Document:

Exhibit 10.2

Exhibit 10.2

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE
SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION
STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY
TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM
THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF
SECTION 7 OF THIS WARRANT.

CEREPLAST, INC.

WARRANT TO PURCHASE 140,000 SHARES

OF COMMON STOCK

THIS CERTIFIES THAT, for value received, COMPASS HORIZON FUNDING COMPANY LLC and its assignees
are entitled to subscribe for and purchase 140,000 shares of the fully paid and nonassessable
Common Stock (as adjusted pursuant to Section 4 hereof, the “Shares”) of CEREPLAST, INC., a Nevada
corporation (the “Company”), at the price of $4.40 per share (such price and such other price as
shall result, from time to time, from the adjustments specified in Section 4 hereof is herein
referred to as the “Warrant Price”), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, (a) the term “Date of Grant” shall mean December _____, 2010,
and (b) the term “Other Warrants” shall mean any other warrants issued by the Company in connection
with the transaction with respect to which this Warrant was issued, and any warrant issued upon
transfer or partial exercise of or in lieu of this Warrant. The term “Warrant” as used herein
shall be deemed to include Other Warrants unless the context clearly requires otherwise.

1. Term. The purchase right represented by this Warrant is exercisable, in whole or
in part, at any time and from time to time from the Date of Grant through seven (7) years after the
Date of Grant (the “Term”).

2. Method of Exercise; Payment; Issuance of New Warrant. Subject to Section 1 hereof,
the purchase right represented by this Warrant may be exercised by the holder hereof, in whole or
in part and from time to time, at the election of the holder hereof, by (a) the surrender of this
Warrant (with the notice of exercise substantially in the form attached hereto as Exhibit A-1 duly
completed and executed) at the principal office of the Company and by the payment to the Company,
by certified or bank check, or by wire transfer to an account designated by the Company (a “Wire
Transfer”) of an amount equal to the then applicable Warrant Price multiplied by the number of
Shares then being purchased; (b) if in connection with a registered public offering of the
Company’s securities pursuant to which the Shares are being registered, the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit A-2 duly completed and
executed) at the principal office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either by certified or bank check or by Wire
Transfer from the proceeds of the sale of shares to be sold by the holder in such public offering
of an amount equal to the then applicable Warrant Price per share multiplied by the number of
Shares then being purchased; or (c) exercise of the “net issuance” right provided for in Section

 

 

 

10.2 hereof. The person or persons in whose name(s) any certificate(s) representing the Shares shall be issuable upon exercise of
this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for
all purposes as the record holder(s) of, the shares represented thereby (and such shares shall be
deemed to have been issued) immediately prior to the close of business on the date or dates upon
which this Warrant is exercised. In the event of any exercise of the rights represented by this
Warrant, certificates for the shares of stock so purchased shall be delivered to the holder hereof
as soon as possible and in any event within thirty (30) days after such exercise and, unless this
Warrant has been fully exercised or expired, a new Warrant representing the portion of the Shares,
if any, with respect to which this Warrant shall not then have been exercised shall also be issued
to the holder hereof as soon as possible and in any event within such thirty-day period; provided,
however, at such time as the Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended, if requested by the holder of this Warrant, the Company shall
cause its transfer agent to deliver the certificate representing Shares issued upon exercise of
this Warrant to a broker or other person (as directed by the holder exercising this Warrant) within
the time period required to settle any trade made by the holder after exercise of this Warrant.

3. Stock Fully Paid; Reservation of Shares. All Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance pursuant to the terms and
conditions herein, be fully paid and nonassessable, and free from all preemptive rights and taxes,
liens and charges with respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the
rights represented by this Warrant.

4. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:

(a) Reclassification or Merger. In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or
substantially all of the assets of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall duly execute and deliver to the holder of this Warrant a new
Warrant (in form and substance satisfactory to the holder of this Warrant), so that the holder of
this Warrant shall have the right to receive upon exercise of this Warrant, at a total purchase
price not to exceed that payable upon the exercise of the unexercised portion of this Warrant, and
in lieu of the shares of Common Stock theretofore issuable upon exercise of this Warrant, (i) the
kind and amount of shares of stock, other securities, money and property receivable upon such
reclassification, change, merger or sale by a holder of the number of shares of Common Stock then
purchasable under this Warrant, or (ii) in the case of such a merger or sale in which the
consideration paid consists all or in part of assets other than securities of the

 

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successor or
purchasing corporation, at the option of the holder of this Warrant, the securities of the successor or purchasing corporation having a value at the time of the
transaction equivalent to the value of the Common Stock purchasable upon exercise of this Warrant
at the time of the transaction. Any new Warrant shall provide for adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided for in this Section 4. The
provisions of this Section 4(a) shall similarly apply to successive reclassifications, changes,
mergers and sales.

(b) Subdivision or Combination of Shares. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its outstanding shares of
Common Stock, the Warrant Price shall be proportionately decreased and the number of Shares
issuable hereunder shall be proportionately increased in the case of a subdivision and the Warrant
Price shall be proportionately increased and the number of Shares issuable hereunder shall be
proportionately decreased in the case of a combination.

(c) Stock Dividends and Other Distributions. If the Company at any time while this
Warrant is outstanding and unexpired shall (i) pay a dividend with respect to its Common Stock
payable in Common Stock, then the Warrant Price shall be adjusted, from and after the date of
determination of shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such date of
determination by a fraction (A) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and (B) the
denominator of which shall be the total number of shares of Common Stock outstanding immediately
after such dividend or distribution; or (ii) make any other distribution with respect to Common
Stock (except any distribution specifically provided for in Sections 4(a) and 4(b)), then, in each
such case, provision shall be made by the Company such that the holder of this Warrant shall
receive upon exercise of this Warrant a proportionate share of any such dividend or distribution as
though it were the holder of the Shares as of the record date fixed for the determination of the
shareholders of the Company entitled to receive such dividend or distribution.

(d) Adjustment of Number of Shares. Upon each adjustment in the Warrant Price, the
number of Shares purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of Shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant Price
immediately prior to such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.

