Exhibit 10.1


 


ENTERPRISE
BANCORP, INC.


 


2009
STOCK INCENTIVE PLAN


 


SECTION 1.                                GENERAL PURPOSE OF THE PLAN; DEFINITIONS


 


The name of this plan is the Enterprise
Bancorp, Inc. 2009 Stock Incentive Plan (the “Plan”).  The purpose of the Plan is to encourage and
enable the officers, employees, Non-Employee Directors and other key persons
(including consultants and prospective employees) of Enterprise Bancorp, Inc.
(the “Company”) and its Subsidiaries upon whose judgment, initiative and
efforts the Company largely depends for the successful conduct of its business
to acquire a proprietary interest in the Company.  It is anticipated that providing such persons
with a direct stake in the Company’s welfare will assure a closer
identification of their interests with those of the Company and its
stockholders, thereby stimulating their efforts on the Company’s behalf and
strengthening their desire to remain with the Company.


 


The following terms shall be defined as set
forth below:


 


“Act” means the
Securities Act of 1933, as amended, and the rules and regulations
thereunder.


 


“Administrator”
means the compensation committee of the Board, which is comprised of not less
than three Non-Employee Directors, each of whom qualifies as an “outside
director” within the meaning of Section 162(m) of the Code and a “non-employee
director” within the meaning of Rule 16b-3 of the Exchange Act; provided,
however, that if and to the extent that the Board at any time assumes the
powers and responsibilities of the Administrator under the Plan, then all
references to the “Administrator” in the Plan shall refer to the Board under
such circumstances.


 


“Award” or “Awards” means, except where referring to a particular category of grant
under the Plan, any and all of the following: 
Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock
Awards, RSUs and SARs.


 


“Award Agreement”
means a written or electronic agreement setting forth the terms and provisions
applicable to an Award granted under the Plan. 
Each Award Agreement is subject to the terms and conditions of the Plan.


 


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


 


“Change in Control” means
the occurrence of either (i) a change in control of the Company that the
Company would be required to report in response to Item 5.01 of a Current
Report on Form 8-K as filed by the Company with the Securities and
Exchange Commission pursuant to the requirements of Section 13 or Section 15(d) of
the Exchange Act or, if such reporting obligation is no longer in effect, any
regulations promulgated by the Securities and Exchange Commission or any
successor agency pursuant to the Exchange Act or any successor statute that are
intended to serve similar purposes, or (ii) a person (as such term is used
in Sections 13(d) and 14(d)(2) of the Exchange Act) becoming a
beneficial owner (as that term is 


 

















 


defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Company representing twenty-five
percent or more of the total number of votes that may be cast for the election
of directors of the Company, and in either such case the Board has not
consented to the occurrence of such event by a two-thirds vote of all of its
members (unless there is an Interested Stockholder, as that term is defined in
the Company’s articles of organization, as amended, in which case the
affirmative vote of two-thirds of the Continuing Directors, as that term is
defined in the Company’s articles of organization, as amended, shall also be
required).  In addition to the foregoing,
a Change in Control shall be deemed to have occurred if as the result of, or in
connection with, any tender or exchange offer, merger or other business
combination, sale or other disposition of assets or any contested election of
directors of the Company or any combination of the foregoing transactions, the
persons who were directors of the Company before such transaction or related
series of transactions shall cease to constitute a majority of the Board or of
the board of directors of any successor entity.


 


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


 


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


 


“Disability” means a
condition of total incapacity, mental or physical, for further performance of
duty with the Company and/or any Subsidiary, which the Administrator shall have
determined, on the basis of competent medical evidence, is likely to be permanent.


 


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


 


“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.


 


“Fair Market Value”
of the Stock on any given date means the closing price of the Stock as reported
on the Nasdaq Global Market or another national securities exchange.  If there is no trading in the Stock on such
date, the determination shall be made by reference to the closing price of the
Stock on the last date preceding such date on which the Stock was 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.


 


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


 


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“Restricted Stock Award”
means an Award entitling the recipient to acquire, at such purchase price
(which may be zero) as determined by the Administrator, shares of Stock, subject
to such restrictions and conditions as the Administrator may determine at the
time of grant.


