Exhibit 10.7


AS ADOPTED


 


BU FINANCIAL
CORPORATION

2009 STOCK OPTION PLAN


 


1.                                      PURPOSE


 


The BU Financial
Corporation 2009 Stock Option Plan (the “Plan”) has been
established to advance the interests of BU Financial Corporation (the “Company”) and its Affiliates by providing for the grant of
Stock Options to Participants.


 


2.                                      DEFINED TERMS


 


The following terms, when used
in the Plan, shall have the meanings and be subject to the provisions set forth
below:


 


“Affiliate”: Any Person that, with respect to a specified
Person, directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, the specified Person.


 


“Award
Agreement”: A
written agreement between the Company and the Participant evidencing a Stock Option,
which may, but need not, be executed or acknowledged by a Participant.


 


“Board”: The Board of Directors of the Company.


 


“Cause”: The term “Cause” shall mean (A) the
conviction, guilty plea or plea of “no contest” by the Participant to any
felony or a crime involving moral turpitude or the Participant’s commission of
any other act or omission involving dishonesty or fraud, (B) the
substantial and repeated failure of the Participant to perform duties of the
office held by the Participant, (C) the Participant’s gross negligence,
willful misconduct or breach of fiduciary duty with respect to the Company or
any of its Subsidiaries or Affiliates, and/or (D) any breach by the
Participant of any Restrictive Covenants.


 


“Change of
Control”: The
term “Change of Control” shall mean (A) the sale or disposition, in one or
a series of related transactions, of all or substantially all of the assets of
the Company and its Subsidiaries, taken as a whole, to any “person” or “group”
(as such terms are defined in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act), other than any person or group holding an interest in BU
Financial Holdings LLC as of May 21, 2009 and/or their respective
Affiliates (together, the “Investors”) or (B) the
date upon which any “person” or “group”, other than the Investors, is or
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, of fifty percent (50%) or more of
the total voting power of the voting Interests (as defined in the LLC
Agreement) in BU Financial Holdings LLC or the Voting Stock of the Company (or
any successor thereto), including by way of merger, consolidation or otherwise.


 


“Code”: The U.S. Internal Revenue Code of 1986, as from
time to time amended and in effect, or any successor statute as from time to
time in effect.


 

















 


“Committee”: The Board or, if one or more has been appointed, a
committee of the Board. The Committee may delegate ministerial tasks to such
persons as it deems appropriate.


 


“Common
Stock”: Common shares of the
Company, par value $0.01 per share.


 


“Company”: The term “Company” shall have the meaning set forth
in Section 1 hereof.


 


“Disability”: A finding by the Board that the Participant has
been unable to perform his or her job functions by reason of a physical or
mental impairment for a period of 90 consecutive days or any 90 days within a
period of 180 consecutive days.


 


“Employee”: Any individual who is employed by the Company or
an Affiliate.


 


“Employment”: A Participant’s employment or other service
relationship with the Company and its Affiliates.  Unless the Committee provides otherwise, a
Participant who receives a Stock Option in his or her capacity as an Employee
shall be deemed to cease Employment when the employee-employer relationship with
the Company and its Affiliates ceases.  A
Participant who receives a Stock Option in any other capacity shall be deemed
to continue Employment so long as the Participant is providing services in such
capacity.  If a Participant’s
relationship is with an Affiliate and that entity ceases to be an Affiliate,
the Participant shall be deemed to cease Employment when the entity ceases to
be an Affiliate unless the Participant transfers Employment to the Company or
its remaining Affiliates.


 


“Exchange
Act”: The Securities
Exchange Act of 1934, as from time to time amended and in effect, or any
successor statute as from time to time in effect.


 


“Fair Market
Value”: “Fair Market Value” as
defined in the Shareholders Agreement.


 


“LLC
Agreement”: The
Amended and Restated Limited Liability Company Agreement, dated May 21,
2009, by and among BU Financial Holdings LLC and its members, as it may be
amended, supplemented or modified from time to time.