5. Notice of Adjustments. Whenever the Warrant Price or the number of Shares
purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the Company shall make a
certificate signed by its chief financial officer setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such adjustment was
calculated, and the Warrant Price and the number of Shares purchasable hereunder after giving
effect to such adjustment, and shall cause copies of such certificate to be mailed (without regard
to Section 13 hereof, by first class mail, postage prepaid) to the holder of this Warrant.

 

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6. Fractional Shares. No fractional shares of Common Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares the Company shall
make a cash payment therefor based on the fair market value of the Common Stock on the date of
exercise as reasonably determined in good faith by the Company’s Board of Directors.

7. Compliance with Securities Act; Disposition of Warrant or Shares of Common Stock.

(a) Compliance with Securities Act. The holder of this Warrant, by acceptance hereof,
agrees that this Warrant, and the Shares to be issued upon exercise hereof are being acquired for
investment and that such holder will not offer, sell or otherwise dispose of this Warrant, or any
Shares except under circumstances which will not result in a violation of the Securities Act of
1933, as amended (the “Act”) or any applicable state securities laws. Upon exercise of this
Warrant, unless the Shares being acquired are registered under the Act and any applicable state
securities laws or an exemption from such registration is available, the holder hereof shall
confirm in writing that the Shares so purchased are being acquired for investment and not with a
view toward distribution or resale in violation of the Act and shall confirm such other matters
related thereto as may be reasonably requested by the Company. This Warrant and all Shares issued
upon exercise of this Warrant (unless registered under the Act and any applicable state securities
laws) shall be stamped or imprinted with a legend in substantially the following form:

“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i)
EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF
NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH
THE PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR
INDIRECTLY.”

Said legend shall be removed by the Company, upon the request of a holder, at such time as the
restrictions on the transfer of the applicable security shall have terminated. In addition, in
connection with the issuance of this Warrant, the holder specifically represents to the Company by
acceptance of this Warrant as follows:

(1) The holder is aware of the Company’s business affairs and financial condition, and has
acquired information about the Company sufficient to reach an informed and knowledgeable decision
to acquire this Warrant. The holder is acquiring this Warrant for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any “distribution”
thereof in violation of the Act.

(2) The holder understands that this Warrant has not been registered under the Act in reliance
upon a specific exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of the holder’s investment intent as expressed herein.

 

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(3) The holder further understands that this Warrant must be held indefinitely unless
subsequently registered under the Act and qualified under any applicable state
securities laws, or unless exemptions from registration and qualification are otherwise
available. The holder is aware of the provisions of Rule 144, promulgated under the Act.

(4) The holder is an “accredited investor” as such term is defined in Rule 501 of Regulation D
promulgated under the Act.

(b) Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any Shares acquired pursuant to the exercise of this Warrant prior
to registration of such Warrant or Shares, the holder hereof agrees to give written notice to the
Company prior thereto, describing briefly the manner thereof, together with a written opinion of
such holder’s counsel, or other evidence, if reasonably satisfactory to the Company, to the effect
that such offer, sale or other disposition may be effected without registration or qualification
(under the Act as then in effect or any federal or state securities law then in effect) of this
Warrant or the Shares and indicating whether or not under the Act certificates for this Warrant or
the Shares to be sold or otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with such law. Upon receiving such
written notice and reasonably satisfactory opinion or other evidence, the Company, as promptly as
practicable but no later than fifteen (15) days after receipt of the written notice, shall notify
such holder that such holder may sell or otherwise dispose of this Warrant or such Shares, all in
accordance with the terms of the notice delivered to the Company. If a determination has been made
pursuant to this Section 7(b) that the opinion of counsel for the holder or other evidence is not
reasonably satisfactory to the Company, the Company shall so notify the holder promptly with
details thereof after such determination has been made. Notwithstanding the foregoing, this
Warrant or such Shares may, as to such federal laws, be offered, sold or otherwise disposed of in
accordance with Rule 144 or 144A under the Act, provided that the Company shall have been furnished
with such information as the Company may reasonably request to provide a reasonable assurance that
the provisions of Rule 144 or 144A have been satisfied. Each certificate representing this Warrant
or the Shares thus transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a legend
as to the applicable restrictions on transferability in order to ensure compliance with such laws,
unless in the aforesaid opinion of counsel for the holder, such legend is not required in order to
ensure compliance with such laws. The Company may issue stop transfer instructions to its transfer
agent in connection with such restrictions.

(c) Applicability of Restrictions. Neither any restrictions of any legend described
in this Warrant nor the requirements of Section 7(b) above shall apply to any transfer of, or grant
of a security interest in, this Warrant (or the Common Stock obtainable upon exercise thereof) or
any part hereof (i) to a partner of the holder if the holder is a partnership or to a member of the
holder if the holder is a limited liability company, (ii) to a partnership of which the holder is a
partner or to a limited liability company of which the holder is a member, (iii) to any affiliate
of the holder if the holder is a corporation, (iv) notwithstanding the foregoing, to any
corporation, company, limited liability company, limited partnership, partnership, or other person
managed or sponsored by Horizon Technology Finance Corporation (“HRZN”) or in which HRZN has an
interest, (v) or to a lender to the holder or any of the foregoing; provided,
however, in any such transfer, if applicable, the transferee shall on the Company’s request
agree in writing to be bound by the terms of this Warrant as if an original holder hereof.

 

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8. Rights as Shareholders; Information. No holder of this Warrant, as such, shall be
entitled to vote or receive dividends or be deemed the holder of Common Stock which may at any time
be issuable upon the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided herein.
Notwithstanding the foregoing, the Company will transmit to the holder of this Warrant such
information, documents and reports as are generally distributed to the holders of any class or
series of the securities of the Company concurrently with the distribution thereof to the
shareholders.

9. Registration Rights. For the period starting from the Date of Grant through the
initial date that the holder of this Warrant is permitted to offer, sell or dispose of the Warrant
or Shares pursuant to Rule 144 under the Act, the Company grants registration rights to the holder
of this Warrant for any Shares obtained upon exercise of this Warrant as follows:

(a) At any time after the date hereof, if the Company shall determine to register for its
account or for the account of others any of its equity securities, the Company shall give notice to
the Lender at least 10 days prior to filing a registration statement, and shall include in such
registration statement the Shares, provided, however, that the Company may reduce
the number of Shares to be registered or not register the Shares in view of market conditions or
other conditions as determined in writing by the lead underwriter, if such registration statement
is for an underwritten offering, or by the Company’s investment banker, which written determination
the Company will share with the Lender. The Company may not reduce the number of Shares included
in such registration statement by a greater percentage than any other person exercising piggyback
registration rights.; and

(b) The registration rights are assignable by the holder of this Warrant in connection with a
permitted transfer of this Warrant or the Shares.