 


“RSU” means a
restricted stock unit granted pursuant to Section 7.


 


“SAR” means a stock
appreciation right granted pursuant to Section 7.


 


 “Section 409A”
means Section 409A of the Code and the regulations and other guidance
promulgated thereunder.


 


“Stock” means the
common stock, par value $0.01 per share, of the Company, subject to adjustments
pursuant to Section 3.


 


“Subsidiary” means
any corporation or other entity (other than the Company) in which the Company
has at least a 50 percent interest, either directly or indirectly.


 


“Ten Percent Owner”
means an employee who owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10 percent of the combined
voting power of all classes of stock of the Company or any parent corporation
or Subsidiary.


 


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


 


(a)                                  Administration of Plan.  The Plan shall be administered by
the Administrator.


 


(b)                                 Powers of Administrator.  Subject to the penultimate sentence of this subsection (b), the
Administrator shall have the power and authority to grant Awards consistent
with the terms of the Plan, including the power and authority:


 


(i)  to select the individuals to whom Awards may from time to
time be granted;


 


(ii)  to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock
Awards, RSUs and SARs, or any combination of the foregoing, granted to any one
or more grantees;


 


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


 


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


 


(v)  subject to the terms of the Plan, to accelerate at any time
the exercisability or vesting of all or any portion of any Award;


 


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


 


(vii)  at any time to adopt, alter or 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.


 


Notwithstanding any other provision contained
in the Plan to the contrary, the terms and conditions of each and every Award
granted to the Company’s chairman, president, and chief executive officer, to
all other executive officers of the Company or any Subsidiary, which shall
include all officers who are subject to the provisions of Section 16 of
the Exchange Act and any other additional officers as may be determined by the
Board, and to any director of the Company, shall be approved by the Board.  All decisions and interpretations of the
Administrator shall be binding on all persons, including the Company and Plan
grantees.


 


(c)                                  Delegation of Authority to Grant Awards.  Subject to applicable law, the
Administrator, in its discretion, may delegate to the chief executive officer
of the Company all or part of the Administrator’s authority and duties with
respect to the granting of Awards to persons other than the chairman, the
president, and the chief executive officer of the Company, any other executive
officer of the Company or any Subsidiary (as determined pursuant to the
penultimate sentence of Section 2(b) above), and any director of the
Company.  Any such delegation by the
Administrator shall include a limitation as to the amount or value of Awards that
may be granted during the period of the delegation and shall contain guidelines
as to the determination of any applicable exercise price and the vesting
criteria.  The Administrator may revoke
or amend the terms of a delegation at any time, but such action shall not
invalidate any prior actions of the Administrator’s delegate or delegates that
were consistent with the terms of the Plan.


 


(d)                                 Award Agreement. 
Awards under the Plan shall be evidenced by Award Agreements
that set forth the terms, conditions and limitations for each Award, which may
include, without limitation, the term of an Award, the provisions applicable in
the event employment or service terminates, and the Company’s authority to
unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award.


 


(e)                                  Indemnification. 
Neither the Board nor the Administrator, nor any member of
either or any delegate thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with the Plan, and the members of the Board and the Administrator (and any
delegate thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense
(including, without limitation, reasonable attorneys’ fees) arising or
resulting therefrom to the fullest extent permitted by law and/or under the
Company’s articles of organization or bylaws, each as amended, or any directors’
and officers’ liability insurance coverage which may be in effect from time to
time and/or any indemnification agreement between such individual and the
Company.


 


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


 


(a)                                  Stock Issuable. 
The maximum number of shares of Stock reserved and available
for issuance under the Plan, subject to adjustment as provided in Section 3(c),
shall be 400,000 shares.  For purposes of
this limitation, the shares of Stock underlying any Awards that are forfeited,
canceled, held back upon exercise of an Option or settlement of an Award to
cover the exercise price or tax withholding, reacquired by the Company prior to
vesting, 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.  The shares
available for issuance under the Plan may be authorized but unissued shares of
Stock or shares of Stock reacquired by the Company.


