EXHIBIT 4.1


 


AMERICAN SCIENCE AND
ENGINEERING, INC.


 


2005 EQUITY AND
INCENTIVE PLAN


 


1.  Purposes of the Plan


 


The purposes of the
American Science and Engineering, Inc. 2005 Equity and Incentive Plan (the
“Plan”) are (i) to provide long-term incentives and rewards to
those employees, officers, directors, and consultants of American Science and
Engineering, Inc. (the “Company”) and its Affiliates (as defined
below) who are in a position to contribute to the long-term success and growth
of the Company and its Affiliates, (ii) to assist the Company and its
Affiliates in attracting and retaining persons with the requisite experience
and ability, and (iii) to more closely align the interests of such
employees, officers, directors, and consultants with the interests of the
Company’s stockholders.


 


2.  Definitions


 


“Affiliate” means any
business entity in which the Company holds, directly or indirectly, an equity,
profits, or voting interest of 30% or more, and
includes any Subsidiary.


 


“Applicable Law” means
the applicable requirements relating to the administration of equity
compensation plans under Massachusetts
state corporate law, federal and state securities laws, the Code, any stock
exchange or quotation system on which the Common Stock is listed or quoted, employment
laws, and the applicable laws of any foreign jurisdiction where Awards are or
will be granted.


 


“Award” means any Option,
Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Cash Award,
or Foreign National Award granted under the Plan.  Awards may be granted for services to be
rendered or for past services already rendered to the Company or any Affiliate.


 


“Cash Award” means an
Award granted to a Participant pursuant to Section 10(d) of the Plan
that is payable in cash, and that may be subject to certain terms, conditions,
and restrictions.


 


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


 


“Code” means the Internal
Revenue Code of 1986, as amended from time to time, or any successor law.


 


“Committee” means one or
more committees each comprised of not less than two members of the Board
appointed by the Board to administer the Plan or a specified portion
thereof.  To the extent that the Board
determines its desirable to qualify Awards granted to Covered Employees under
the Plan as “performance-based compensation” within the meaning of Section 162(m)
of the Code, then each member of the Committee shall be an “outside director”
within the meaning of Section 162(m) of the Code.  To the extent that the Board determines it
desirable to qualify Awards granted by the Committee to a Reporting Person
under the Plan as exempt under Rule 16b-3(d)(1) of the Exchange Act,
then each member of the Committee shall be a “non-employee director” within the
meaning of Rule 16b-3.


 


“Common Stock” or “Stock”
means the common stock of the Company.


 


“Company” means American
Science and Engineering, Inc., or any successor corporation.


 





















 


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


 


“Designated Beneficiary”
means the beneficiary designated by a Participant, in a manner determined by
the Committee, to receive amounts due or exercise rights of the Participant in
the event of the Participant’s death.  In
the absence of an effective designation by a Participant, “Designated
Beneficiary” means the Participant’s estate.


 


“Disability” means a
total and permanent disability as provided in the long-term disability plan or
policy maintained by the Company or if applicable, most recently maintained, by
the Company or if applicable, an Affiliate, for the Participant, whether or not
such Participant actually receives disability benefits under such plan or
policy.  If no long-term disability plan
or policy was ever maintained on behalf of the Participant or if the determination
of disability relates to an Incentive Stock Option or SAR issued in tandem with
an Incentive Stock Option, Disability means permanent and total disability as
defined in Section 22(e)(3) of the Code.  In the event of a dispute, the determination
whether a Participant is disabled will be made by the Committee and may be
supported by the advice of a physician competent in the area to which such
disability relates.


 


“Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time, or any successor
law.


 


“Fair Market Value”
means, with respect to Common Stock or any other property, the fair market
value of such property as determined by the Committee in good faith or in the
manner established by the Committee from time to time.


 


“Foreign National Award”
means an Award granted pursuant to Section 10(f) to a Participant who
is a foreign national or employed or performing services outside of the United
States.


