Exhibit 10.1


 


IMMUNOGEN, INC.


 


2006 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY
INCENTIVE PLAN

(as amended and restated through November 12, 2008)


 


1.                                      DEFINITIONS.


 


                                                Unless
otherwise specified or unless the context otherwise requires, the following
terms, as used in this ImmunoGen, Inc. 2006 Employee, Director and
Consultant Equity Incentive Plan, have the following meanings:


 


                                                                                                Administrator
means the Board of Directors, unless it has delegated power to act on its
behalf to the Committee, in which case the Administrator means the Committee.


 


                                                                                                Affiliate
means a corporation which, for purposes of Section 424 of the Code, is a
parent or subsidiary of the Company, direct or indirect.


 


                                                                                                Agreement
means an agreement between the Company and a Participant delivered pursuant to
the Plan, in such form as the Administrator shall approve.


 


                                                                                                Board
of Directors means the Board of Directors of the Company.


 


                                                                                                Cause
shall include (and is not limited to) dishonesty with respect to the Company or
any Affiliate, insubordination, substantial malfeasance or non-feasance of
duty, unauthorized disclosure of confidential information, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or similar agreement between the Participant and
the Company, and conduct substantially prejudicial to the business of the
Company or any Affiliate provided, however that any provision in an agreement
between the Participant and the Company or an Affiliate, which contains a
conflicting definition of “cause” for termination and which is in effect at the
time of such termination, shall supersede the definition in this Plan with
respect to that Participant.  The
determination of the Administrator as to the existence of Cause will be
conclusive on the Participant and the Company.


 


                                                                                                Change
of Control means the occurrence of any of the following events:


 


(i)                                   Ownership. 
Any “Person” (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner”
(as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 50% or more of the total voting power
represented by the Company’s then outstanding voting securities (excluding for
this purpose any such voting securities held by the Company or its Affiliates
or by any employee benefit plan of the 


 

















 


Company)
pursuant to a transaction or a series of related transactions which the Board
of Directors does not approve; or


 


(ii)                                Merger/Sale of Assets.  (A) A merger or consolidation of the
Company whether or not approved by the Board of Directors, other than 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 or the parent of such corporation) at least 50% of the total
voting power represented by the voting securities of the Company or such
surviving entity or parent of such corporation, as the case may be,
outstanding immediately after such merger or consolidation; or (B) the
stockholders of the Company approve an agreement for the sale or disposition by
the Company of all or substantially all of the Company’s assets; or


 


(iii)                             Change in Board
Composition.  A change in the composition
of the Board of Directors, as a result of which fewer than a majority of the
directors are Incumbent Directors.  “Incumbent
Directors” shall mean directors who either (A) are directors of the
Company as of November 11, 2006, or (B) are elected, or nominated for
election, to the Board of Directors with the affirmative votes of at least
a majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of directors to the Company).


 


                                                                                                Code
means the United States Internal Revenue Code of 1986, as amended.


 


                                                                                                Committee
means the committee of the Board of Directors to which the Board of Directors
has delegated power to act under or pursuant to the provisions of the Plan.


 


                                                                                                Common
Stock means shares of the Company’s common stock, $.01 par value per share.


 


                                                                                                Company
means ImmunoGen, Inc., a Massachusetts corporation.


 


                                                                                                Disability
or Disabled means permanent and total disability as defined in Section 22(e)(3) of
the Code.


 


                                                                                                Employee
means any employee of the Company or of an Affiliate (including, without
limitation, an employee who is also serving as an officer or director of the
Company or of an Affiliate), designated by the Administrator to be eligible to
be granted one or more Stock Rights under the Plan.


 


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                                                                                                Fair
Market Value of a Share of Common Stock means:


 


                                                                                                (1)                                  If
the Common Stock is listed on a national securities exchange or traded in the
over-the-counter market and sales prices are regularly reported for the Common
Stock, the closing or last price of the Common Stock on the composite tape or
other comparable reporting system for the trading day on the applicable date,
which is the date of grant, and if such applicable date is not a trading day,
the last market trading day prior to such date;


 


                                                                                                (2)                                  If
the Common Stock is not traded on a national securities exchange but is traded
on the over-the-counter market, if sales prices are not regularly reported for
the Common Stock for the trading day referred to in clause (1), and if bid
and asked prices for the Common Stock are regularly reported, the mean between
the bid and the asked price for the Common Stock at the close of trading in the
over-the-counter market for the trading day on which Common Stock was traded on
the applicable date, which is the date of grant, and if such applicable date is
not a trading day, the last market trading day prior to such date; and


 


                                                                                                (3)                                  If
the Common Stock is neither listed on a national securities exchange nor traded
in the over-the-counter market, such value as the Administrator, in good faith,
shall determine.


 


                                                                                                ISO
means an option meant to qualify as an incentive stock option under Section 422
of the Code.


 


                                                                                                Non-Qualified
Option means an option which is not intended to qualify as an ISO.


 


                                                                                                Option
means an ISO or Non-Qualified Option granted under the Plan.


 


                                                                                                Participant
means an Employee, director or consultant of the Company or an Affiliate to
whom one or more Stock Rights are granted under the Plan.  As used herein, “Participant” shall include “Participant’s
Survivors” where the context requires.


 


                                                                                                Plan
means this ImmunoGen, Inc. 2006 Employee, Director and Consultant Equity
Incentive Plan.


 


                                                                                                Shares
means shares of the Common Stock as to which Stock Rights have been or may be
granted under the Plan or any shares of capital stock into which the Shares are
changed or for which they are exchanged within the provisions of
Paragraph 3 of the Plan.  The Shares
issued under the Plan may be authorized and unissued shares or shares held by
the Company in its treasury, or both.


 


                                                                                                Stock-Based
Award means a grant by the Company under the Plan of an equity award or an
equity based award which is not an Option or a Stock Grant.