 


(b)                                 Limitations on Size of Grants.  The total number of shares of Stock with respect to which Options and
Restricted Stock Awards and any RSUs and/or SARs that may by their terms be
settled in whole or in part in shares of Stock may be granted under the Plan to
any single person, whether an employee of the Company or otherwise, shall not
exceed in the aggregate 120,000 (subject to adjustment pursuant to Section 3(c) below).


 


(c)                                  Changes in Capital Stock.  If, as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar change in the Company’s capital stock, the outstanding shares of Stock
are increased or decreased or are exchanged for a different number or kind of
shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company are distributed with
respect to such shares of Stock, the Administrator shall make an appropriate or
proportionate adjustment in (i) the maximum number of shares reserved for
issuance under the Plan, including the limitation set forth in Section 3(b) above),
(ii) the number and kind of shares or other securities subject to any then
outstanding Awards under the Plan, (iii) the repurchase price, if any, per
share subject to each outstanding Restricted Stock Award, and (iv) the
exercise price for each share subject to any then outstanding Stock Options
under the Plan, without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of shares subject to such outstanding
Stock Options) as to which such Stock Options remain exercisable; provided,
however, that no adjustment shall be made hereunder with respect to any
Incentive Stock Option that would constitute a modification as defined under Section 424
of the Code.  Any adjustment by the
Administrator hereunder shall be final, binding and conclusive.  No fractional shares of Stock shall be issued
under the Plan resulting from any such adjustment, but the Administrator in its
discretion may make a cash payment in lieu of fractional shares.


 


(d)                                 Change in Control or Liquidation.  Except as the Administrator may
otherwise specify with respect to particular Awards in the relevant Award
documentation, in the case of and subject to the consummation of a Change in
Control or a liquidation of the Company, all Options that are not exercisable
immediately prior to the effective time of the Change in Control or liquidation
shall become fully exercisable as of such effective time and all Restricted
Stock Awards, RSUs and SARs shall become fully vested and nonforfeitable as of
such effective time.  Upon the effective
time of a Change in Control or liquidation of the Company, the Plan and all
outstanding Options granted hereunder shall terminate, unless, in the case of a
Change in Control, provision is made in connection with the Change in Control
in the sole discretion of the parties thereto for the assumption or
continuation of all Options theretofore granted by the successor entity, or the
substitution of such Options with new stock options of the successor entity or
parent thereof, with appropriate adjustment as to the number and kind of shares
and, if 


 


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appropriate, the per share exercise prices, as such parties shall agree
(after taking into account any acceleration hereunder).  In the event of such prospective termination
of outstanding Options, the Company shall have the option in its sole
discretion to either (i) make or provide for a cash payment to the holders
of such Options, in exchange for the cancellation thereof, in an amount equal
to the difference between (A) the value on a per share basis as determined
by the Administrator of the consideration payable or otherwise to be received
by the Company’s shareholders in such Change in Control or liquidation
multiplied by the number of shares of Stock subject to such Options (to the
extent then exercisable (after taking into account any acceleration hereunder)
at prices not in excess of such value) and (B) the aggregate exercise price
of all such Options or (ii) permit the holders of such Options, within a
specified period of time prior to the consummation of the Change in Control or
liquidation as determined by the Administrator, to exercise the Options.


 


(e)                                  Substitute Awards. 
The Administrator may grant Awards under the Plan in
substitution for stock and stock based awards held by employees, directors or
other key persons of another corporation in connection with the merger or
consolidation of the employing corporation with the Company or a Subsidiary or
the acquisition by the Company or a Subsidiary of property or stock of the
employing corporation.  The Administrator
may direct that the substitute Awards be granted on such terms and conditions
as the Administrator considers appropriate in the circumstances. Any substitute
Awards granted under the Plan shall not count against the share limitation set
forth in Sections 3(a) and 3(b).


 


(f)                                    Interpretation.  Except
as expressly provided to the contrary in this Section 3, the issuance by
the Company of shares of capital 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 Stock then subject to outstanding Options or Restricted Stock Awards.