 


“Participant”: An individual who is granted a Stock Option under
the Plan.


 


“Person”: Any individual, corporation, partnership, limited
liability company, joint venture, association, trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.


 


“Plan”: The term “Plan” has the meaning set forth in Section 1
hereof.


 


“Public
Offering”: A
public offering and sale of equity securities for cash pursuant to an effective
registration statement under the Securities Act of 1933 and the rules promulgated
thereunder, as amended from time to time (the “Securities
Act”).


 


“Restrictive
Covenants”: Any
non-competition, non-solicitation, confidentiality or other restrictive
covenants, in each case to the extent applicable to the Participant under any
written agreement between the Participant and the Company or any of its
Subsidiaries.


 


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“Shareholders
Agreement”: The
Shareholders’ Agreement to be entered into by and among the Company, BU
Financial Holdings LLC and such other stockholders of the Company as may be
party thereto from time to time, which agreement shall contain the terms and
conditions of as set forth on Exhibit A to the Participant’s Award
Agreement and such other customary and other terms and conditions as may be
determined by the Company and BU Financial Holdings LLC prior to the execution
thereof.


 


“Stock
Option”: An
option entitling the recipient to acquire shares of Common Stock upon payment
of the applicable exercise price.


 


“Subsidiary”: Any subsidiary of the Company.


 


“Voting
Stock”: All
classes of capital stock or shares then outstanding and normally entitled to
vote in elections of directors.


 


3.                                      ADMINISTRATION


 


The Committee has
discretionary authority, subject only to the express provisions of the Plan and
the Award Agreements, to interpret the Plan; to determine eligibility for and
grant Stock Options; to determine, modify and/or waive the terms and conditions
of any Stock Option; to prescribe forms, rules and procedures; and to
otherwise do all things necessary to carry out the purposes of the Plan.  Except as otherwise provided by the express
terms of an Award Agreement, all determinations of the Committee made under the
Plan shall be conclusive and shall bind all parties.


 


4.                                      LIMITS ON STOCK OPTIONS UNDER THE PLAN


 


(a)           Number of Shares. A maximum of 231,250 shares of Common Stock (which reflects the Common
Stock split on November 12, 2009) may be delivered in satisfaction of
Stock Options under the Plan.  The
issuance of shares of Common Stock, the payment of cash upon the exercise of a
Stock Option, the withholding of shares of Common Stock in satisfaction of the
exercise price of Stock Options or the withholding of shares of Common Stock in
satisfaction of tax withholding requirements shall reduce the total number of
shares of Common Stock available under the Plan, as applicable.  Shares of Common Stock issued under stock
options of an acquired company that are converted, replaced or adjusted in
connection with the acquisition shall not reduce the number of shares of Common
Stock available for Stock Options under the Plan.


 


(b)           Type of Shares.
Shares of Common Stock delivered under the Plan may be authorized but unissued
Common Stock or previously issued Common Stock acquired by the Company or any
of its Affiliates and may include fractional shares of Common Stock.


 


5.                                      ELIGIBILITY AND PARTICIPATION


 


The Board, or the Committee if
expressly so permitted by the Board, shall select Participants from among those
key Employees of the Company or its Affiliates who, in the opinion of the Board
or the Committee, as applicable, are in a position to make a significant
contribution to the success of the Company and its Affiliates.


 


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6.                                      RULES APPLICABLE TO STOCK OPTIONS


 


(a)           General.


 


(1)   Stock Option Provisions. The Committee shall determine the terms of all Stock Options, subject
to the limitations provided herein, and shall furnish to each Participant an
Award Agreement setting forth the terms applicable to the Participant’s Stock
Option.  By entering into an Award
Agreement, the Participant agrees to the terms of the Stock Option and of the
Plan, to the extent not inconsistent with the express terms of the Award
Agreement.  Notwithstanding any provision
of this Plan to the contrary, awards of an acquired company that are converted,
replaced or adjusted in connection with the acquisition may contain terms and
conditions that are inconsistent with the terms and conditions specified
herein, as determined by the Committee.