 


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                                                                                                Stock
Grant means a grant by the Company of Shares under the Plan.


 


                                                                                                Stock
Right means a right to Shares or the value of Shares of the Company granted
pursuant to the Plan — an ISO, a Non-Qualified Option, a Stock Grant or a
Stock-Based Award.


 


                                                                                                Survivor
means a deceased Participant’s legal representatives and/or any person or
persons who acquired the Participant’s rights to a Stock Right by will or by
the laws of descent and distribution.


 


2.                                      PURPOSES
OF THE PLAN.


 


                                                The
Plan is intended to encourage ownership of Shares by Employees and directors of
and certain consultants to the Company in order to attract and retain such
people, to induce them to work for the benefit of the Company or of an
Affiliate and to provide additional incentive for them to promote the success
of the Company or of an Affiliate.  The
Plan provides for the granting of ISOs, Non-Qualified Options, Stock Grants and
Stock-Based Awards.


 


3.                                      SHARES
SUBJECT TO THE PLAN.


 


                                                (a)                                  The
number of Shares which may be issued from time to time pursuant to this Plan
shall be the sum of: (i) 4,500,000 shares of Common Stock and (ii) any
shares of Common Stock that are represented by awards granted under the Company’s
Restated Stock Option Plan that are forfeited, expire or are cancelled without
delivery of shares of Common Stock or which result in the forfeiture of shares
of Common Stock back to the Company on or after November 11, 2006, or the
equivalent of such number of Shares after the Administrator, in its sole
discretion, has interpreted the effect of any stock split, stock dividend,
combination, recapitalization or similar transaction in accordance with
Paragraph 24 of this Plan; provided, however, that no more than 5,900,000
Shares shall be added to the Plan pursuant to this provision.


 


                                                (b)                                 If
an Option ceases to be “outstanding”, in whole or in part (other than by
exercise), or if the Company shall reacquire (at not more than its original
issuance price) any Shares issued pursuant to a Stock Grant or Stock-Based
Award, or if any Stock Right expires or is forfeited, cancelled, or otherwise
terminated or results in any Shares not being issued, the unissued Shares which
were subject to such Stock Right shall again be available for issuance from
time to time pursuant to this Plan. Notwithstanding the foregoing, if a Stock
Right is exercised, in whole or in part, by tender of Shares or if the Company’s
tax withholding obligation is satisfied by withholding Shares, the number of
Shares deemed to have been issued under the Plan for purposes of the
limitations set forth in Paragraph 3(a) above shall be the number of
Shares that were subject to the Stock Right or portion thereof, and not the net
number of Shares actually issued.


 


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4.                                      ADMINISTRATION
OF THE PLAN.


 


                                                The
Administrator of the Plan will be the Board of Directors, except to the extent
the Board of Directors delegates its authority to the Committee, in which case
the Committee shall be the Administrator. 
Subject to the provisions of the Plan, the Administrator is authorized
to:


 


                                                a.                                       Interpret
the provisions of the Plan and all Stock Rights and to make all rules and
determinations which it deems necessary or advisable for the administration of
the Plan;


 


                                                b.                                      Determine
which Employees, directors and consultants shall be granted Stock Rights;


 


                                                c.                                       Determine
the number of Shares for which a Stock Right or Stock Rights shall be granted, provided, however, that in no event shall Stock Rights
with respect to more than 500,000 Shares be granted to any Participant in any
fiscal year;


 


                                                d.                                      Specify
the terms and conditions upon which a Stock Right or Stock Rights may be
granted; and


 


                                                e.                                       Adopt
any sub-plans applicable to residents of any specified jurisdiction as it deems
necessary or appropriate in order to comply with or take advantage of any tax
or other laws applicable to the Company or to Plan Participants or to otherwise
facilitate the administration of the Plan, which sub-plans may include
additional restrictions or conditions applicable to Stock Rights or Shares
issuable pursuant to a Stock Right;


 


provided, however, that
all such interpretations, rules, determinations, terms and conditions shall be
made and prescribed in the context of preserving the tax status under Section 422
of the Code of those Options which are designated as ISOs.  Subject to the foregoing, the interpretation
and construction by the Administrator of any provisions of the Plan or of any
Stock Right granted under it shall be final, unless otherwise determined by the
Board of Directors, if the Administrator is the Committee.  In addition, if the Administrator is the
Committee, the Board of Directors may take any action under the Plan that would
otherwise be the responsibility of the Committee.


 


                                                To
the extent permitted under applicable law, the Board of Directors or the
Committee may allocate all or any portion of its responsibilities and powers to
any one or more of its members and may delegate all or any portion of its
responsibilities and powers to any other person selected by it. The Board of
Directors or the Committee may revoke any such allocation or delegation at any
time.


 


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5.                                      ELIGIBILITY
FOR PARTICIPATION.


 


                                                The
Administrator will, in its sole discretion, name the Participants in the Plan,
provided, however, that each Participant must be an Employee, director or
consultant of the Company or of an Affiliate at the time a Stock Right is
granted.  Notwithstanding the foregoing,
the Administrator may authorize the grant of a Stock Right to a person not then
an Employee, director or consultant of the Company or of an Affiliate;
provided, however, that the actual grant of such Stock Right shall be
conditioned upon such person becoming eligible to become a Participant at or
prior to the time of the execution of the Agreement evidencing such Stock Right.  ISOs may be granted only to Employees.  Non-Qualified Options, Stock Grants and
Stock-Based Awards may be granted to any Employee, director or consultant of
the Company or an Affiliate.  The
granting of any Stock Right to any individual shall neither entitle that
individual to, nor disqualify him or her from, participation in any other grant
of Stock Rights.