 


SECTION 4.                            ELIGIBILITY


 


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


 


SECTION 5.                            STOCK OPTIONS


 


(a)                                  Stock Option Grants.  Any Stock Option granted under the
Plan shall be in such form as the Administrator may from time to time
approve.  Stock Options granted under the
Plan may be either Incentive Stock Options or Non-Qualified Stock Options.  Incentive Stock Options may be granted only
to employees of the Company or any Subsidiary that is a “subsidiary corporation”
within the meaning of Section 424(f) of the Code.  To the extent that any Option does not
qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock
Option. Stock Options granted pursuant to this Section 5(a) shall be
subject to the following terms and conditions contained in this Section 5
and shall contain such additional terms and conditions, not inconsistent with
the terms of the Plan, as the Administrator shall deem desirable.


 


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(b)                                 Exercise Price. 
The exercise price per share for the Stock covered by a Stock
Option granted pursuant to Section 5(a) shall be determined by the
Administrator at the time of grant, but shall not be less than 100 percent of
the Fair Market Value on the date of grant. 
In the case of an Incentive Stock Option that is granted to a Ten
Percent Owner, the option price of such Incentive Stock Option shall be not
less than 110 percent of the Fair Market Value on the grant date.


 


(c)                                  Option Term.  The
term of each Stock Option shall be fixed by the Administrator, but no Stock
Option shall be exercisable more than ten years after the date the Stock Option
is granted.  In the case of an Incentive
Stock Option that is granted to a Ten Percent Owner, the term of such Stock
Option shall be no more than five years from the date of grant.


 


(d)                                 Exercisability; Rights of a Stockholder.  Stock Options shall become exercisable
at such time or times, whether or not in installments, as shall be determined
by the Administrator at the time of grant and set forth in the applicable
Option Award Agreement.  The
Administrator may not accelerate the exercisability of all or any portion of
any Stock Option, except in the case of a Change in Control or liquidation of
the Company or upon the death or Disability of the grantee.  A grantee of a Stock Option shall have the
rights of a stockholder only as to shares acquired upon the exercise of the
Stock Option and not as to any unexercised portion of the Stock Option.


 


(e)                                  Method of Exercise.  Stock Options may be exercised in
whole or in part by giving written notice of exercise to the Company or to such
third-party service provider as may be designated by the Company for such
purpose, specifying the number of shares to be purchased.  Payment of the purchase price may be made by
one or more of the following methods to the extent provided in the Option Award
Agreement:


 


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


 


(ii)  Through the delivery (or attestation to the ownership) of
shares of Stock that have been purchased by the optionee on the open market or
that are beneficially owned by the optionee and are not then subject to
restrictions under any Company plan. 
Such surrendered shares shall be valued at Fair Market Value on the
exercise date.  To the extent required to
avoid variable accounting treatment under FAS 123R or other applicable accounting
rules, such surrendered shares shall have been owned by the optionee for at
least six months; or


 


(iii)  By the optionee delivering to the Company or its
third-party designee a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company cash or
a check payable and acceptable to the Company for the purchase price; provided
that in the event the optionee chooses to pay the purchase price as so
provided, the optionee and the broker shall comply with such procedures and
enter into such agreements of indemnity and other agreements as the
Administrator shall prescribe as a condition of such payment procedure.


 


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Payment instruments will be received subject
to collection.  The transfer to the
optionee on the records of the Company or of the Company’s transfer agent of
the shares of Stock to be purchased pursuant to the exercise of a Stock Option
will be contingent upon receipt from the optionee (or a purchaser acting in his
or her stead in accordance with the provisions of the Stock Option) by the
Company of the full purchase price for such shares and the fulfillment of any
other requirements contained in the Option Award Agreement or applicable
provisions of laws (including the satisfaction of any withholding taxes that
the Company is obligated to withhold with respect to the optionee).  In the event an optionee chooses to pay the
purchase price by previously-owned shares of Stock through the attestation
method, the number of shares of Stock transferred to the optionee upon the
exercise of the Stock Option shall be net of the number of attested
shares.  In the event that the Company
establishes, for itself or using the services of a third party, an automated
system for the exercise of Stock Options, such as a system using an internet
website or interactive voice response, then the paperless exercise of Stock
Options may be permitted through the use of such an automated system.