10. Additional Rights.

10.1 Acquisition Transactions. The Company shall provide the holder of this Warrant
with at least twenty (20) days’ written notice prior to closing thereof of the terms and conditions
of any of the following transactions (to the extent the Company has notice thereof): (i) the sale,
lease, exchange, conveyance or other disposition of all or substantially all of the Company’s
property or business, or (ii) its merger into or consolidation with any other corporation (other
than a wholly-owned subsidiary of the Company), or any transaction (including a merger or other
reorganization) or series of related transactions, in which more than 50% of the voting power of
the Company is disposed of.

 

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10.2 Right to Convert Warrant into Stock: Net Issuance.

(a) Right to Convert. In addition to and without limiting the rights of the holder
under the terms of this Warrant, the holder shall have the right to convert this Warrant or any
portion thereof (the “Conversion Right”) into shares of Common Stock as provided in this Section
10.2 at any time or from time to time during the term of this Warrant. Upon exercise of the
Conversion Right with respect to a particular number of shares subject to this Warrant (the
“Converted Warrant Shares”), the Company shall deliver to the holder (without payment by the holder
of any exercise price or any cash or other consideration) that number of shares of fully paid and
nonassessable Common Stock as is determined according to the following formula:

	 	 	 	 	 	 	 

	 

	 	X =
	 	B - A
 

Y
	 	 

	 	 	 	 	 	 	 

	 

	 	Where:
	 	X  =
	 	the number of shares of Common Stock that shall be issued to holder
	 
	 	 	 	 	 	 
	 

	 	 	 	Y  =
	 	the fair market value of one share of Common Stock
	 
	 	 	 	 	 	 
	 

	 	 	 	A  =
	 	the aggregate Warrant Price of the specified number of
Converted Warrant Shares immediately prior to the exercise of the Conversion
Right (i.e., the number of Converted Warrant Shares multiplied by the Warrant
Price)
	 
	 	 	 	 	 	 
	 

	 	 	 	B  =
	 	the aggregate fair market value of the specified number of
Converted Warrant Shares (i.e., the number of Converted Warrant Shares
multiplied by the fair market value of one Converted Warrant Share)

No fractional shares shall be issuable upon exercise of the Conversion Right, and, if the
number of shares to be issued determined in accordance with the foregoing formula is other than a
whole number, the Company shall pay to the holder an amount in cash equal to the fair market value
of the resulting fractional share on the Conversion Date (as hereinafter defined). For purposes of
Section 10 of this Warrant, shares issued pursuant to the Conversion Right shall be treated as if
they were issued upon the exercise of this Warrant.

(b) Method of Exercise. The Conversion Right may be exercised by the holder by the
surrender of this Warrant at the principal office of the Company together with a written statement
(which may be in the form of Exhibit A-1 or Exhibit A-2 hereto) specifying that the holder thereby
intends to exercise the Conversion Right and indicating the number of shares subject to this
Warrant which are being surrendered (referred to in Section 10.2(a) hereof as the Converted Warrant
Shares) in exercise of the Conversion Right. Such conversion shall be effective upon receipt by
the Company of this Warrant together with the aforesaid written statement, or on such later date as
is specified therein (the “Conversion Date”), and, at the election of the holder hereof, may be
made contingent upon the closing of the sale of the Company’s Common Stock to the public in a
public offering pursuant to a Registration Statement under the Act (a “Public Offering”).
Certificates for the shares issuable upon exercise of the Conversion Right and, if applicable, a
new warrant evidencing the balance of the shares remaining subject to this Warrant, shall be issued
as of the Conversion Date and shall be delivered to the holder within thirty (30) days following
the Conversion Date.

 

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(c) Determination of Fair Market Value. For purposes of this Section 10.2, “fair
market value” of a share of Common Stock as of a particular date (the “Determination Date”) shall
mean:

(i) If the Conversion Right is exercised in connection with and contingent upon a Public
Offering, and if the Company’s Registration Statement relating to such Public Offering
(“Registration Statement”) has been declared effective by the Securities and Exchange Commission,
then the initial “Price to Public” specified in the final prospectus with respect to such offering.

(ii) If the Conversion Right is not exercised in connection with and contingent upon a Public
Offering, then as follows:

(A) If traded on a securities exchange, the fair market value of the Common Stock shall be
deemed to be the average of the closing prices of the Common Stock on such exchange over the five
trading days immediately prior to the Determination Date;

(B) If traded on the NASDAQ Stock Market or other over-the-counter system, the fair market
value of the Common Stock shall be deemed to be the average of the closing prices of the Common
Stock over the five trading days immediately prior to the Determination Date; and

(C) If there is no public market for the Common Stock, then fair market value shall be
determined by mutual agreement of the holder of this Warrant and the Company.

If closing prices or closing bid prices are no longer reported by a securities exchange or other
trading system, the closing price or closing bid price shall be that which is reported by such
securities exchange or other trading system at 4:00 p.m. New York City time on the applicable
trading day.

10.3 Exercise Prior to Expiration. To the extent this Warrant is not previously
exercised as to all of the Shares subject hereto, and if the fair market value of one share of the
Common Stock is greater than the Warrant Price then in effect, this Warrant shall be deemed
automatically exercised pursuant to Section 10.2 above (even if not surrendered) immediately before
its expiration. For purposes of such automatic exercise, the fair market value of one share of the
Common Stock upon such expiration shall be determined pursuant to Section 10.2(c). To the extent
this Warrant or any portion thereof is deemed automatically exercised pursuant to this Section
10.3, the Company agrees to promptly notify the holder hereof of the number of Shares, if any, the
holder hereof is to receive by reason of such automatic exercise.