 


“Grant Date” means the
first date on which all necessary corporate action has been taken to approve
the grant of the Award as provided in the Plan, or such later date as is
determined and specified as part of that authorization process.  Notice of the grant shall be provided to the
Participant within a reasonable time after the grant.


 


“Grant Agreement” means
the documentation evidencing an Award as provided in Section 10(b).


 


“Incentive Stock Option”
means an Option intended to qualify as an incentive stock option and which
meets the requirements of Section 422 of the Code.


 


“Nonstatutory Stock
Option” means an Option that is not an Incentive Stock Option.


 


“Option” means a right to
acquire shares of Company Stock upon the payment of an exercise price that is
granted in accordance with Section 6 of the Plan.  An Option may be either an Incentive Stock
Option or a Nonstatutory Stock Option.


 


“Participant” means a
person selected by the Committee to receive an Award under the Plan.


 


“Performance Goals” means
with respect to any Performance Period, one or more performance goals based on
one or more of the following objective criteria established by the Committee
prior to the beginning of such Performance Period or within such period after
the beginning of the Performance Period as shall meet the requirements to be
considered “pre-established objective performance goals” for purposes of the
regulations issued under Section 162(m) of the Code: (i) increases in
the price of the Common Stock, (ii) market share, (iii) sales, (iv) revenue,
(v) return on equity, assets, or capital, (vi) economic profit
(economic value added), (vii) total shareholder return, (viii) costs,
(ix) expenses, (x) margins, (xi) earnings (including EBITDA) or earnings
per share, (xii) cash flow (including adjusted operating cash flow), (xiii)
customer satisfaction, (xiv) operating profit, (xv) net income, (xvi) research
and development, (xvii) product releases, (xviii) manufacturing, or (xix) any
combination of the foregoing, including without limitation, goals based on any
of such measures relative to appropriate peer groups or market indices.  Such Performance Goals may be particular to a
Participant or may be based, in whole or in part, on the performance of the
division, department, line of business, subsidiary, or other business unit,
whether or not legally constituted, in which


 





















 


the Participant works or
on the performance of the Company generally.


 


“Performance Period”
means the period of service designated by the Committee applicable to an Award
subject to Section 10(l) during which the Performance Goals will be measured.


 


“Reporting Person” means
a person subject to Section 16 of the Exchange Act.


 


“Restricted Stock” means
shares of Common Stock granted to a Participant pursuant to Section 8 of
the Plan that may be subject to certain terms, conditions, and restrictions.


 


“Restricted Stock Unit”
means the right granted to a Participant pursuant to  Section 9 of the Plan to receive shares
of Common Stock (or the equivalent value in cash or other property if the
Committee so provides) in the future that may be subject to certain terms,
conditions, and restrictions.


 


“Service Provider” means
an employee, officer, director or consultant of the Company or any of its
Affiliates.


 


“Stock Appreciation Right”
or “SAR” means a right to acquire cash or shares of Common Stock granted in
accordance with Section 7 of the Plan having a value equal to the
difference between the Fair Market Value on the date of exercise over the
exercise price set forth in the Grant Agreement multiplied by the number of
shares of Common Stock with respect to which the SAR is being exercised.


 


“Subsidiary” means any
subsidiary corporation as defined in Section 424(f) of the Code.


 


“Termination Date” means (i) in
the case of an employee, the date that the Committee determines that the
employee-employer relationship between the Company or Affiliate and such person
ceased for any reason, (ii) in the case of a consultant or non-employee
officer, the date that the Committee determines that the service relationship
between the Company or Affiliate and such person ceased for any reason, and (iii) in
the case of a director, the date that the Committee determines that such person’s
service on the Board ceased for any reason.