 


(2)   Non-Qualified Stock Options. All Stock Options granted pursuant to the Plan are intended to be
non-qualified stock options, and are not intended to be treated as “Incentive
Stock Options” that comply with Section 422 of the Code.


 


(3)   Transferability.
Except as the Committee otherwise expressly provides, Stock Options may not be
transferred other than by will or by the laws of descent and distribution, and
during a Participant’s lifetime, except as the Committee otherwise expressly
provides, may be exercised only by the Participant


 


(4)   Vesting.
The Committee may determine the time or times at which a Stock Option shall
vest or become exercisable and the terms on which a Stock Option requiring
exercise shall remain exercisable; provided, however, that each
Stock Option shall expire on the tenth (10th) anniversary of the date of grant
of such Stock Option, unless it is earlier exercised or forfeited as provided
herein.  Notwithstanding anything set
forth herein to the contrary, the Committee may at any time accelerate the
vesting or exercisability of a Stock Option, regardless of any adverse or
potentially adverse tax consequences resulting from such acceleration.


 


(5)   Termination of Employment.  Unless the Committee expressly
provides otherwise in an Award Agreement, immediately upon the cessation of a
Participant’s Employment all Stock Options (whether vested or unvested) shall
cease to be exercisable and shall terminate, except that:


 


(A)          subject to subsections (B) and (C) below, all Stock Options
held by the Participant or the Participant’s “permitted transferees” (as
determined by reference to the Shareholders Agreement, and, in each case, the
applicable Award Agreement), if any, immediately prior to the termination of
the Participant’s Employment for any reason other than Cause, death or
Disability, to the extent then exercisable, shall remain exercisable for the
shorter of (i) the ninety (90) day period following such termination and (ii) the
period ending on the last date on which such Stock Option could have been
exercised without regard to this Section 6(a)(5), and shall thereupon
terminate;


 


(B)           all Stock Options held by a Participant or the Participant’s permitted
transferees, if any, immediately prior to the termination of the Participant’s
employment as a result of the Participant’s death or Disability, to the extent
then exercisable, shall remain exercisable for


 


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the shorter of (i) the
twelve (12) month period following such termination and (ii) the period
ending on the latest date on which such Stock Options could have been exercised
without regard to this Section 6(a)(5), and shall thereupon terminate; and


 


(C)           all Stock Options (whether vested or unvested) held by a Participant or
the Participant’s permitted transferees, if any, immediately prior to the
cessation of the Participant’s Employment shall immediately terminate upon such
cessation if such cessation of Employment was for Cause.


 


(6)   Taxes.
The Committee shall make such provision for the withholding of taxes as it
deems necessary.  The Committee may, but
need not, hold back shares of Common Stock from the exercise of a Stock Option
or permit a Participant to tender previously owned shares of Common Stock in
satisfaction of tax withholding requirements (but not in excess of the
applicable minimum statutory withholding rate).


 


(7)   Rights Limited.
Nothing in the Plan shall be construed as giving any person the right to
continued Employment with the Company or its Affiliates, continued participation
in the Plan, or any rights as a stockholder except as to shares of Common Stock
actually issued under the Plan.


 


(8)   Shareholders Agreement. All shares of Common Stock issued upon the exercise of Stock Options
issued under the Plan shall be subject to the Shareholders Agreement.


 


(b)           Exercise.


 


(1)   Time And Manner Of Exercise. Unless the Committee expressly provides otherwise, a Stock Option
permitting exercise by the holder shall not be deemed to have been exercised
until the Committee receives a notice of exercise (in a form acceptable to the
Committee) signed by the appropriate person and accompanied by any payment
required under the Stock Option.  If the
Stock Option is exercised by any person other than the Participant, the
Committee may require satisfactory evidence that the person exercising the
Stock Option has the right to do so.