11. Representations and Warranties. The Company represents and warrants to the holder
of this Warrant as follows:

(a) This Warrant has been duly authorized and executed by the Company and is a valid and
binding obligation of the Company enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors and the rules of
law or principles at equity governing specific performance, injunctive relief and other equitable
remedies.

 

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(b) The Shares have been duly authorized and reserved for issuance by the Company and, when
issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable
and free from preemptive rights.

(c) A true and correct copy of the Company’s Articles of Incorporation, as amended through the
Date of Grant has been provided to Holder (the “Charter”). The rights, preferences, privileges and
restrictions granted to or imposed upon the classes and series of the Company’s capital stock and
the holders thereof are as set forth in the Charter.

(d) The execution and delivery of this Warrant are not, and the issuance of the Shares upon
exercise of this Warrant in accordance with the terms hereof will not be, inconsistent with the
Company’s Charter or by-laws, do not and will not contravene any law, governmental rule or
regulation, judgment or order applicable to the Company, and do not and will not conflict with or
contravene any provision of, or constitute a default under, any indenture, mortgage, contract or
other instrument of which the Company is a party or by which it is bound or require the consent or
approval of, the giving of notice to, the registration or filing with or the taking of any action
in respect of or by, any Federal, state or local government authority or agency or other person,
except for the filing of notices pursuant to federal and state securities laws, which filings will
be effected by the time required thereby.

(e) There are no actions, suits, audits, investigations or proceedings pending or, to the
knowledge of the Company, threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, could have a material adverse effect
on the ability of the Company to perform its obligations under this Warrant.

12. Modification and Waiver. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the party against which
enforcement of the same is sought.

13. Notices. Any notice, request, communication or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be delivered, or shall
be sent by certified or registered mail, postage prepaid, to each such holder at its address as
shown on the books of the Company or to the Company at the address indicated therefor on the
signature page of this Warrant.

14. Binding Effect on Successors. This Warrant shall be binding upon any corporation
succeeding the Company by merger, consolidation or acquisition of all or substantially all of the
Company’s assets, and all of the obligations of the Company relating to the Shares issuable upon
the exercise or conversion of this Warrant shall survive the exercise, conversion and termination
of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit
of the successors and assigns of the holder hereof.

15. Lost Warrants or Stock Certificates. The Company covenants to the holder hereof
that, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate and, in the case of any such
loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or
in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the
Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the
lost, stolen, destroyed or mutilated Warrant or stock certificate.

 

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16. Descriptive Headings. The descriptive headings of the various Sections of this
Warrant are inserted for convenience only and do not constitute a part of this Warrant. The
language in this Warrant shall be construed as to its fair meaning without regard to which party
drafted this Warrant.

17. Governing Law. This Warrant shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the laws of the State of California.

18. Survival of Representations, Warranties and Agreements. All representations and
warranties of the Company and the holder hereof contained herein shall survive the Date of Grant,
the exercise or conversion of this Warrant (or any part hereof) or the termination or expiration of
rights hereunder. All agreements of the Company and the holder hereof contained herein shall
survive indefinitely until, by their respective terms, they are no longer operative.

19. Remedies. In case any one or more of the covenants and agreements contained in
this Warrant shall have been breached, the holders hereof (in the case of a breach by the Company),
or the Company (in the case of a breach by a holder), may proceed to protect and enforce their or
its rights either by suit in equity and/or by action at law, including, but not limited to, an
action for damages as a result of any such breach and/or an action for specific performance of any
such covenant or agreement contained in this Warrant.

20. No Impairment of Rights. The Company will not, by amendment of its Charter or
through any other means, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant against impairment.

21. Severability. The invalidity or unenforceability of any provision of this Warrant
in any jurisdiction shall not affect the validity or enforceability of such provision in any other
jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and
effect.

22. Recovery of Litigation Costs. If any legal action or other proceeding is brought
for the enforcement of this Warrant, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Warrant, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs
incurred in that action or proceeding, in addition to any other relief to which it or they may be
entitled.

23. Entire Agreement; Modification. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and undertakings of the parties, whether oral or
written, with respect to such subject matter.

 

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The Company has caused this Warrant to be duly executed and delivered as of the Date of Grant
specified above.

	 	 	 	 	 
	 	CEREPLAST, INC.

 	 
	 	By:  	 	 
	 	 	Name: 	Frederic Scheer	 
	 	 	Title: 	CEO	 
	 	 	  	 	 
	 	Address: 	300 North Continental Blvd.

El Segundo, CA 90245 	 

 

-12-

 

EXHIBIT A-1

NOTICE OF EXERCISE

	 	 	To: CEREPLAST, INC. (the “Company”)

1. The undersigned hereby:

	 	o	 	elects to purchase                      shares of Common Stock of the Company pursuant to
the terms of the attached Warrant, and tenders herewith payment of the
purchase price of such shares in full, or

	 	o	 	elects to exercise its net issuance rights pursuant to Section 10.2 of the
attached Warrant with respect to                      shares of Common Stock.

2. Please issue a certificate or certificates representing                      shares in the name of the
undersigned or in such other name or names as are specified below:

 

(Name)

 

 

(Address)

3. The undersigned represents that the aforesaid shares are being acquired for the account of
the undersigned for investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of distributing or reselling
such shares, all except as in compliance with applicable securities laws.

 

(Signature)

                                 

          (Date)

 

 

 

EXHIBIT A-2

NOTICE OF EXERCISE

To: CEREPLAST, INC. (the “Company”)

1. Contingent upon and effective immediately prior to the closing (the “Closing”) of the
Company’s public offering contemplated by the Registration Statement on Form S_____, filed                     ,
200_____, the undersigned hereby:

o elects to purchase                      shares of Common Stock of the Company (or such lesser number of
shares as may be sold on behalf of the undersigned at the Closing) pursuant to the terms of the
attached Warrant, or

o elects to exercise its net issuance rights pursuant to Section 10.2 of the attached Warrant
with respect to                      shares of Common Stock.

2. Please deliver to the custodian for the selling shareholders a stock certificate
representing such                      shares.

3. The undersigned has instructed the custodian for the selling shareholders to deliver to the
Company $                    or, if less, the net proceeds due the undersigned from the sale of shares in the
aforesaid public offering. If such net proceeds are less than the purchase price for such shares,
the undersigned agrees to deliver the difference to the Company prior to the Closing.