 


3.  Administration


 


The Plan shall be
administered by the Committee.  Subject
to and consistent with the provisions of the Plan, the Committee shall have the
authority and discretion to: (i) determine which eligible employees,
officers, directors, and consultants will receive Awards, (ii) determine
the number of shares of Common Stock, cash, or other consideration to be
covered by each Award, (iii) determine the terms and conditions of any
Award (including Fair Market Value, the exercise price, the vesting schedule,
the term of the Award, and the period following termination from employment or
service during which an Award may be exercised), (iv) approve forms of
Award agreements and other documentation for use under the Plan, (v) adopt,
alter, and repeal administrative rules, guidelines, and practices governing the
operation of the Plan and the Committee, (vi) interpret the provisions of
the Plan and any Award documentation and remedy any ambiguities, omissions, or
inconsistencies therein, (vii) to modify or amend Awards, or grant waivers
of Plan or Award conditions, and (viii) make all other determinations
necessary or advisable for the administration of the Plan.  A majority of the members of the Committee
shall constitute a quorum.  The Committee’s
decisions, determinations, and interpretations shall be final and binding on
all persons having an interest in any Award. 
To the extent permitted by Applicable Law, the Committee may delegate to
one or more executive officers of the Company the power to make Awards to
Participants who are not Reporting Persons and all determinations under the
Plan with respect thereto, provided that the Committee shall fix the maximum
amount of such Awards for all such Participants and a maximum for any one
Participant, and such other features of the Awards as required by Applicable
Law.


 


4.  Eligibility


 


Incentive Stock Options
may be granted only to employees (including officers and directors who are also
employees) of the Company or a Subsidiary. 
All other Awards may be granted to employees, officers, directors, and 


 





















 


consultants of the
Company or any Affiliate.


 


5.  Stock Available for Awards


 


(a)                                  Amount.  Subject to adjustment under Section 5(c),
the aggregate number of shares of Common Stock that may be issued pursuant to
Awards granted under the Plan shall be 750,000 shares.  Subject to adjustment under Section 5(c),
up to 750,000 shares of Common Stock may be issued upon exercise of Incentive
Stock Options granted under the Plan. 
Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares, or treasury shares, or shares purchased on the
open market.  At all times the Company
will reserve and keep available a sufficient number of shares to satisfy the
number of shares available for issuance under the Plan.


 


(b)                                  Share
Counting.  If an Award granted
under the Plan is canceled, terminates, expires, is forfeited, lapses, or is
settled in cash, then the shares subject to such Award (to the extent of such
cancelation, termination, expiration, forfeiture, lapse, or settlement) shall
again be available for issuance pursuant to Awards granted under the Plan.  For purposes of Section 5(a), any shares
granted as Options or Stock Appreciation Rights under the Plan shall be counted
against this limit as one share for every share subject to the Award.  Any shares granted as Awards other than Options
or Stock Appreciation Rights shall be counted against the limit set forth in Section 5(a) as
1.5 shares for every one share subject to the Award.  Any shares tendered in payment of an Option’s
exercise price (whether by attestation or actual delivery), any shares tendered
or withheld to satisfy a tax withholding on an Award, and any shares
repurchased by the Company using Option proceeds shall not be added back,
replenish, or increase the aggregate Plan share limit set forth in Section 5(a).


 


(c)                                  Adjustment.  In the event that the Committee determines
that any stock dividend, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination,
exchange of shares, or other transaction affects the Common Stock such that an
adjustment is required in order to preserve the benefits intended to be
provided by the Plan, then the Committee (subject in the case of Incentive
Stock Options to any limitation required under the Code) shall equitably adjust
any or all of (i) the number and class of shares that may be issued in
respect of Awards under the Plan, (ii) the number and class of shares
subject to outstanding Awards, (iii) the number and class of shares
subject to the limit on individual grants under Section 5(d) of the
Plan, and (iv) the exercise price with respect to any of the foregoing,
and if considered appropriate, the Committee may make provision for a cash
payment with respect to an outstanding Award, provided that the number of
shares subject to any Award shall always be a whole number.