 


6.                                      TERMS
AND CONDITIONS OF OPTIONS.


 


                                                Each
Option shall be set forth in writing in an Option Agreement, duly executed by
the Company and, to the extent required by law or requested by the Company, by
the Participant.  The Administrator may
provide that Options be granted subject to such terms and conditions,
consistent with the terms and conditions specifically required under this Plan,
as the Administrator may deem appropriate including, without limitation,
subsequent approval by the shareholders of the Company of this Plan or any
amendments thereto.  The Option
Agreements shall be subject to at least the following terms and conditions:


 


                                                a.                                       Non-Qualified
Options:  Each Option intended to be
a Non-Qualified Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best interest of the
Company, subject to the following minimum standards for any such Non-Qualified
Option:


 


                                                                                                i.                                          Option
Price: Each Option Agreement shall state the option price (per share) of
the Shares covered by each Option, which option price shall be determined by
the Administrator but shall not be less than the Fair Market Value per
share of Common Stock.


 


                                                                                                ii.                                       Number
of Shares: Each Option Agreement shall state the number of Shares to which
it pertains.


 


                                                                                                iii.                                    Option
Periods:  Each Option Agreement shall
state the date or dates on which it first is exercisable and the date after
which it may no longer be exercised, provided that each Non-Qualified Option
shall terminate not more than ten years from the date of the grant.  Each Option Agreement may provide that the
Option rights accrue or become exercisable in installments over a period of
months or years, or upon the occurrence of certain conditions or the attainment
of stated goals or events.


 


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                                                                                                iv.                                   Option
Conditions:  Exercise of any Option
may be conditioned upon the Participant’s execution of a Share purchase
agreement in form satisfactory to the Administrator providing for certain
protections for the Company and its other shareholders, including requirements
that:


 


                                                                                                                                                A.                                  The
Participant’s or the Participant’s Survivors’ right to sell or transfer the
Shares may be restricted; and


 


                                                                                                                                                B.                                    The
Participant or the Participant’s Survivors may be required to execute letters
of investment intent and must also acknowledge that the Shares will bear
legends noting any applicable restrictions.


 


                                                b.                                      ISOs:  Each Option intended to be an ISO shall be
issued only to an Employee and be subject to the following terms and
conditions, with such additional restrictions or changes as the Administrator
determines are appropriate but not in conflict with Section 422 of the
Code and relevant regulations and rulings of the Internal Revenue Service:


 


                                                                                                i.                                          Minimum
standards:  The ISO shall meet the
minimum standards required of Non-Qualified Options, as described in Paragraph
6(a) above.


 


                                                                                                ii.                                       Option
Price:  Immediately before the ISO is
granted, if the Participant owns, directly or by reason of the applicable
attribution rules in Section 424(d) of the Code:


 


                                                                                                                                                A.                                   10%
or less of the total combined voting power of all classes of stock of
the Company or an Affiliate, the Option price per share of the Shares covered
by each ISO shall not be less than 100% of the Fair Market Value per share of
the Shares on the date of the grant of the Option; or


 


                                                                                                                                                B.                                     More
than 10% of the total combined voting power of all classes of stock of the
Company or an Affiliate, the Option price per share of the Shares covered by
each ISO shall not be less than 110% of the Fair Market Value on the date of
grant.


 


                                                                                                iii.                                    Term
of Option:  For Participants who own:


 


                                                                                                                                                A.                                   10%
or less of the total combined voting power of all classes of stock of
the Company or an Affiliate, each ISO shall terminate not more than ten years
from the date of the grant or at such earlier time as the Option Agreement may
provide; or


 


                                                                                                                                                B.                                     More
than 10% of the total combined voting power of all classes of stock of the
Company or an Affiliate, each ISO shall terminate not 


 


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more than five
years from the date of the grant or at such earlier time as the Option Agreement
may provide.


 


                                                                                                iv.                                   Limitation
on Yearly Exercise:  The Option
Agreements shall restrict the amount of ISOs which may become exercisable in
any calendar year (under this or any other ISO plan of the Company or an
Affiliate) so that the aggregate Fair Market Value (determined at the time each
ISO is granted) of the stock with respect to which ISOs are exercisable for the
first time by the Participant in any calendar year does not exceed $100,000.


 


7.                                      TERMS
AND CONDITIONS OF STOCK GRANTS.


 


                                                Each
offer of a Stock Grant to a Participant shall state the date prior to which the
Stock Grant must be accepted by the Participant, and the principal terms of
each Stock Grant shall be set forth in an Agreement, duly executed by the
Company and, to the extent required by law or requested by the Company, by the
Participant.  The Agreement shall be in a
form approved by the Administrator and shall contain terms and conditions which
the Administrator determines to be appropriate and in the best interest of the
Company, subject to the following minimum standards:


 


                                                (a)                                 Each
Agreement shall state the purchase price (per share), if any, of the Shares
covered by each Stock Grant, which purchase price shall be determined by the
Administrator but shall not be less than the minimum consideration required by
the Massachusetts General Corporation Law on the date of the grant of the Stock
Grant;


 


                                                (b)                                 Each
Agreement shall state the number of Shares to which the Stock Grant pertains;
and


 


                                                (c)                                  Each
Agreement shall include the terms of any right of the Company to restrict or
reacquire the Shares subject to the Stock Grant, including the time and events
upon which such rights shall accrue and the purchase price therefor, if any.


 


8.                                      TERMS
AND CONDITIONS OF OTHER STOCK-BASED AWARDS.


 


                                                The
Administrator shall have the right to grant other Stock-Based Awards based upon
the Common Stock having such terms and conditions as the Administrator may
determine, including, without limitation, the grant of Shares based upon
certain conditions, the grant of securities convertible into Shares and the
grant of stock appreciation rights, phantom stock awards, stock units deferred
or otherwise.  The principal terms of
each Stock-Based Award shall be set forth in an Agreement, duly executed by the
Company and, to the extent required by law or requested by the Company, by the
Participant.  The Agreement shall be in a
form approved by 


 


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the Administrator and
shall contain terms and conditions which the Administrator determines to be
appropriate and in the best interest of the Company.