 


(2)   Exercise Price.
Except as otherwise permitted pursuant to Section 7(b)(1) hereof, the
exercise price of a Stock Option shall not be less than the Fair Market Value
of the Common Stock subject to the Stock Option, determined as of the date of
grant.


 


(3)   Payment Of Exercise Price. Where the exercise of a Stock Option is to be accompanied by payment,
the Committee may determine the required or permitted forms of payment; provided,
that all such payments shall be (a) by cash or check acceptable to the
Committee, (b) by means of withholding of shares of Common Stock with an
aggregate Fair Market Value equal to (A) the aggregate exercise price and (B) the
minimum statutory withholding taxes with respect to such exercise or (c) by
any other method approved by the Committee.


 


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7.                                      EFFECT OF CERTAIN TRANSACTIONS


 


(a)           Change Of Control.  Except as otherwise provided in an Award
Agreement, in the event of a Change of Control in which there is an acquiring
or surviving entity, the Committee may, unless the Committee determines that
doing so is inappropriate or unfeasible, provide for the continuation or
assumption of some or all of the outstanding Stock Options, or for the grant of
new Stock Options in substitution therefor, by the acquiror or survivor or an
Affiliate of the acquiror or survivor, in each case on such terms and subject
to such conditions as preserve the intrinsic value of the Stock Option in the
Committee’s good faith determination.  In
the event of a Change of Control (whether or not there is an acquiring or
surviving entity) in which there is no assumption or substitution as to some or
all of the outstanding Stock Options, the Committee shall preserve the
intrinsic value of the Stock Options, provide for treating as satisfied any
time-based vesting condition on any such Stock Option or for the accelerated
delivery of shares of Common Stock issuable under each such Stock Option, or
cancel any Stock Option and, in connection therewith, pay an amount (in cash
or, in the discretion of the Committee, in the form of consideration paid to
shareholders of the Company in connection with such Change of Control) which
shall equal the excess, if any, of the Fair Market Value of the shares of
Common Stock subject to such Stock Options over the aggregate exercise price of
such Stock Options, in each case on a basis that gives the holder of the Stock
Option a reasonable opportunity, as determined by the Committee, following
exercise or cancellation of the Stock Option or the issuance of the shares of
Common Stock, as the case may be, to participate as a stockholder in the Change
of Control.  Except as otherwise provided
in an Award Agreement, each Stock Option (unless assumed pursuant to the first
sentence of this Section 7(a)), shall terminate upon consummation of the
Change of Control.


 


(b)           Changes In, Distributions With Respect To And
Redemptions Of Common Stock.


 


(1)   Basic Adjustment Provisions. In the event of any stock dividend or other similar distribution
(whether in the form of stock or other securities or other property), stock
split or combination of shares (including a reverse stock split),
recapitalization, conversion, reorganization, consolidation, split-up,
spin-off, combination, merger, exchange of stock, redemption or repurchase of
all or part of the shares of any class of stock or any change in the capital
structure of the Company or an Affiliate or other transaction or event (other
than those described in Section 7(a)), the Committee shall, as appropriate
in order to prevent enlargement or dilution of benefits intended to be made
available under the Plan, make adjustments to the maximum number of shares of
Common Stock that may be delivered under the Plan under Section 4(a) and
shall also make appropriate adjustments to the number and kind of shares of
stock, securities or other property (including cash) subject to Stock Options
then outstanding or subsequently granted, any exercise prices relating to Stock
Options and any other provision of Stock Options affected by such change.


 


(2)   Certain Other Adjustments. The Committee shall also make adjustments of the type described in Section 7(b)(1) above
to take into account distributions to stockholders other than those provided
for in Section 7(a) and 7(b)(1), or any other event, if the Committee
determines that adjustments are appropriate to avoid distortion in the
operation of the Plan and to preserve the value of Stock Options made
hereunder.


 


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(3)   Continuing Application of Plan Terms. References in the Plan to shares of Common Stock shall be construed to
include any stock or securities resulting from an adjustment pursuant to this Section 7.