 


(d)                                  Limit
on Individual Grants.  The
maximum number of shares of Common Stock subject to all Awards that may be
granted under this Plan to any Participant in the aggregate in any fiscal year of the Company shall not exceed 250,000 shares,
subject to adjustment under Section 5(b). 
Notwithstanding the foregoing, during the fiscal year in which a
Participant first becomes an employee of the Company or an Affiliate, the
Participant may be granted Awards covering an additional 250,000 shares of
Common Stock, subject to adjustment under Section 5(b).  With respect to any Award settled in cash
that is intended to satisfy the requirements for “performance-based
compensation” (within the meaning of Section 162(m)(4)(C) of the Code),
no more than $2,500,000 may be paid to any one individual with respect to each
year of a Performance Period.


 


6.  Stock Options


 


(a)                                  Grant
of Options.  Subject to the
provisions of the Plan, the Committee may grant Incentive Stock Options or
Nonstatutory Stock Options to a Participant.


 


(b)                                  Terms
and Conditions. The Committee shall determine the number of shares of
Common Stock subject to each Option and the exercise price therefor, which
shall not be less than 100% of the Fair Market Value of the Common Stock on the
Grant Date.  Each Option shall be
exercisable at such times and subject to such terms and conditions as the
Committee may specify in the Grant Agreement or thereafter; provided that (i) no
Option shall be exercisable after the expiration of ten years
from the Option’s Grant Date, and (ii) no Option may be granted with a
reload feature which provides for an automatic grant of additional or
replacement options upon the exercise of an Option.


 





















 


A Participant may
exercise an Option by following such procedures as the Committee or its
designees may specify from time to time. The Committee may impose such
conditions with respect to the exercise of Options, including conditions
relating to Applicable Laws, as it considers necessary or advisable.


 


(c)                                  Payment.  No shares shall be delivered pursuant to any
exercise of an Option until payment in full of the exercise price therefor is
received by the Company.  Except as
otherwise provided by the Committee, such payment may be made in whole or in
part in or pursuant to any of the following methods:  (i) cash, (ii) by actual delivery
or attestation of ownership of shares of Common Stock owned by the Participant,
including vested Restricted Stock, (iii) by retaining shares of Common
Stock otherwise issuable pursuant to the Option, (iv) for consideration
received by the Company under a broker-assisted cashless exercise program
acceptable to the Company, or (v) for such other lawful consideration as
the Committee may determine.


 


(d)                                  Exercise
Period.  When a Participant’s
status as a Service Provider terminates, the Participant’s Option may be
exercised within the period of time specified in the Grant Agreement to the
extent that the Option is vested on the Participant’s Termination Date.  In the absence of a specific period of time
set forth in the Grant Agreement, an Option shall remain exercisable for three (3) months
following the date the Participant ceases to be a Service Provider, but in no
event shall the Option be exercisable after the expiration of the term of such
Option.  If a Participant’s status as a
Service Provider terminates from death or Disability or the Participant dies
within three (3) months after his Termination Date, then (unless provided
otherwise in the Grant Agreement) the Option shall remain exercisable for
twelve (12) months following the date the Participant ceases to be a Service
Provider, but in no event shall the Option be exercisable after the expiration
of the term of such Option.  In no event
may the Committee provide in a Grant Agreement that the period of time for
exercising an Option following a Participant’s Termination Date shall exceed
three (3) years.


 


(e)                                  Incentive
Stock Option Rules.  In addition to the limitations and conditions
that apply generally to Options, the following provisions shall apply to any
Incentive Stock Option.  The Committee
may grant Incentive Stock Options only to persons who are employees of the
Company or a Subsidiary as of the Grant Date. 
The aggregate Fair Market Value (determined as of the Grant Date) of all
shares with respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year (under the Plan or any
other incentive stock option plan of the Company or any Subsidiary) shall not
exceed $100,000.  If the Fair Market
Value of shares on the Grant Date with respect to which Incentive Stock Options
are exercisable for the first time by a Participant during any calendar year
exceeds $100,000, the Options for the first $100,000 worth of shares to become
exercisable in that calendar year will be Incentive Stock Options, and the
Options for the shares with a Fair Market Value in excess of $100,000 that
become exercisable in that calendar year will be Nonstatutory Stock Options.  No Incentive Stock Option shall be granted to
any individual who, at the Grant Date, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Subsidiary unless the exercise price per share of such Option is
at least 110% of the Fair Market Value per share at the Grant Date and the
Option expires no later than five (5) years after the Grant Date.  If a Participant sells or otherwise disposes
of any shares acquired pursuant to the exercise of an Incentive Stock Option on
or before the later of (i) the date two (2) years after the Grant
Date, and (ii) the date one year after the exercise of the Incentive Stock
Option, the Company may require the Participant to immediately notify the
Company in writing of such disposition.