 

(Signature)

                            

      (Date)exv10w1

EXHIBIT 10.1

AMENDED AND RESTATED

LEGACY BANCORP, INC.

2006 EQUITY INCENTIVE PLAN

     This Amended and Restated Legacy Bancorp, Inc. 2006 Equity Incentive Plan, dated December 21,
2010, amends and restates in its entirety the Legacy Bancorp, Inc. 2006 Equity Incentive Plan, as
approved by the stockholders of Legacy Bancorp, Inc. on November 1, 2006, as follows:

1. DEFINITIONS

     (a) “Affiliate” means any “parent corporation” or “subsidiary corporation” of the Holding
Company, as such term is defined in sections 424(e) and 424(f) of the Code.

     (b) “Award” means, individually or collectively, a grant under the Plan of Non-Statutory Stock
Options, Incentive Stock Options, Stock Awards or Stock Appreciation Rights.

     (c) “Award Agreement” means a written or electronic agreement evidencing and setting forth the
terms of an Award.

     (d) “Bank” means Legacy Banks, a Massachusetts-chartered savings bank.

     (e) “Board of Directors” means the board of directors of the Holding Company.

     (f) “Change in Control” means a change in control of the Bank or the Holding Company of a
nature that; (i) would be required to be reported in response to Item 5.01 of the current report on
Form 8-K, as in effect on the Effective Date, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”); or (ii) results in a Change in Control
within the meaning of the Home Owners’ Loan Act of 1933, as amended (“HOLA”) and the Rules and
Regulations promulgated by the Office of Thrift Supervision (“OTS”) (or its predecessor agency), as
in effect on the Effective Date (provided, that in applying the definition of change in control as
set forth under such rules and regulations the Board shall substitute its judgment for that of the
OTS); or (iii) without limitation such a Change in Control shall be deemed to have occurred at such
time as (A) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Bank or the Holding Company representing 20% or more of the Bank’s
or the Holding Company’s outstanding securities except for any securities of the Bank purchased by
the Holding Company and any securities purchased by any tax qualified employee benefit plan of the
Bank or Holding Company; or (B) individuals who constitute the Board of Directors of the Holding
Company on the Effective Date (the “Incumbent Board”) cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the Effective Date
whose election was approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the Holding Company’s stockholders was
approved by a Nominating Committee serving under an Incumbent Board, shall be, for purposes of this
clause (B), considered as though he were a member of the Incumbent Board; or (C) a plan of
reorganization, merger, consolidation, sale of all or substantially all the assets of the Bank or

 

 

the Holding Company or similar transaction occurs in which the Bank or Holding Company is not
the resulting entity; or (D) after a solicitation of shareholders of the Holding Company, by
someone other than current management of the Holding Company, stockholders approve a plan of
reorganization, merger or consolidation of the Holding Company or Bank or similar transaction with
one or more corporations, as a result of which the outstanding shares of the class of securities
then subject to the plan would be exchanged for or converted into cash or property or securities
not issued by the Bank or the Holding Company; or (E) a tender offer is made for 20% or more of the
voting securities of the Bank or the Holding Company.

     (g) “Code” means the Internal Revenue Code of 1986, as amended.

     (h) “Committee” means the committee designated by the Board of Directors, pursuant to Section
2 of the Plan to administer the Plan.

     (i) “Common Stock” means the Common Stock of the Holding Company, par value, $.01 per share.

     (j) “Consultant” means any person, including an advisor, engaged by the Holding Company or an
Affiliate to render services to such entity.

     (k) “Covered Employee” means an Employee who is, or is determined by the Committee may become,
a “covered employee” within the meaning of section 162(m) of the Code (or any successor provision),
which generally means, the chief executive officer and the four other highest compensated officers
of the Bank for whom total compensation is required to be reported to stockholders under the
Securities Exchange Act of 1934.

     (l) “Date of Grant” means the effective date of an Award.

     (m) “Disability” means the permanent and total inability by reason of mental or physical
infirmity, or both, of a Participant to perform the work customarily assigned to him or, in the
case of a Director, to serve on the Board. Additionally, a medical doctor selected or approved by
the Board of Directors must advise the Committee that it is either not possible to determine when
such Disability will terminate or that it appears probable that such Disability will be permanent
during the remainder of said Participant’s lifetime.

     (n) “Disaffiliation” means an organization ceasing to be an Affiliate (within the meaning of
Section 1(a) hereof) of the Holding Company for any reason (including, without limitation, as a
result of a public offering, or a spin-off or sale).

     (o) “Effective Date” means the date the Plan is approved by shareholders of the Holding
Company.

     (p) “Employee” means any person employed by the Holding Company or an Affiliate. Directors who
are employed by the Holding Company or an Affiliate shall be considered Employees under the Plan.

     (q) “Exercise Price” means the price at which a Participant may purchase a share of Common
Stock pursuant to an Option.

2

 

     (r) “Fair Market Value” on any date means the market price of Common Stock, determined by the
Committee as follows:

     (i) If the Common Stock was traded on the date in question on an established stock
exchange or national market system, including the NASDAQ Stock Market, then the Fair Market
Value shall be equal to the average of the high and low bid prices reported for such date;

     (ii) If the foregoing provision is not applicable, then the Fair Market Value shall be
determined by the Committee in good faith on such basis as it deems appropriate.

     (s) Whenever possible, the determination of Fair Market Value by the Committee shall be based
on the prices reported in The Wall Street Journal. The Committee’s determination of Fair Market
Value shall be conclusive and binding on all persons.

     (t) “Holding Company” means Legacy Bancorp, Inc.

     (u) “Incentive Stock Option” means a stock option granted to a Participant pursuant to Section
7 of the Plan that is intended to meet the requirements of section 422 of the Code.

     (v) “Non-Statutory Stock Option” means a stock option granted to a Participant pursuant to
Section 6 of the Plan that is not intended to qualify, or does not qualify, as an Incentive Stock
Option.

     (w) “Option” means an Incentive Stock Option or a Non-Statutory Stock Option.

     (x) “Outside Director” means a member of the Boards of Directors of the Holding Company or an
Affiliate or a director emeritus of the Holding Company or an Affiliate who is not also an Employee
of the Holding Company or an Affiliate.