 


9.                                      EXERCISE
OF OPTIONS AND ISSUE OF SHARES.


 


                                                An
Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company or its designee, together with provision for
payment of the full purchase price in accordance with this Paragraph for the
Shares as to which the Option is being exercised, and upon compliance with any
other condition(s) set forth in the Option Agreement.  Such notice shall be signed by the person
exercising the Option, shall state the number of Shares with respect to which
the Option is being exercised and shall contain any representation required by
the Plan or the Option Agreement.  Payment
of the purchase price for the Shares as to which such Option is being exercised
shall be made (a) in United States dollars in cash or by check, or (b) at
the discretion of the Administrator, through delivery of shares of Common Stock
having a Fair Market Value equal as of the date of the exercise to the cash
exercise price of the Option and held
for at least six months, or (c) at the discretion of the
Administrator, by having the Company retain from the shares otherwise issuable
upon exercise of the Option, a number of shares having a Fair Market Value
equal as of the date of exercise to the exercise price of the Option, or (d) at
the discretion of the Administrator, in accordance with a cashless exercise
program established with a securities brokerage firm, and approved by the
Administrator, or (e) at the discretion of the Administrator, by any
combination of (a), (b), (c) and (d) above or (f) at the
discretion of the Administrator, payment of such other lawful consideration as
the Administrator may determine. Notwithstanding the foregoing, the Administrator
shall accept only such payment on exercise of an ISO as is permitted by Section 422
of the Code.


 


                                                The
Company shall then reasonably promptly deliver the Shares as to which such
Option was exercised to the Participant (or to the Participant’s Survivors, as
the case may be).  In determining what
constitutes “reasonably promptly,” it is expressly understood that the issuance
and delivery of the Shares may be delayed by the Company in order to comply
with any law or regulation (including, without limitation, state securities or “blue
sky” laws) which requires the Company to take any action with respect to the
Shares prior to their issuance.  The
Shares shall, upon delivery, be fully paid, non-assessable Shares.


 


                                                The
Administrator shall have the right to accelerate the date of exercise of any
installment of any Option; provided that the Administrator shall not accelerate
the exercise date of any installment of any Option granted to an Employee as an
ISO (and not previously converted into a Non-Qualified Option pursuant to
Paragraph 27) without the prior approval of the Employee, if such acceleration
would violate the annual vesting limitation contained in Section 422(d) of
the Code, as described in Paragraph 6(b)(iv).


 


                                                The
Administrator may, in its discretion, amend any term or condition of an
outstanding Option provided (i) such term or condition as amended is
permitted by the Plan, (ii) any such amendment shall be made only with the
consent of the Participant to whom the Option was granted, or in the event of
the death of the Participant, the Participant’s Survivors, if the amendment is adverse to the
Participant, and (iii) any such amendment of any Option shall be 


 


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made only after the
Administrator determines whether such amendment would constitute a “modification”
of any Option which is an ISO (as that term is defined in Section 424(h) of
the Code) or would cause any adverse tax consequences for the holder of such
Option including, but not limited to, pursuant to Section 409A of the
Code.


 


10.                                ACCEPTANCE
OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES.


 


                                                A
Stock Grant or Stock-Based Award (or any part or installment thereof) shall be
accepted by executing the applicable Agreement and delivering it to the Company
or its designee, together with provision for payment of the full purchase
price, if any, in accordance with this Paragraph for the Shares as to which
such Stock Grant or Stock-Based Award is being accepted, and upon compliance with
any other conditions set forth in the applicable Agreement.  Payment of the purchase price for the Shares
as to which such Stock Grant or Stock-Based Award is being accepted shall be
made (a) in United States dollars in cash or by check, or (b) at the
discretion of the Administrator, through delivery of shares of Common Stock held for at least six months and
having a Fair Market Value equal as of the date of acceptance of the Stock
Grant or Stock Based-Award to the purchase price of the Stock Grant or Stock-Based
Award, or (c) at the discretion of the Administrator, by any combination
of (a) and (b) above; or (d) at the discretion of the
Administrator, payment of such other lawful consideration as the Administrator
may determine.


 


                                                The
Company shall then, if required by the applicable Agreement, reasonably
promptly deliver the Shares as to which such Stock Grant or Stock-Based Award
was accepted to the Participant (or to the Participant’s Survivors, as the case
may be), subject to any escrow provision set forth in the applicable
Agreement.  In determining what
constitutes “reasonably promptly,” it is expressly understood that the issuance
and delivery of the Shares may be delayed by the Company in order to comply
with any law or regulation (including, without limitation, state securities or “blue
sky” laws) which requires the Company to take any action with respect to the
Shares prior to their issuance.


 


                                                The
Administrator may, in its discretion, amend any term or condition of an
outstanding Stock Grant, Stock-Based Award or applicable Agreement provided (i) such
term or condition as amended is permitted by the Plan, and (ii) any such
amendment shall be made only with the consent of the Participant to whom the
Stock Grant or Stock-Based Award was made, if the amendment is adverse to the Participant.


 


11.                                RIGHTS
AS A SHAREHOLDER.


 


                                                No
Participant to whom a Stock Right has been granted shall have rights as a
shareholder with respect to any Shares covered by such Stock Right, except
after due exercise of the Option or acceptance of the Stock Grant or as set
forth in any Agreement, and tender of the full purchase price, if any, for the
Shares being purchased pursuant to such exercise or acceptance and registration
of the Shares in the Company’s share register in the name of the Participant.