 


8.                                      LEGAL CONDITIONS ON DELIVERY OF COMMON STOCK


 


The Company shall, prior to
delivering shares of Common Stock pursuant to the Plan or removing any
restriction from shares of Common Stock previously delivered under the Plan,
ensure that (a) all legal matters in connection with the issuance and
delivery of such shares have been addressed and resolved, and (b) if the
outstanding Common Stock is at the time of delivery listed on any stock
exchange or national market system, the shares to be delivered have been listed
or authorized to be listed on such exchange or system upon official notice of
issuance.  The Company and its Affiliates
shall be obligated to deliver any shares of Common Stock pursuant to the Plan
or to remove any restriction from shares of Common Stock previously delivered
under the Plan upon satisfaction or waiver of the conditions set forth in the
preceding sentence and all other conditions of the Award Agreement.  If the sale of Common Stock has not been
registered under the Securities Act, the Company may require, as a condition to
exercise of the Stock Option, such representations or agreements as counsel for
the Company may in good faith recommend to avoid violation of the Securities
Act.  The Company may require that certificates
evidencing Common Stock issued under the Plan bear an appropriate legend
reflecting any restriction on transfer applicable to such Common Stock, and the
Company may hold the certificates pending lapse of the applicable restrictions.


 


9.                                      AMENDMENT AND TERMINATION


 


The Committee, in it sole and
absolute discretion, may at any time or times amend or alter the Plan or any
outstanding Stock Option and may at any time terminate or discontinue the Plan
as to any future grants of Stock Options; provided, that the Committee
may not, without the Participant’s consent, amend or terminate the terms of a
Stock Option or the Plan so as to affect adversely the Participants’ or a
Participant’s rights under a Stock Option or the Plan.  Any amendments to the Plan shall be
conditioned upon stockholder approval only to the extent, if any, such approval
is required by applicable law (including the Code), as determined by the
Committee.


 


10.                               ESTABLISHMENT OF SUB-PLANS


 


The Board may from time to
time establish one or more sub-plans under the Plan for purposes of satisfying
applicable blue sky, securities or tax laws of various jurisdictions.  The Board shall establish such sub-plans by
adopting supplements to the Plan setting forth (i) such limitations on the
Committee’s discretion under the Plan as the Board deems necessary or desirable
and (ii) such additional terms and conditions not otherwise inconsistent
with the Plan as the Board shall deem necessary or desirable.  All supplements adopted by the Board shall be
deemed to be part of the Plan, but each supplement shall apply only to
Participants within the affected jurisdiction and the Company shall not be
required to provide copies of any supplement to Participants in any
jurisdiction that is not affected.


 


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11.                               SECTION 409A


 


It is intended that the terms
of this Plan be exempt from or comply with Section 409A of the Code.  If it is determined that the terms of this
Plan have been structured in a manner that would result in adverse tax
treatment under Section 409A of the Code, the parties agree to cooperate
in taking all reasonable measures to restructure the arrangement to minimize or
avoid such adverse tax treatment without materially impairing the economic
rights of the Participants.


 


12.                               GOVERNING LAW/JURISDICTION


 


The Plan shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed therein.  Any suit, action or proceeding with respect
to the Plan or a Stock Option, or any judgment entered by any court in respect
of any thereof, shall be brought in any court of competent jurisdiction in the
State of New York or the State of Delaware. 
By accepting a Stock Option under the Plan, each Participant hereby
submits to the exclusive jurisdiction of such courts for the purpose of any
such suit, action, proceeding or judgment and hereby irrevocably waives (i) any
objections which the Participant may now or hereafter have to the laying of the
venue of any suit, action or proceeding arising out of or relating to this
Agreement brought in any court of competent jurisdiction in the State of
Delaware or the State of New York, (ii) any claim that any such suit,
action or proceeding brought in any such court has been brought in any
inconvenient forum and (iii) any right to a jury trial.


 


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