     (y) “Participant” means any person who holds an outstanding Award.

     (z) “Performance Criteria” means the criteria the Committee selects for purposes of
establishing the Performance Goal or Performance Goals for a Participant for a Performance Period.
The Performance Criteria that will be used to establish Performance Goals are limited to the
following: economic value added (as determined by the Committee); origination or sales of loans or
deposits; sales of services; net income (either before or after taxes); operating earnings; return
on capital; return on net assets; return on stockholders’ equity; return on assets; stockholder
returns; productivity; expenses; margins; operating efficiency; customer satisfaction; earnings per
share; price per share of Common Stock; and market share, any of which may be measured either in
absolute terms or as compared to any incremental increase or as compared to results of a peer
group. The Committee shall, within the time prescribed by section 162(m) of the Code, define in an
objective fashion the manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.

     (aa) “Performance Goals” means the goals established in writing by the Committee for the
Performance Period based upon the Performance Criteria. Depending on the Performance Criteria used
to establish such Performance Goals, the Performance Goals may be expressed in

3

 

terms of overall Holding Company performance or the performance of the Bank, an Affiliate, a
division or business unit of the Holding Company, the Bank or other Affiliate, or an individual.
The Committee shall establish Performance Goals for each Performance Period prior to, or as soon as
practicable after, the commencement of such Performance Period. The Committee, in its discretion,
may, within the time prescribed by section 162(m) of the Code, adjust or modify the calculation of
Performance Goals for such Performance Period in order to prevent the dilution or enlargement of
the rights of Participants (i) in the event of, or in anticipation of, any unusual or extraordinary
corporate item, transaction, event, or development, or (ii) in recognition of, or in anticipation
of, any other unusual or nonrecurring events affecting the Holding Company, or the financial
statements of the Holding Company, or in response to, or in anticipation of, changes in applicable
laws, regulations, accounting principles, or business conditions.

     (bb) “Performance Period” means the designated period during which the Performance Goals must
be satisfied with respect to the Award to which the Performance Goals relate.

     (cc) “Plan” means this Legacy Bancorp, Inc. 2006 Equity Incentive Plan, as may be amended and
restated from time to time.

     (dd) “Qualified Performance-Based Award” means a Stock Award that is intended to qualify as
“qualified performance-based compensation” within the meaning of section 162(m) of the Code and is
designated as a Qualified Performance-Based Award pursuant to Section 9 hereof.

     (ee) “Retirement” with respect to an Employee means termination of employment which
constitutes retirement under any tax-qualified plan maintained by the Holding Company or the Bank.
“Retirement” will be deemed not to have occurred for purposes of this Plan in the event a
Participant continues to serve as a director, advisory director, director emeritus or consultant to
the board of directors of the Holding Company or an Affiliate, even if such Participant is
receiving retirement benefits under any retirement plan of the Holding Company or an Affiliate.
With respect to an Outside Director, “Retirement” means the termination of service from the
respective boards of directors of the Holding Company or an Affiliate following written notice to
the respective board of directors as a whole of such Outside Director’s intention to retire, except
that an Outside Director shall be deemed not to have retired for purposes of this Plan in the event
he continues to serve as a consultant to the board or as an advisory director or director emeritus.

     (ff) “Share” means a share of Common Stock.

     (gg) “Stock Appreciation Right” or “SAR” means and Award, granted alone or in connection with
an Option, that pursuant to Section 10 of the Plan is designated as a SAR.

     (hh) “Stock Award” means an Award granted to a Participant pursuant to Section 8 of the Plan.

     (ii) “Termination for Cause” shall mean, in the case of an Outside Director, removal from the
board of directors or, in the case of an Employee, termination of employment, in both such cases as
determined by the Board of Directors, because of the Participant’s personal

4

 

dishonesty, willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule or regulation
(other than traffic violations or similar offenses) or any other grounds provided for under
employment policies, as amended from time to time, of the Holding Company or its Affiliates.

2. ADMINISTRATION

     (a) The Committee shall administer the Plan. The Committee shall consist of two or more
disinterested directors of the Holding Company, who shall be appointed by the Board of Directors. A
member of the Board of Directors shall be deemed to be “disinterested” only if he satisfies (i)
such requirements as the Securities and Exchange Commission may establish for non-employee
directors administering plans intended to qualify for exemption under Rule 16b-3 (or its successor)
under the Exchange Act and (ii) such requirements as the Internal Revenue Service may establish for
outside directors acting under plans intended to qualify for exemption under section 162(m)(4)(C)
of the Code. The Board of Directors may also appoint one or more separate committees of the Board
of Directors, each composed of one or more directors of the Holding Company or an Affiliate who
need not be disinterested, that may grant Awards and administer the Plan with respect to Employees,
Outside Directors, and other individuals who are not considered officers or directors of the
Holding Company under Section 16 of the Exchange Act or for whom Awards are not intended to satisfy
the provisions of section 162(m) of the Code.

     (b) The Committee shall have the sole and complete authority to:

     (i) determine the individuals to whom Awards are granted, the type and amounts of
Awards to be granted and the time of all such grants;

     (ii) determine the terms, conditions and provisions of, and restrictions relating to,
each Award granted;

     (iii) interpret and construe the Plan and all Award Agreements;

     (iv) prescribe, amend and rescind rules and regulations relating to the Plan;

     (v) determine the content and form of all Award Agreements;

     (vi) determine all questions relating to Awards under the Plan, including whether any
conditions relating to an Award have been met;

     (vii) consistent with the Plan and with the consent of the Participant, as appropriate,
amend any outstanding Award or amend the exercise date or dates thereof, provided that the
Committee shall not have any discretion or authority to make changes to any Award that is
intended to qualify as a Qualified Performance-Based Award to the extent that the existence
of such discretion or authority would cause such Award not to so qualify;

5

 

     (viii) determine the duration and purpose of leaves of absence that may be granted to a
Participant without constituting termination of the Participant’s employment for the purpose
of the Plan or any Award;

     (ix) maintain accounts, records and ledgers relating to Awards;

     (x) maintain records concerning its decisions and proceedings;

     (xi) employ agents, attorneys, accountants or other persons for such purposes as the
Committee considers necessary or desirable; and

     (xii) do and perform all acts which it may deem necessary or appropriate for the
administration of the Plan and to carry out the objectives of the Plan; and

     The Committee’s determinations under the Plan shall be final and binding on all persons.