 


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12.                                ASSIGNABILITY
AND TRANSFERABILITY OF STOCK RIGHTS.


 


                                                By
its terms, a Stock Right granted to a Participant shall not be transferable by
the Participant other than (i) by will or by the laws of descent and
distribution, or (ii) as approved by the Administrator in its discretion
and set forth in the applicable Agreement. 
Notwithstanding the foregoing, an ISO transferred except in compliance
with clause (i) above shall no longer qualify as an ISO.  The designation of a beneficiary of a Stock
Right by a Participant, with the prior approval of the Administrator and in
such form as the Administrator shall prescribe, shall not be deemed a transfer
prohibited by this Paragraph.  Except as
provided above, a Stock Right shall only be exercisable or may only be
accepted, during the Participant’s lifetime, by such Participant (or by his or
her legal representative) and shall not be assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. 
Any attempted transfer, assignment, pledge, hypothecation or other
disposition of any Stock Right or of any rights granted thereunder contrary to
the provisions of this Plan, or the levy of any attachment or similar process
upon a Stock Right, shall be null and void.


 


13.                                EFFECT
ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR
DISABILITY.


 


                                                Except
as otherwise provided in a Participant’s Option Agreement, in the event of a
termination of service (whether as an employee, director or consultant) with
the Company or an Affiliate before the Participant has exercised an Option, the
following rules apply:


 


                                                a.                                       A
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate (for any reason other than termination for Cause,
Disability, or death for which events there are special rules in
Paragraphs 14, 15, and 16, respectively), may exercise any Option granted to
him or her to the extent that the Option is exercisable on the date of such
termination of service, but only within such term as the Administrator has
designated in a Participant’s Option Agreement.


 


                                                b.                                      Except
as provided in Subparagraph (c) below, or Paragraph 15 or 16, in no event
may an Option intended to be an ISO, be exercised later than three months after
the Participant’s termination of employment.


 


                                                c.                                       The
provisions of this Paragraph, and not the provisions of Paragraph 15 or 16,
shall apply to a Participant who subsequently becomes Disabled or dies after
the termination of employment, director status or consultancy; provided,
however, in the case of a Participant’s Disability or death within three months
after the termination of employment, director status or consultancy, the
Participant or the Participant’s Survivors may exercise the Option within one
year after the date of 


 


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the Participant’s
termination of service, but in no event after the date of expiration of the
term of the Option.


 


                                                d.                                      Notwithstanding
anything herein to the contrary, if subsequent to a Participant’s termination
of employment, termination of director status or termination of consultancy,
but prior to the exercise of an Option, the Board of Directors determines that,
either prior or subsequent to the Participant’s termination, the Participant
engaged in conduct which would constitute Cause, then such Participant shall
forthwith cease to have any right to exercise any Option.


 


                                                e.                                       A
Participant to whom an Option has been granted under the Plan who is absent
from the Company or an Affiliate because of temporary disability (any
disability other than a Disability as defined in Paragraph 1 hereof), or who is
on leave of absence for any purpose, shall not, during the period of any such
absence, be deemed, by virtue of such absence alone, to have terminated such
Participant’s employment, director status or consultancy with the Company or
with an Affiliate, except as the Administrator may otherwise expressly provide.


 


                                                f.                                         Except
as required by law or as set forth in a Participant’s Option Agreement, Options
granted under the Plan shall not be affected by any change of a Participant’s
status within or among the Company and any Affiliates, so long as the
Participant continues to be an employee, director or consultant of the Company
or any Affiliate.


 


14.                                EFFECT
ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE.


 


                                                Except
as otherwise provided in a Participant’s Option Agreement, the following rules apply
if the Participant’s service (whether as an employee, director or consultant)
with the Company or an Affiliate is terminated for Cause prior to the time that
all his or her outstanding Options have been exercised:


 


                                                a.                                       All
outstanding and unexercised Options as of the time the Participant is notified
his or her service is terminated for Cause will immediately be forfeited.


 


                                                b.                                      Cause
is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of
Cause occur prior to termination.  If the
Administrator determines, subsequent to a Participant’s termination of service
but prior to the exercise of an Option, that either prior or subsequent to the
Participant’s termination the Participant engaged in conduct which would
constitute Cause, then the right to exercise any Option is forfeited.


 


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15.                               EFFECT
ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.


 


                                                Except
as otherwise provided in a Participant’s Option Agreement:


 


                                                a.                                       A
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:


 


                                                                                                                                                (i)                                     To
the extent that the Option has become exercisable but has not been exercised on
the date of Disability; and


 


                                                                                                                                                (ii)                                  In
the event rights to exercise the Option accrue periodically, to the extent of a
pro rata portion through the date of Disability of any additional vesting
rights that would have accrued on the next vesting date had the Participant not
become Disabled.  The proration shall be
based upon the number of days accrued in the current vesting period prior to
the date of Disability.


 


                                                b.                                      A
Disabled Participant may exercise such rights only within the period ending one
year after the date of the Participant’s Disability, notwithstanding that the
Participant might have been able to exercise the Option as to some or all of
the Shares on a later date if the Participant had not become Disabled and had
continued to be an employee, director or consultant or, if earlier, within the
originally prescribed term of the Option.


 


                                                c.                                       The
Administrator shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such
determination).  If requested, the
Participant shall be examined by a physician selected or approved by the
Administrator, the cost of which examination shall be paid for by the Company.


 


16.                               EFFECT
ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.


 


                                                Except
as otherwise provided in a Participant’s Option Agreement:


 


                                                a.                                       In
the event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant’s Survivors:


 


                                                                                                                                                (i)                                     To
the extent that the Option has become exercisable but has not been exercised on
the date of death; and


 


                                                                                                                                                (ii)                                  In
the event rights to exercise the Option accrue periodically, to the extent of a
pro rata portion through the date of death of any additional vesting 


 


13

















 


rights that would
have accrued on the next vesting date had the Participant not died.  The proration shall be based upon the number
of days accrued in the current vesting period prior to the Participant’s date
of death.