 


7.  Stock Appreciation Rights


 


(a)                                  Grant
of SARs.  Subject to the
provisions of the Plan, the Committee may grant SARs to a Participant in tandem
with an Option (at or after the award of the Option), or alone and unrelated to
an Option.  SARs granted in tandem with
an Option shall terminate to the extent that the related Option is exercised,
and the related Option shall terminate to the extent that the tandem SARs are
exercised.


 


(b)                                  Terms
and Conditions.  The Committee
shall determine the number of shares of Common Stock subject to each SAR and
the exercise price therefore.  A SAR
granted in tandem with an Option shall have an exercise price not less than the
exercise price of the related Option.  A
SAR granted alone and unrelated to an Option may not have an exercise price
less than 100% of the Fair Market Value of the Common Stock on of the Grant
Date.  Each SAR shall


 





















 


be exercisable at such
times and subject to such terms and conditions as the Committee may specify in
the Grant Agreement or thereafter; provided that no SAR shall be exercisable
after the expiration of ten years from the SAR’s Grant Date.  A Participant may exercise a SAR by following
such procedures as the Committee or its designees may specify from time to
time.  The Committee may impose such
conditions with respect to the exercise of SARs, including conditions relating
to Applicable Laws, as it considers necessary or advisable.


 


(c)                                  Exercise
Period.  When a Participant’s
status as a Service Provider terminates, the Participant’s SAR may be exercised
within the period of time specified in the Grant Agreement to the extent that
the SAR is vested on the Participant’s Termination Date.  In the absence of a specific period of time
set forth in the Grant Agreement, a SAR shall remain exercisable for three (3) months
following the date the Participant ceases to be a Service Provider, but in no
event shall the SAR be exercisable after the expiration of the term of such
SAR.  If a Participant’s status as a
Service Provider terminates from death or Disability or the Participant dies
within three (3) months after his Termination Date, then (unless provided
otherwise in the Grant Agreement) the SAR shall remain exercisable for twelve
(12) months following the date the Participant ceases to be a Service Provider,
but in no event shall the SAR be exercisable after the expiration of the term
of such SAR.  In no event may the
Committee provide in the Grant Agreement that the period of time for exercising
a SAR following a Participant’s Termination Date shall exceed three (3) years.


 


8.  Restricted Stock


 


(a)                                  Grant
of Restricted Stock.  Subject to
the provisions of the Plan, the Committee may grant Restricted Stock to a
Participant.


 


(b)                                  Terms and Conditions. 
The Committee shall determine the number of shares of Common Stock
subject to each Restricted Stock Award and the purchase price (if any) for each
share.  Shares of Restricted Stock may be
issued for no cash consideration, or such minimum consideration as may be
required by Applicable Law.  The
Committee may grant shares of Common Stock subject to such other terms,
conditions, and restrictions (including forfeiture provisions and conditions
relating to Applicable Laws) as it considers necessary or advisable.


 


(c)                                  Restrictions.  Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as permitted by
the Committee, during the restricted period. 
Shares of Restricted Stock shall be evidenced in such manner as the
Committee may determine, including book-entry registration.  Any physical certificates issued in respect
of shares of Restricted Stock shall be registered in the name of the
Participant bearing an appropriate legend referring to the terms, conditions,
and restrictions applicable to such Restricted Stock and unless otherwise
determined by the Committee, deposited by the Participant, together with a
stock power endorsed in blank, with the Company or a designated custodian or
escrow agent.  At the expiration of the
restricted period, the Company shall deliver any such certificates to the
Participant or if the Participant has died, to the Participant’s Designated
Beneficiary.