     (c) Each Award shall be evidenced by an Award Agreement containing such provisions as may be
approved by the Committee. Each Award Agreement shall constitute a binding contract between the
Holding Company and the Participant, and every Participant, upon acceptance of the Award Agreement,
shall be bound by the terms and restrictions of the Plan and the Award Agreement. The terms of each
Award Agreement shall be in accordance with the Plan, but each Award Agreement may include such
additional provisions and restrictions determined by the Committee, in its discretion, provided
that such additional provisions and restrictions are not inconsistent with the terms of the Plan.
In particular, and at a minimum, the Committee shall set forth in each Award Agreement (i) the type
of Award granted, (ii) the Exercise Price of any Option or Stock Appreciation Right, (iii) the
number of Shares subject to the Award; (iv) the expiration date of the Award, (v) the manner, time,
and rate (cumulative or otherwise) of exercise or vesting of such Award, and (vi) the restrictions,
if any, placed upon such Award, or upon Shares which may be issued upon exercise of such Award. The
Chairman of the Committee and such other directors and officers as shall be designated by the
Committee is hereby authorized to execute Award Agreements on behalf of the Holding Company or an
Affiliate and to cause them to be delivered to the recipients of Awards.

     (d) The Committee in its sole discretion and on such terms and conditions as it may provide
may delegate all or any part of its authority and powers under the Plan to one or more members of
the Board of Directors and/or officers of the Holding Company; provided, however, that the
Committee may not delegate its authority or power with respect to (i) the selection for
participation in this Plan of an officer or other person subject to Section 16 of the Exchange Act
or decisions concerning the timing, pricing or amount of an Award to such an officer or person; or
(ii) any Qualified Performance-Based Award intended to satisfy the requirements of Code section
162(m).

     (e) The Committee in its sole discretion and on such terms and conditions as it may provide
may delegate all authority for: (i) the determination of forms of payment to be made by or received
by the Plan and (ii) the execution of any Award Agreement. The Committee may rely on the
descriptions, representations, reports and estimates provided to it by the management of the
Holding Company or an Affiliate for determinations to be made pursuant to the Plan, including the
satisfaction of any conditions of a Qualified Performance-Based Award. However,

6

 

only the Committee or a portion of the Committee may certify the attainment of any conditions
of a Qualified Performance-Based Award intended to satisfy the requirements of section 162(m) of
the Code.

3. TYPES OF AWARDS AND RELATED RIGHTS

The following types of Awards may be granted under the Plan:

     (a) Non-Statutory Stock Options;

     (b) Incentive Stock Options;

     (c) Stock Awards; and

     (d) Stock Appreciation Rights.

4. STOCK SUBJECT TO THE PLAN

     (a) General Limitation. Subject to adjustment as provided in Section 16 of the Plan,
the maximum number of Shares reserved for issuance in connection with Awards under the Plan is
1,443,204 Shares of which a maximum of 1,030,860 Shares may be delivered pursuant to Options and
Stock Appreciation Rights under the Plan. Notwithstanding the 1,030,860 Share limitation in the
foregoing sentence on Shares reserved for Options and Stock Appreciation Rights, which is an amount
not in excess of ten percent (10%) of outstanding Shares as of the Effective Date, the Committee
may elect to grant Options and Stock Appreciation Rights in excess of such limitation, provided
such grants (i) comply with applicable law in effect at the time of grant and (ii) are subject to
the overall Plan limit of 1,443,204 Shares (as may be adjusted pursuant to Section 16) as well as
other limits set forth in Section 4(a) and 4(b) and the terms of the Plan. Subject to adjustment as
provided in Section 16 of the Plan, the maximum number of Shares with respect to which Options and
Stock Appreciation Rights may be granted to any individual during any one calendar year is 800,000
Shares and the maximum number of Shares with respect to Qualified Performance-Based Awards that can
be paid to any Covered Employee under the Plan for a Performance Period is 800,000 Shares.

     (b) Incentive Stock Option Limitation. Subject to adjustment as provided in Section
16 of the Plan, no more than 1,443,204 Shares reserved for issuance in connection with Awards may
be issued under the Plan in connection with Incentive Stock Options.

     (c) Other Limitations. No Option, Stock Award or SAR Award granted to an individual
Employee may exceed 25% of the total Options, Stock Awards or SARs, as applicable, that may be
granted under the Plan. No Option, Stock Award or SAR Award granted to an individual Outside
Director may exceed 5% of the total amount of Options, Stock Awards or SARs, as applicable, that
may be granted under the Plan. The aggregate amount of Options, Stock Awards or SARs granted to all
Outside Directors may not exceed 30% of the total Options, Stock Awards or SARs, as applicable,
that may be granted under the Plan. Notwithstanding the limitations of this Section 4(c), the
Committee may grant Awards in excess of any of the limitations of this Section 4(c), subject to
Sections 4(a) and 4(b), if it determines that such grants comply with applicable regulations.

7

 

     (d) Share Counting. In applying the limitations of Sections, 4(a) and 4(b) above, the
following rules shall apply:

     (i) the number of Shares associated with an Award originally counted against the
limitations as the result of the grant of the Award shall be restored against the
limitations and be available for reissuance under this Plan if and to the extent the Award
is surrendered, expires, terminates or forfeited for any reason (other than a cancellation
within the meaning of Code section 162(m).

     (ii) The following Shares shall not become available for issuance or reissuance under
the Plan:

     A. Shares tendered by a Participant as full or partial payment to the Holding Company upon
exercise of an Option;

     B. Shares associated with an Option if the Option is cancelled within the meaning of Code
section 162(m); and

     C. Shares withheld by, or otherwise remitted to satisfy a Participant’s tax withholding
obligations upon the lapse of restrictions on a Stock Award or the exercise of Options granted
under the Plan or upon any other payment or issuance of Shares under the Plan.

     (e) Shares issued under the Plan may be either authorized but unissued Shares or authorized
Shares previously issued and acquired or reacquired by the Holding Company.

