October 20, 2000 (excluding,
for the avoidance of doubt, becoming the beneficial owner of such percentage of
securities by reason of any acquisition, retirement or cancellation of
securities by the Company).

 

(ii) at any time after October 20, 2000, persons who, as of October 20, 2000,
constituted the Company’s Board (the “Incumbent Board”) cease for any reason,
including without limitation as a result of a tender offer, proxy contest,
merger or similar transaction, to constitute at least a majority of the Board,
provided that any person becoming a director of the Company subsequent to
October 20, 2000 whose election was approved by, or who was nominated with the
approval of, at least a majority of the directors then comprising the Incumbent
Board shall, for purposes of this Plan, be considered a member of the Incumbent
Board; or

 

(iii) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation or other entity, other than (a) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 65% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
“person” (as hereinabove defined) acquires more than 50% of the combined voting
power of the Company’s then outstanding securities; or

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(iv) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.

 

SECTION 14. General Provisions.

 

(a) No Distribution; Compliance with Legal Requirements. The Committee may
require each person acquiring shares 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 requirements have been
satisfied. The Committee 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. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant’s last known address on file with the Company.

 

(c) Other Compensation Arrangements; No Employment Rights. Nothing contained in
this Plan shall prevent the Board from adopting other or additional compensation
arrangements, including trusts, subject to stockholder approval if such approval
is required; and such arrangements may be either generally applicable or
applicable only in specific cases. The adoption of the Plan or any Award under
the Plan does not confer upon any employee any right to continued employment
with the Company or any Subsidiary.

 

SECTION 15. Effective Date Of Plan.

 

The Plan shall become effective upon approval by the holders of a majority of
the shares of capital stock of the Company present or represented and entitled
to vote at a meeting of stockholders.

 

SECTION 16. Governing Law.

 

This Plan shall be governed by, and construed and enforced in accordance with,
the substantive laws of The Commonwealth of Massachusetts without regard to its
principles of conflicts of laws.