 


                                                b.                                      If
the Participant’s Survivors wish to exercise the Option, they must take all
necessary steps to exercise the Option within one year after the date of death
of such Participant, notwithstanding that the decedent might have been able to
exercise the Option as to some or all of the Shares on a later date if he or
she had not died and had continued to be an employee, director or consultant
or, if earlier, within the originally prescribed term of the Option.


 


17.                               EFFECT
OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS.


 


                                                In
the event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate for any reason before the Participant
has accepted a Stock Grant, such offer shall terminate.


 


                                                For
purposes of this Paragraph 17 and Paragraph 18 below, a Participant to whom a
Stock Grant has been offered and accepted under the Plan who is absent from
work with the Company or with an Affiliate because of temporary disability (any
disability other than a Disability as defined in Paragraph 1 hereof), or who is
on leave of absence for any purpose, shall not, during the period of any such
absence, be deemed, by virtue of such absence alone, to have terminated such
Participant’s employment, director status or consultancy with the Company or
with an Affiliate, except as the Administrator may otherwise expressly provide.


 


                                                In
addition, for purposes of this Paragraph 17 and Paragraph 18 below, any change
of employment or other service within or among the Company and any Affiliates
shall not be treated as a termination of employment, director status or
consultancy so long as the Participant continues to be an employee, director or
consultant of the Company or any Affiliate.


 


18.                               EFFECT
ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR
DISABILITY.


 


                                                Except
as otherwise provided in a Participant’s Stock Grant Agreement, in the event of
a termination of service (whether as an employee, director or consultant),
other than termination for Cause, Disability, or death for which events there
are special rules in Paragraphs 19, 20, and 21, respectively, before all
forfeiture provisions or Company rights of repurchase shall have lapsed, then
the Company shall have the right to cancel or repurchase that number of Shares
subject to a Stock Grant as to which the Company’s forfeiture or repurchase
rights have not lapsed.


 


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19.                               EFFECT
ON STOCK GRANTS OF TERMINATION OF SERVICE FOR CAUSE.


 


                                                Except
as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply
if the Participant’s service (whether as an employee, director or consultant)
with the Company or an Affiliate is terminated for Cause:


 


                                                a.                                       All
Shares subject to any Stock Grant that remain subject to forfeiture provisions
or as to which the Company shall have a repurchase right shall be immediately
forfeited to the Company as of the time the Participant is notified his or her
service is terminated for Cause.


 


                                                b.                                      Cause
is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of
Cause occur prior to termination.  If the
Administrator determines, subsequent to a Participant’s termination of service,
that either prior or subsequent to the Participant’s termination the
Participant engaged in conduct which would constitute Cause, then the Company’s
right to repurchase all of such Participant’s Shares shall apply.


 


20.                               EFFECT
ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.


 


                                                Except
as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply
if a Participant ceases to be an employee, director or consultant of the
Company or of an Affiliate by reason of Disability:  to the extent the forfeiture provisions or
the Company’s rights of repurchase have not lapsed on the date of Disability,
they shall be exercisable; provided, however, that in the event such forfeiture
provisions or rights of repurchase lapse periodically, such provisions or
rights shall lapse to the extent of a pro rata portion of the Shares subject to
such Stock Grant through the date of Disability as would have lapsed had the Participant
not become Disabled.  The proration shall
be based upon the number of days accrued prior to the date of Disability.


 


                                                The
Administrator shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such
determination).  If requested, the
Participant shall be examined by a physician selected or approved by the
Administrator, the cost of which examination shall be paid for by the Company.


 


21.                               EFFECT
ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.


 


                                                Except
as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply
in the event of the death of a Participant while the Participant is an
employee, 


 


 


15

















 


director or consultant of
the Company or of an Affiliate:  to the
extent the forfeiture provisions or the Company’s rights of repurchase have not
lapsed on the date of death, they shall be exercisable; provided, however, that
in the event such forfeiture provisions or rights of repurchase lapse
periodically, such provisions or rights shall lapse to the extent of a pro rata
portion of the Shares subject to such Stock Grant through the date of death as
would have lapsed had the Participant not died. 
The proration shall be based upon the number of days accrued prior to the
Participant’s death.


 


22.                               PURCHASE
FOR INVESTMENT.


 


                                                Unless
the offering and sale of the Shares to be issued upon the particular exercise
or acceptance of a Stock Right shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:


 


                                                a.                                       The
person(s) who exercise(s) or accept(s) such Stock Right shall
warrant to the Company, prior to the receipt of such Shares, that such person(s) are
acquiring such Shares for their own respective accounts, for investment, and
not with a view to, or for sale in connection with, the distribution of any
such Shares, in which event the person(s) acquiring such Shares shall be bound
by the provisions of the following legend which shall be endorsed upon the
certificate(s) evidencing their Shares issued pursuant to such exercise or such
grant:


 


                                                                                                                                                “The
shares represented by this certificate have been taken for investment and they
may not be sold or otherwise transferred by any person, including a pledgee,
unless (1) either (a) a Registration Statement with respect to such
shares shall be effective under the Securities Act of 1933, as amended, or (b) the
Company shall have received an opinion of counsel satisfactory to it that an
exemption from registration under such Act is then available, and (2) there
shall have been compliance with all applicable state securities laws.”


 


                                                b.                                      At
the discretion of the Administrator, the Company shall have received an opinion
of its counsel that the Shares may be issued upon such particular exercise or
acceptance in compliance with the 1933 Act without registration thereunder.