 


9.  Restricted Stock Units


 


(a)                                  Restricted Stock Units.  Subject to the provisions of the Plan, the
Committee may grant Restricted Stock Units to a Participant.


 


(b)                                  Terms and Conditions. 
The Committee shall determine the number of shares of Common Stock
subject to each Restricted Stock Unit Award and the purchase price (if any) for
each unit.  Restricted Stock Units may be
issued for no cash consideration, or such minimum consideration as may be
required by Applicable Law.  The
Committee may grant Restricted Stock Units subject to such other terms,
conditions, and restrictions (including forfeiture provisions and conditions
relating to Applicable Laws) as it considers necessary or advisable.


 


(c)                                  Unfunded Obligation. 
A Restricted Stock Unit Award shall constitute an unfunded and unsecured
obligation of the Company, and shall be settled in shares of Common Stock or
cash, as determined by the Committee at the time of grant or thereafter.  Each unit shall represent the equivalent of
one share of Common Stock.


 





















 


10.  General Provisions
Applicable to Awards


 


(a)                                  Transferability.  Except as otherwise
provided in this Section 10(a), an Award (i) shall not be
transferable other than as designated by the Participant by will or by the laws
of descent and distribution, and (ii) may be exercised during the
Participant’s lifetime only by the Participant or by the Participant’s guardian
or legal representative.  In the
discretion of the Committee, any Award may be transferable upon such terms and
conditions and to such extent as the Committee determines at or after grant,
provided that Incentive Stock Options may be transferable only to the extent
permitted by the Code.


 


(b)                                  Grant
Agreement. 
Each Award under the Plan shall be evidenced by a written or electronic
grant agreement delivered to the Participant specifying the terms and
conditions thereof and containing such other terms and conditions not
inconsistent with the provisions of the Plan or Applicable Laws as the
Committee considers necessary or advisable to achieve the purposes of the Plan.


 


(c)                                  Committee
Discretion. 
Each type of Award may be made alone, in addition to or in relation to
any other Award.  The terms of each type
of Award need not be identical, and the Committee need not treat Participants
uniformly.  In addition to the authority
granted to the Committee in Section 10(l) to make Awards to Covered
Employees which qualify as “performance-based compensation” for purposes of Section 162(m)
of the Code, the Company may grant Awards subject to such performance
conditions (including performance-based vesting) as it shall determine in its
discretion.  Except as otherwise provided
by the Plan or a particular Award, any determination with respect to an Award
may be made by the Committee at the time of grant or at any time thereafter.


 


(d)                                  Dividends
and Cash Awards.  In the discretion of the Committee, any Award
under the Plan may provide the Participant with dividends or dividend
equivalents payable currently or deferred, with or without interest.  The Committee may also make cash payments
under the Plan in lieu of or in addition to an Award.  Such Cash Awards may be made subject to such
terms, conditions, and restrictions as the Committee considers necessary or
advisable.


 


(e)                                  Termination
of Employment or Service.  Whether military service, government service,
or other leave of absence shall constitute a termination of employment or
service, and whether the vesting of an Award shall cease, be suspended, or
continue during such  leave of absence,
shall be determined in each case by the Committee in its direction.  Except as otherwise provided by the
Committee, a Participant’s employment or service shall not be deemed to
terminate upon the transfer of employment or service between the Company and an
Affiliate.  Except as otherwise provided
by the Committee, a Participant’s employment or service shall be deemed to
terminate, and further vesting of any Award shall cease, in the case of any
sale, spin-off, or other disposition of the Participant’s employer or
substantially all of its assets.  To the
extent that this Section 10(e) or action by the Committee results in
an Incentive Stock Option being exercised beyond the date that a Participant is
deemed to be an employee of the Company or a Subsidiary for purposes of Section 424
of the Code, the Option shall be deemed to be a Nonstatutory Stock Option.