 


(f)                                    Annual Limit on Incentive Stock Options.  To the extent required for “incentive
stock option” treatment under Section 422 of the Code, the aggregate Fair
Market Value (determined as of the time of grant) of the shares of Stock with
respect to which Incentive Stock Options granted under this Plan and any other
plan of the Company or of its parent corporation or any Subsidiary become
exercisable for the first time by an optionee during any calendar year shall
not exceed $100,000.  To the extent that
any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock
Option.


 


SECTION 6.                            RESTRICTED STOCK AWARDS


 


(a)                                  Nature of Restricted Stock Awards.  The Administrator shall determine
the restrictions and conditions applicable to each Restricted Stock Award at
the time of grant.  Conditions may be
based on continuing employment (or other service relationship) and/or
achievement of pre-established performance goals and objectives.  The grant of a Restricted Stock Award is
contingent on the grantee executing a Restricted Stock Award Agreement.  The terms and conditions of each such
Restricted Stock Award Agreement shall be determined by the Administrator, and
such terms and conditions may differ among individual Awards and grantees.


 


(b)                                 Rights as a Stockholder.  Upon execution of a Restricted
Stock Award Agreement and payment of any applicable purchase price, a grantee
shall have the rights of a stockholder with respect to the voting of the
Restricted Stock, subject to such conditions contained in the Restricted Stock
Award Agreement.  Unless the
Administrator shall otherwise determine, (i) uncertificated Restricted
Stock shall be accompanied by a notation on the records of the Company or the
Company’s transfer agent to the effect that they are subject to forfeiture
until such Restricted Stock are vested as provided in Section 6(d) below,
and (ii) certificated Restricted Stock shall remain in the possession of
the Company until such Restricted Stock is vested as provided in Section 6(d) below,
and the grantee shall be required, as a condition of the grant, to deliver to
the Company such instruments of transfer as the Administrator may prescribe.


 


(c)                                  Restrictions. 
Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the applicable Restricted Stock Award Agreement.  Except in the case of a Change in Control or
liquidation of 


 


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the Company or upon the death or Disability of the grantee, if a
grantee’s employment (or other service relationship) with the Company and its
Subsidiaries terminates for any reason, any Restricted Stock that has not
vested at the time of termination shall automatically and without any
requirement of notice to such grantee from, or other action by or on behalf of,
the Company be deemed to have been reacquired by the Company at its original
purchase price (if any) from such grantee or such grantee’s legal
representative simultaneously with such termination of employment (or other
service relationship), and thereafter shall cease to represent any ownership of
the Company by the grantee or rights of the grantee as a stockholder.  Following such deemed reacquisition of shares
of unvested Restricted Stock that are represented by physical certificates, a
grantee shall surrender such certificates to the Company upon request without
consideration.


 


(d)                                 Vesting of Restricted Stock.  The Administrator at the time of
grant shall specify and include in the applicable Restricted Stock Award
Agreement the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company’s right of repurchase
or forfeiture shall lapse.  Subsequent to
such date or dates and/or the attainment of such pre-established performance
goals, objectives and other conditions, the shares on which all restrictions
have lapsed shall no longer be Restricted Stock and shall be deemed “vested”.  Except in the case of a Change in Control or
liquidation of the Company or upon the death or Disability of the grantee, a
grantee’s rights in any shares of Restricted Stock that have not vested shall
automatically terminate upon the grantee’s termination of employment (or other
service relationship) with the Company and its Subsidiaries and such shares
shall be subject to the provisions of Section 6(c) above.


 


SECTION 7.                            RESTRICTED STOCK UNITS AND STOCK APPRECIATION RIGHTS


 


The Administrator may grant RSUs and SARs in
respect of such number of shares of Stock subject to the Plan as it shall
determine in its sole discretion.  The
terms and conditions of any such RSUs or SARs shall be contained in an RSU
Agreement or SAR Agreement as the case may be.