 


23.                               DISSOLUTION
OR LIQUIDATION OF THE COMPANY.


 


                                                Upon
the dissolution or liquidation of the Company, all Options granted under this
Plan which as of such date shall not have been exercised and all Stock Grants
and Stock-Based Awards which have not been accepted will terminate and become
null and void; provided, however, that if the rights of a Participant or a
Participant’s Survivors have not otherwise terminated and expired, the
Participant or the Participant’s Survivors will have the right 


 


16

















 


immediately prior to such dissolution or liquidation to exercise or
accept any Stock Right to the extent that the Stock Right is exercisable or
subject to acceptance as of the date immediately prior to such dissolution or
liquidation.  Upon the dissolution or
liquidation of the Company, any outstanding Stock-Based Awards shall
immediately terminate unless otherwise determined by the Administrator or
specifically provided in the applicable Agreement.


 


24.                               ADJUSTMENTS.


 


                                                Upon
the occurrence of any of the following events, a Participant’s rights with
respect to any Stock Right granted to him or her hereunder shall be adjusted as
hereinafter provided, unless otherwise specifically provided in a Participant’s
Agreement:


 


                                                a.                                       Stock
Dividends and Stock Splits.  If (i) the
shares of Common Stock shall be subdivided or combined into a greater or
smaller number of shares or if the Company shall issue any shares of Common
Stock as a stock dividend on its outstanding Common Stock, or (ii) additional
shares or new or different shares or other securities of the Company or other
non-cash assets are distributed with respect to such shares of Common Stock,
the number of shares of Common Stock deliverable upon the exercise of an Option
or acceptance of a Stock Grant shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made including, in the
purchase price per share, to reflect such events.  The number of Shares subject to the
limitations in Paragraph 3(a) and 4(c) shall also be proportionately
adjusted upon the occurrence of such events.


 


                                                b.                                      Corporate
Transactions.  If the Company is to
be consolidated with or acquired by another entity in a merger, sale of all or
substantially all of the Company’s assets other than a transaction to merely
change the state of incorporation (a “Corporate Transaction”), the
Administrator or the board of directors of any entity assuming the obligations
of the Company hereunder (the “Successor Board”), shall, as to outstanding
Options, either (i) make appropriate provision for the continuation of
such Options by substituting on an equitable basis for the Shares then subject
to such Options either the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Corporate Transaction
or securities of any successor or acquiring entity; or (ii) upon written
notice to the Participants, provide that all Options must be exercised (all
Options being made fully exercisable for purposes of this Subparagraph), within
a specified number of days of the date of such notice, at the end of which
period the Options shall terminate; or (iii) terminate all Options in
exchange for a cash payment equal to the excess of the Fair Market Value of the
Shares subject to such Options (all Options being made fully exercisable for
purposes of this Subparagraph), over the exercise price thereof.


 


                                                With
respect to outstanding Stock Grants, the Administrator or the Successor Board,
shall either (i) make appropriate provisions for the continuation of such
Stock Grants on the same terms and conditions by substituting on an equitable
basis for the Shares then subject to such Stock Grants either the consideration
payable with respect to the outstanding Shares of Common Stock in connection
with the Corporate Transaction or securities of any successor or acquiring
entity; or (ii) terminate all Stock Grants in exchange for a cash payment
equal to the excess of the Fair Market Value of the Shares subject to such
Stock Grants over the purchase price thereof, 


 


17

















 


if any.  In addition, in the event of a Corporate
Transaction, the Administrator may waive any or all Company forfeiture or
repurchase rights with respect to outstanding Stock Grants.


 


                                                c.                                       Recapitalization
or Reorganization.  In the event of a
recapitalization or reorganization of the Company other than a Corporate
Transaction pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock,
a Participant upon exercising an Option or accepting a Stock Grant after the
recapitalization or reorganization shall be entitled to receive for the
purchase price paid upon such exercise or acceptance of the number of
replacement securities which would have been received if such Option had been
exercised or Stock Grant accepted prior to such recapitalization or
reorganization.


 


                                                d.                                      Adjustments
to Stock-Based Awards.  Upon the
happening of any of the events described in Subparagraphs a, b or c above, any
outstanding Stock-Based Award shall be appropriately adjusted to reflect the
events described in such Subparagraphs. 
The Administrator or the Successor Board shall determine the specific
adjustments to be made under this Paragraph 24, including, but not limited to
the effect if any, of a Change of Control and, subject to Paragraph 4, its
determination shall be conclusive.


 


                                                e.                                       Modification
of ISOs.  Notwithstanding the
foregoing, any adjustments made pursuant to Subparagraph a, b or c above with
respect to ISOs shall be made only after the Administrator determines whether
such adjustments would constitute a “modification” of such ISOs (as that term
is defined in Section 424(h) of the Code) or would cause any adverse
tax consequences for the holders of such ISOs. 
If the Administrator determines that such adjustments made with respect
to ISOs would constitute a modification of such ISOs, it may refrain from
making such adjustments, unless the holder of an ISO specifically requests in
writing that such adjustment be made and such writing indicates that the holder
has full knowledge of the consequences of such “modification” on his or her
income tax treatment with respect to the ISO. 
This paragraph shall not apply to the acceleration of the vesting of any
ISO that would cause any portion of the ISO to violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in
Paragraph 6b(iv).


 


25.                               ISSUANCES
OF SECURITIES.


 


                                                Except
as expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares subject to Stock Rights.  Except as expressly provided herein, no
adjustments shall be made for dividends paid in cash or in property (including
without limitation, securities) of the Company prior to any issuance of Shares
pursuant to a Stock Right.


 


18

















 


26.                               FRACTIONAL
SHARES.


 


                                                No
fractional shares shall be issued under the Plan and the person exercising a
Stock Right shall receive from the Company cash in lieu of such fractional
shares equal to the Fair Market Value thereof.