 


(f)                                    Change
in Control. 
In order to preserve a Participant’s rights under an Award in the event
of a change in control of the Company as defined by the Committee (a “Change in
Control”), the Committee in its discretion may, at the time an Award is made or
at any time thereafter, take one or more of the following actions: (i) provide
for the acceleration of any time period relating to the exercise or payment of
the Award, (ii) provide for payment to the Participant of cash or other
property with a Fair Market Value equal to the amount that would have been
received upon the exercise or payment of the Award had the Award been exercised
or paid upon the Change in Control, (iii) adjust the terms of the Award in
a manner determined by the Committee to reflect the Change in Control, (iv) cause
the Award to be assumed, or new rights substituted therefor, by another entity,
or (v) make such other provision as the Committee may consider equitable
to Participants and in the best interests of the Company.


 


(g)                                 Loans.  The Committee may
not authorize the making of loans to Participants in connection with the grant
or exercise of any Award under the Plan.


 





















 


(h)                                 Withholding
Taxes. 
A Participant shall pay to the Company, or make provision satisfactory
to the Committee for payment of, any taxes required by law to be withheld in
respect of Awards under the Plan no later than the date of the event creating
the tax liability.  In the Committee’s
discretion, such tax obligations may be paid in whole or in part in shares of
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value on the date of delivery.  The Company and its Affiliates may, to the
extent permitted by Applicable Law, deduct any such tax obligations from any
payment of any kind otherwise due to the Participant.


 


(i)                                    Foreign
National Awards.  Notwithstanding anything to the contrary
contained in this Plan, Foreign National Awards may be made to Participants on
such terms and conditions different from those specified in the Plan as the
Committee considers necessary or advisable to achieve the purposes of the Plan
or to comply with Applicable Law.


 


(j)                                    Amendment
of Award. 
Except as provided in Section 10(k), the Committee may amend,
modify, or terminate any outstanding Award, including substituting therefor
another Award of the same or a different type, changing the date of exercise or
realization and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant’s consent to such action shall be
required unless (i) the Committee determines that the action, taking into
account any related action, would not materially and adversely affect the
Participant, or (ii) the action is permitted by the terms of the Plan.


 


(k)                                No Repricing of Options. 
Notwithstanding anything to the contrary in the Plan, the Company shall
not engage in any repricing of Options or SARs granted under this Plan without
further stockholder approval.  For this
purpose, the term “repricing” shall mean any of the following or other action
that has the same effect:  (i) lowering
the exercise price of an Option or a SAR after it is granted, (ii) any
other action that is treated as a repricing under generally accepted accounting
principles, or (iii) canceling an Option or a SAR at a time when its exercise
price exceeds the fair market value of the underlying stock in exchange for
another Option, SAR, Restricted Stock, or other equity of the Company, unless
the cancellation and exchange occurs in connection with a merger, acquisition,
spin-off, or similar corporate transaction (including any adjustment described
in Section 5(c)).


 


(l)                                    Code Section 162(m)
Provisions.  If the Committee determines at the
time an Award is granted to a Participant that such Participant is, or may be
as of the end of the tax year for which the Company would claim a tax deduction
in connection with such Award, a Covered Employee, then the Committee may
provide that the Participant’s right to receive cash, shares, or other property
pursuant to such Award shall be subject to the satisfaction of Performance
Goals during a Performance Period.  Prior
to the payment of any Award subject to this Section 10(l), the Committee
shall certify in writing that the Performance Goals and other material terms
applicable to such Award were satisfied. 
Notwithstanding the attainment of Performance Goals by a Covered
Employee, the Committee shall have the right to reduce (but not to increase)
the amount payable at a given level of performance to take into account
additional factors that the Committee may deem relevant.  The Committee shall have the power to impose
such other restrictions on Awards subject to this Section 10(l) as it may
deem necessary or appropriate to ensure that such Awards satisfy all
requirements for “performance-based compensation” within the meaning of Section 162(m)
of the Code.