 


SECTION 8.                            TRANSFERABILITY OF AWARDS


 


(a)                                  Transferability. 
Except as provided in Section 8(b) below, during a
grantee’s lifetime, his or her Awards shall be exercisable only by the grantee,
or by the grantee’s legal representative or guardian in the event of the
grantee’s incapacity.  No Awards shall be
sold, assigned, transferred or otherwise encumbered or disposed of by a grantee
other than by will or by the laws of descent and distribution.  No Awards shall be subject, in whole or in
part, to attachment, execution, or levy of any kind, and any purported transfer
in violation hereof shall be null and void.


 


(b)                                 Administrator Action. 
Notwithstanding Section 8(a), the Administrator, in its
discretion, may provide either in the Award Agreement regarding a given Award
or by subsequent written approval that the grantee may transfer his or her
Awards (other than any Incentive Stock Options) to his or her immediate family
members, to trusts for the benefit of such family members, or to partnerships
or limited liability companies in which such family members are the only
partners or members, provided that the transferee agrees in writing with 


 


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the Company to be bound by all of the terms and conditions of the Plan
and the applicable Award.


 


(c)                                  Family Member. 
For purposes of Section 8(b), “family member” shall mean
a grantee’s child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the grantee’s household (other than
a tenant or employee of the grantee), a trust in which these persons (or the
grantee) have more than 50 percent of the beneficial interest, a foundation in
which these persons (or the grantee) control the management of assets, and any
other entity in which these persons (or the grantee) own more than 50 percent
of the voting interests.


 


(d)                                 Designation of Beneficiary.  Each grantee to whom an Award has
been made under the Plan may designate a beneficiary or beneficiaries to
exercise any Award or receive any payment under any Award payable on or after
the grantee’s death.  Any such designation
shall be on a form provided for that purpose by the Administrator and shall not
be effective until received by the Administrator.  If no beneficiary has been designated by a
deceased grantee, or if the designated beneficiaries have predeceased the grantee,
the beneficiary shall be the grantee’s estate.


 


SECTION 9.                            TAX WITHHOLDING


 


(a)                                  Payment by Grantee. 
Each grantee shall, no later than the date as of which the
value of an Award or of any Stock or other amounts received thereunder first
becomes includable in the gross income of the grantee for federal income tax
purposes, pay to the Company, or make arrangements satisfactory to the
Administrator regarding payment of, any federal, state, or local taxes of any
kind required by law to be withheld by the Company with respect to such
income.  The Company and its Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the grantee.  The Company’s obligation to deliver evidence
of book entry (or stock certificates) to any grantee is subject to and
conditioned on tax withholding obligations being satisfied by the grantee.


 


(b)                                 Payment in Stock. 
Subject to approval by the Administrator, a grantee may elect
to have the Company’s minimum required tax withholding obligation (and not more
than such amount) satisfied, in whole or in part, by 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.


 


SECTION 10.                      SECTION 409A
AWARDS


 


To the extent that any Award is determined to
constitute “nonqualified deferred compensation” within the meaning of Section 409A
(a “409A Award”), the Award shall be subject to such additional rules and
requirements as specified by the Administrator from time to time in order to
comply with Section 409A.  In this
regard, if any amount under a 409A Award is payable upon a “separation from
service” (within the meaning of Section 409A) to a grantee who is then
considered a “specified employee” (within the meaning of Section 409A),
then no such 


 


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payment shall be made prior to the date that is the earlier of (i) six
months and one day after the grantee’s separation from service, or (ii) the
grantee’s death, but only to the extent such delay is necessary to prevent such
payment from being subject to interest, penalties and/or additional tax imposed
pursuant to Section 409A.  Further,
the settlement of any such Award may not be accelerated except to the extent
permitted by Section 409A.


 


SECTION 11.                      TRANSFER, LEAVE OF ABSENCE, ETC.


 


For purposes of the Plan, the following
events shall not be deemed a termination of employment:  (i) a transfer to the employment of the
Company from a Subsidiary or from the Company to a Subsidiary, or from one
Subsidiary to another; or (ii) an approved leave of absence for military
service or sickness, or for any other purpose approved by the Company, if the
employee’s right to re-employment is guaranteed either by a statute or by
contract or under the policy pursuant to which the leave of absence was granted
or if the Administrator otherwise so provides in writing.