 


27.                               CONVERSION
OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.


 


                                                The
Administrator, at the written request of any Participant, may in its discretion
take such actions as may be necessary to convert such Participant’s ISOs (or
any portions thereof) that have not been exercised on the date of conversion
into Non-Qualified Options at any time prior to the expiration of such ISOs,
regardless of whether the Participant is an employee of the Company or an
Affiliate at the time of such conversion. 
At the time of such conversion, the Administrator (with the consent of
the Participant) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Administrator in its discretion may determine,
provided that such conditions shall not be inconsistent with this Plan.  Nothing in the Plan shall be deemed to give
any Participant the right to have such Participant’s ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. 
The Administrator, with the consent of the Participant, may also
terminate any portion of any ISO that has not been exercised at the time of
such conversion.


 


28.                               WITHHOLDING.


 


                                                In
the event that any federal, state, or local income taxes, employment taxes,
Federal Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts
are required by applicable law or governmental regulation to be withheld from
the Participant’s salary, wages or other remuneration in connection with the
exercise or acceptance of a Stock Right or in connection with a Disqualifying
Disposition (as defined in Paragraph 29) or upon the lapsing of any forfeiture
provision or right of repurchase or for any other reason required by law, the
Company may withhold from the Participant’s compensation, if any, or may
require that the Participant advance in cash to the Company, or to any
Affiliate of the Company which employs or employed the Participant, the
statutory minimum amount of such withholdings unless a different withholding
arrangement, including the use of shares of the Company’s Common Stock is
authorized by the Administrator (and permitted by law).  For purposes hereof, the fair market value of
the shares withheld for purposes of payroll withholding shall be determined in
the manner provided in Paragraph 1 above, as of the most recent practicable
date prior to the date of exercise.  If
the fair market value of the shares withheld is less than the amount of payroll
withholdings required, the Participant may be required to advance the
difference in cash to the Company or the Affiliate employer.  The Administrator in its discretion may
condition the exercise of an Option for less than the then Fair Market Value on
the Participant’s payment of such additional withholding.


 


19

















 


29.                               NOTICE
TO COMPANY OF DISQUALIFYING DISPOSITION.


 


                                                Each
Employee who receives an ISO must agree to notify the Company in writing
immediately after the Employee makes a Disqualifying Disposition of any shares
acquired pursuant to the exercise of an ISO. 
A Disqualifying Disposition is defined in Section 424(c) of
the Code and includes any disposition (including any sale or gift) of such
shares before the later of (a) two years after the date the Employee was
granted the ISO, or (b) one year after the date the Employee acquired
Shares by exercising the ISO, except as otherwise provided in Section 424(c) of
the Code.  If the Employee has died
before such stock is sold, these holding period requirements do not apply and
no Disqualifying Disposition can occur thereafter.


 


30.                               TERMINATION
OF THE PLAN.


 


                                                The
Plan will terminate on September 4, 2016, 10 years from the date of the
adoption of the Plan by the Board, the date which is ten years from the earlier
of the date of its adoption by the Board of Directors and the date of its
approval by the shareholders of the Company. 
The Plan may be terminated at an earlier date by vote of the
shareholders or the Board of Directors of the Company; provided, however, that
any such earlier termination shall not affect any Agreements executed prior to
the effective date of such termination.


 


31.                               AMENDMENT
OF THE PLAN AND AGREEMENTS.


 


                                                The
Plan may be amended by the shareholders of the Company.  The Plan may also be amended by the
Administrator, including, without limitation, to the extent necessary to
qualify any or all outstanding Stock Rights granted under the Plan or Stock
Rights to be granted under the Plan for favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded incentive
stock options under Section 422 of the Code, and to the extent necessary
to qualify the shares issuable upon exercise or acceptance of any outstanding
Stock Rights granted, or Stock Rights to be granted, under the Plan for listing
on any national securities exchange or quotation in any national automated
quotation system of securities dealers. 
In addition, if Nasdaq amends its corporate governance rules so
that such rules no longer require stockholder approval of “material
amendments” of equity compensation plans, then, from and after the effective
date of such an amendment to the Nasdaq rules, no amendment of the Plan which (i) materially
increases the number of shares to be issued under the Plan (other than to
reflect a reorganization, stock split, merger, spinoff or similar transaction);
(ii) materially increases the benefits to Participants, including any
material change to: (a) permit a repricing (or decrease in exercise price)
of outstanding Options, (b) reduce the price at which Shares or Options
may be offered, or (c) extend the duration of the Plan; (iii) materially
expands the class of Participants eligible to participate in the Plan; or (iv) expands
the types of awards provided under the Plan shall become effective unless
stockholder approval is obtained.  Any
amendment approved by the Administrator which the Administrator determines is
of a scope that requires shareholder approval shall be subject to obtaining
such shareholder approval.  Any
modification or amendment of the Plan shall not, without the consent of a
Participant, adversely affect
his or her rights under a Stock Right previously granted to him or her.  With the consent of the 


 


20

















 


Participant affected, the
Administrator may amend outstanding Agreements in a manner which may be adverse
to the Participant but which is not inconsistent with the Plan.  In the discretion of the Administrator,
outstanding Agreements may be amended by the Administrator in a manner which is
not adverse to the Participant.


 


32.                               EMPLOYMENT
OR OTHER RELATIONSHIP.


 


                                                Nothing
in this Plan or any Agreement shall be deemed to prevent the Company or an
Affiliate from terminating the employment, consultancy or director status of a
Participant, nor to prevent a Participant from terminating his or her own
employment, consultancy or director status or to give any Participant a right
to be retained in employment or other service by the Company or any Affiliate
for any period of time.


 


33.                               GOVERNING
LAW.


 


                                                This
Plan shall be construed and enforced in accordance with the law of The
Commonwealth of Massachusetts.


 


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