 


(m)                              Minimum Vesting Requirements.  Each Award granted under the Plan shall vest
in accordance with a schedule that does not permit such Award to vest in
full prior to the third anniversary of the Grant Date of the Award.  This minimum vesting requirements shall not,
however, preclude the Committee from exercising its discretion to (i) accelerate
the vesting of any Award upon retirement, termination of employment by the
Company, death or Disability, (ii) accelerate the vesting of any Award in
accordance with Section 10(f), (iii) establish a shorter vesting schedule for
any Award granted to a consultant, director, or newly-hired employee, (iv) establish
a shorter vesting schedule for any Award that is granted in exchange for
or in lieu of the right to receive the payment of an equivalent amount of
salary, bonus, or other cash compensation, (v) establish a shorter
performance-based vesting schedule in accordance with Section 10(c) or
Section 10(l) (but in each case of not less than one year), or (vi) vest
up to 1,000 shares per year for each Participant.


 





















 


(n)                                 Limitation
Following a Hardship Distribution. 
To the extent required to comply with Treasury Regulation Section 1.401(k)-1(d)(2)(iv)(B)(4),
or any amendment or successor thereto, a Participant’s “elective and employee
contributions” (within the meaning of such Treasury Regulation) under the Plan
shall be suspended for a period of twelve months following such Participant’s
receipt of a hardship distribution made in reliance on such Treasury Regulation
from any plan containing a cash or deferred arrangement under Section 401(k)
of the Code maintained by the Company or a related party within the provisions
of Section 414 of the Code.


 


11.                               Miscellaneous


 


(a)                                  No
Right To Employment.  No person shall have any claim or right to be
granted an Award.  Neither the Plan nor
any Award hereunder shall be deemed to give any employee the right to continued
employment or service or to limit the right of the Company to discharge any
Participant at any time.


 


(b)                                  No
Rights As Stockholder.  Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she becomes the holder thereof.  A Participant to whom Common Stock is awarded
shall be considered the holder of the Stock at the time of the Award except as
otherwise provided in the Grant Agreement.


 


(c)                                  Effective
Date.  Subject to the approval of the stockholders of
the Company, the Plan shall be effective on September 15, 2005.


 


(d)                                  Amendment
and Term of Plan.  The Board may amend, suspend, or terminate
the Plan or any portion thereof at any time, subject to such stockholder
approval as the Board determines to be necessary or advisable to comply with
any tax or regulatory requirement, provided, however, that the Board may not
without stockholder approval materially amend the Plan (within the meaning of
applicable exchange listing requirements) to materially increase the number of
shares of Common Stock that may be issued under the Plan, materially increase
benefits to Participants, materially expand the class of Participants eligible
to participate in the Plan, or expand the types of Awards provided under the
Plan.  Unless terminated earlier by the
Board, or extended by subsequent approval of the Company’s stockholders, the
term of the Plan shall expire on September 15, 2015, and no further Awards
shall be made thereafter.  The
termination of the Plan on such date shall not affect the validity of any Award
outstanding on the date of termination.


 


(e)                                  Governing
Law. 
The provisions of the Plan shall be governed by and interpreted in
accordance with the laws of Massachusetts.


 


(f)                                    Indemnification. 
Neither the Board nor the Committee, nor any members of either, nor any
employees or officers of the Company or any Affiliate, shall be liable for any
act, omission, interpretation, construction, or determination made in good
faith in connection with their responsibilities under the Plan, and the Company
hereby agrees to indemnify the members of the Board, the members of the
Committee, and the employees and officers of the Company or any Affiliate
administering the Plan, in respect of any claim, loss, damage, or expense
(including reasonable fees of legal counsel) arising from any such act,
omission, interpretation, construction, or determination to the fullest extent
permitted by Applicable Law.


 


This Plan
was approved by the Board of Directors on July 20, 2005.


 


This Plan
was approved by the Company’s stockholders on September 15, 2005.