 


SECTION 12.                      AMENDMENTS AND TERMINATION


 


The Board may, at any time, amend or
discontinue the Plan and the Administrator may, at any time, amend or cancel
any outstanding Award for the purpose of satisfying changes in law or for any
other lawful purpose, but no such action shall adversely affect rights under
any outstanding Award without the holder’s consent.  To the extent required under the rules of
any securities exchange or market system on which the Stock is listed, to the
extent determined by the Administrator to be required by the Code to ensure
that Incentive Stock Options granted under the Plan are qualified under Section 422
of the Code or to ensure that compensation earned under Awards qualifies as
performance-based compensation under Section 162(m) of the Code, or
to the extent determined by the Administrator to be required to ensure the
availability to the Plan of the protections of Section 16(b) of the
Exchange Act or for any other reason under applicable law, Plan amendments
shall be subject to the approval of the Company’s stockholders entitled to vote
at a meeting of stockholders.  Nothing in
this Section 12 shall limit the Administrator’s authority to take any
action permitted pursuant to Section 3(c) or 3(d).


 


SECTION 13.                      STATUS OF PLAN


 


With respect to the portion of any Award that
has not been exercised and any payments in cash, Stock or other consideration
not received by a grantee, a grantee shall have no rights greater than those of
a general creditor of the Company unless the Administrator shall otherwise
expressly determine in connection with any Award or Awards.  In its sole discretion, the Administrator may
authorize the creation of trusts or other arrangements to meet the Company’s
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.


 


SECTION 14.                      GENERAL PROVISIONS


 


(a)                                  No Distribution.  The Administrator may require each
person acquiring Stock pursuant to an Award to represent to and agree with the
Company in writing that such person is acquiring the shares without a view to
distribution thereof.


 


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(b)                                 Delivery of Stock Certificates.  Stock certificates to grantees
under this Plan shall be deemed delivered for all purposes when the Company or
a transfer agent of the Company shall have mailed such certificates in the
United States mail, addressed to the grantee, at the grantee’s last known
address on file with the Company. 
Uncertificated Stock shall be deemed delivered for all purposes when the
Company or a transfer agent of the Company shall have given to the grantee by
electronic mail (with proof of receipt) or by United States mail, addressed to the
grantee, at the grantee’s last known address on file with the Company, notice
of issuance and recorded the issuance in its records (which may include
electronic “book entry” records). 
Notwithstanding anything herein to the contrary, the Company shall not
be required to issue or deliver any certificates evidencing shares of Stock
pursuant to the exercise of any Award, unless and until the Administrator has
determined, with advice of counsel (to the extent the Administrator deems such
advice necessary or advisable), that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange
on which the shares of Stock are listed, quoted or traded.  All stock certificates delivered pursuant to
the Plan shall be subject to any stop-transfer orders and other restrictions as
the Administrator deems necessary or advisable to comply with federal, state or
foreign jurisdiction, securities or other laws, and the rules, regulations and
requirements of any stock exchange on which the Stock is listed or traded.  The Administrator may place legends on any
stock certificate to reference restrictions applicable to the Stock.  In addition to the terms and conditions
provided herein, the Administrator may require that an individual make such
reasonable covenants, agreements, and representations as the Administrator, in
its discretion, deems necessary or advisable in order to comply with any such
laws, rules, regulations or requirements. 
The Administrator shall have the right to require any individual to
comply with any timing or other restrictions with respect to the settlement or
exercise of any Award, including a window-period limitation, as may be imposed
in the discretion of the Administrator.


 


(c)                                  Stockholder Rights. 
Until Stock is deemed delivered in accordance with Section 14(b),
no right to vote or receive dividends or any other rights of a stockholder will
exist with respect to shares of Stock to be issued in connection with an Award,
notwithstanding the exercise of a Stock Option or any other action by the
grantee with respect to an Award.


 


(d)                                 Other Compensation Arrangements; No Employment
Rights.  Nothing contained in
this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be
either generally applicable or applicable only in specific cases.  The adoption of this Plan and the grant of
Awards do not confer upon any employee or other person any right to continued
employment or other service relationship with the Company or any Subsidiary.


 


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


 


(f)                                    Forfeiture of Awards under Sarbanes-Oxley Act.  If the Company is required to
prepare an accounting restatement due to the material noncompliance of the
Company, as a result of misconduct, with any financial reporting requirement
under the federal securities laws, then any grantee of an Award who is included
among the individuals subject to automatic forfeiture 


 


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under Section 304 of the Sarbanes-Oxley Act of 2002 shall
reimburse the Company for the amount of any Award received by such individual
under the Plan during the 12-month period following the first public issuance
or filing with the Securities and Exchange Commission, as the case may be, of
the financial document embodying such financial reporting requirement.


 


(g)                                 Forfeiture of Awards for Dishonesty.  Notwithstanding anything to the
contrary in the Plan or in any Award Agreement, if the Administrator
determines, after full consideration of the facts presented on behalf of both
the Company and a grantee of an Award, that the grantee has been engaged in
fraud, embezzlement, theft, commission of a felony or proven dishonesty in the
course of his or her employment by or performance of services for the Company
or a Subsidiary that has damaged the Company or a Subsidiary in any way, or has
disclosed trade secrets or other proprietary information of the Company or a
Subsidiary or has otherwise violated the terms of his or her employment by, or
any other agreement or understanding with, the Company or any Subsidiary, (i) the
grantee shall forfeit all unexercised Options and/or unvested Restricted Stock,
RSUs and SARs and all exercised Options and vested Restricted Stock, RSUs and
SARs to the extent that the Company has not yet delivered or otherwise released
the shares or other payments in question, (ii) the Company shall have the
right to repurchase all or any part of the shares of Stock acquired by the
grantee upon the earlier exercise of any Option or vesting of Restricted Stock
or vesting of any RSU or SAR, at a price equal to the amount, if any, paid to
the Company by the grantee upon the exercise of such Option, receipt of such
Restricted Stock or vesting of such RSU or SAR,,  and (iii) the Company shall have the
right to recoup the full amount of all cash payments previously paid to the
grantee under any vested RSU or SAR and to recoup the full amount of any profit
realized by the grantee upon the sale of any Restricted Stock that has previously
vested or any shares of Stock acquired upon the grantee’s earlier exercise of
any Option or vesting of any RSU or SAR, which recoupment shall be reduced by
an amount equal to the price, if any, paid to the Company by the grantee upon
the earlier issuance of such Restricted Stock, exercise of such Option or
vesting of such RSU or SAR.  The decision
of the Administrator as to the cause of a grantee’s discharge and the damage
done to the Company or a Subsidiary shall be final, binding and
conclusive.  No decision of the
Administrator, however, shall affect in any manner the finality of the
discharge of a grantee by the Company or a Subsidiary.


 


SECTION 15.                      EFFECTIVE DATE OF PLAN


 


The Plan shall become effective on the date
on which it is adopted by the Board (the “Effective Date”), but no Award
granted under the Plan shall become exercisable unless and until the Plan shall
have been approved by the Company’s shareholders.  If such shareholder approval is not obtained
within twelve months after the Effective Date, the Awards previously granted
under the Plan shall not vest and shall terminate and no Awards shall be
granted under the Plan thereafter. 
Amendments to the Plan not requiring shareholder approval shall become effective
when adopted by the Board; amendments requiring shareholder approval (as
provided in Section 12) shall become effective when adopted by the Board,
but no Award granted after the date of such amendment shall become exercisable
(to the extent that such amendment to the Plan was required to enable the
Company to grant such Award to a particular person) unless and until such
amendment shall have been approved by the Company’s shareholders.  If such shareholder approval is not obtained
within twelve months of the Board’s adoption of such amendment, any Awards
granted on or after the date of such amendment shall terminate to the extent
that such 


 


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amendment was required to enable the Company to grant  such Award to a particular grantee.  Subject to this limitation, Awards may be
granted under the Plan at any time during the period from and including the
Effective Date through and including the day next preceding the tenth
anniversary of the Effective Date.


 


SECTION 16.                      GOVERNING LAW


 


The Plan and all Awards and actions taken
thereunder shall be governed by, and construed in accordance with, the laws of
the Commonwealth of Massachusetts, applied without regard to conflict of law
principles.


 


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