5. ELIGIBILITY

     Subject to the terms of the Plan, all Employees and Outside Directors shall be eligible to
receive Awards under the Plan. In addition, the Committee may grant eligibility to Consultants of
the Holding Company or an Affiliate.

6. NON-STATUTORY STOCK OPTIONS

     The Committee may, subject to the limitations of this Plan and the availability of Shares
reserved but not previously awarded under the Plan, grant Non-Statutory Stock Options to eligible
individuals upon such terms and conditions as it may determine to the extent such terms and
conditions are consistent with the following provisions:

     (a) Exercise Price. The Committee shall determine the Exercise Price of each
Non-Statutory Stock Option. However, the Exercise Price shall not be less than 100% of the Fair
Market Value of the Common Stock on the Date of Grant; provided, however, that grants may be made
with a lower Exercise Price if the Board of Directors determines that such grants comply with
applicable law.

     (b) Terms of Non-Statutory Stock Options. The Committee shall determine the term
during which a Participant may exercise a Non-Statutory Stock Option, but in no event may a
Participant exercise a Non-Statutory Stock Option, in whole or in part, more than ten (10) years
from the Date of Grant. The Committee shall also determine the date on which each Non-

8

 

Statutory Stock Option, or any part thereof, first becomes exercisable and any terms or
conditions a Participant must satisfy in order to exercise each Non-Statutory Stock Option;
provided, however, that, unless the Committee determines otherwise, Non-Statutory Stock Options
shall not vest at a rate in excess of 20% per year over five (5) years from the date of grant
except that vesting shall accelerate in the event of death, Disability or written approval of the
Massachusetts Commissioner of Banks. Shares underlying each Non-Statutory Stock Option may be
purchased, in whole or in part, by the Participant at any time during the term of such
Non-Statutory Stock Option, after such Option becomes exercisable. A Non-Statutory Stock Option may
not be exercised for fractional shares.

     (c) Termination of Employment or Service (General). Unless otherwise determined by
the Committee, upon the termination of a Participant’s employment or other service for any reason
other than Retirement, Disability or death, or Termination for Cause, the Participant may exercise
only those Non-Statutory Stock Options that were immediately exercisable by the Participant at the
date of such termination and only for a period of three months following the date of such
termination, or, if sooner, the expiration of term of the Non-Statutory Stock Option.

     (d) Termination of Employment or Service (Retirement). Unless otherwise determined by
the Committee, in the event of a Participant’s Retirement, the Participant’s may exercise only
those Non-Statutory Stock Options that were immediately exercisable by the Participant at the date
of Retirement and only for a period of three years following the date of Retirement, or, if sooner,
the expiration of term of the Non-Statutory Stock Option.

     (e) Termination of Employment or Service (Disability or Death). Unless otherwise
determined by the Committee, in the event of the termination of a Participant’s employment or other
service due to Disability or death, all Non-Statutory Stock Options held by such Participant shall
immediately become exercisable and remain exercisable for a period of one year following the date
of such termination, or, if sooner, the expiration of term of the Non-Statutory Stock Option.

     (f) Termination of Employment or Service (Termination for Cause). Unless otherwise
determined by the Committee, in the event of a Participant’s Termination for Cause, all rights with
respect to the Participant’s Non-Statutory Stock Options shall expire immediately upon the
effective date of such Termination for Cause.

     (g) Acceleration Upon Change in Control. Notwithstanding anything to the contrary in
Section 6(b), in the event of a Change in Control, all Non-Statutory Stock Options held by a
Participant shall immediately become exercisable and, subject to Section 16, shall remain
exercisable until the expiration of the term of the Non-Statutory Stock Option.

     (h) Payment. Payment due to a Participant upon the exercise of a Non-Statutory Stock
Option shall be made in the form of Shares.

7. INCENTIVE STOCK OPTIONS

     The Committee may, subject to the limitations of the Plan and the availability of Shares
reserved but not previously awarded under this Plan, grant Incentive Stock Options to Employees

9

 

upon such terms and conditions as it may determine to the extent such terms and conditions are
consistent with the following provisions:

     (a) Exercise Price. The Committee shall determine the Exercise Price of each
Incentive Stock Option. However, the Exercise Price shall not be less than 100% of the Fair Market
Value of the Common Stock on the Date of Grant; provided, however, that if at the time an Incentive
Stock Option is granted, the Employee owns or is treated as owning, for purposes of section 422 of
the Code, Common Stock representing more than 10% of the total combined voting securities of the
Holding Company (“10% Owner”), the Exercise Price shall not be less than 110% of the Fair Market
Value of the Common Stock on the Date of Grant.

     (b) Amounts of Incentive Stock Options. To the extent the aggregate Fair Market Value
of Shares with respect to which Incentive Stock Options that are exercisable for the first time by
an Employee during any calendar year under the Plan and any other stock option plan of the Holding
Company or an Affiliate exceeds $100,000, or such higher value as may be permitted under section
422 of the Code, such Options in excess of such limit shall be treated as Non-Statutory Stock
Options. Fair Market Value shall be determined as of the Date of Grant with respect to each such
Incentive Stock Option.

     (c) Terms of Incentive Stock Options. The Committee shall determine the term during
which a Participant may exercise an Incentive Stock Option, but in no event may a Participant
exercise an Incentive Stock Option, in whole or in part, more than ten (10) years from the Date of
Grant; provided, however, that if at the time an Incentive Stock Option is granted to an Employee
who is a 10% Owner, the Incentive Stock Option granted to such Employee shall not be exercisable
after the expiration of five years from the Date of Grant. The Committee shall also determine the
date on which each Incentive Stock Option, or any part thereof, first becomes exercisable and any
terms or conditions a Participant must satisfy in order to exercise each Incentive Stock Option;
provided, however, that, unless the Committee determines otherwise, Incentive Stock Options shall
not vest at a rate in excess of 20% per year over five (5) years from the date of grant except
vesting shall accelerate in the event of death, Disability or written approval of the Massachusetts
Commissioner of Banks. Shares underlying each Incentive Stock Option may be purchased, in whole or
in part, at any time during the term of such Incentive Stock Option, after such Option becomes
exercisable. Any Option originally designated as an Incentive Stock Option shall be treated as a
Non-Statutory Stock Option to the extent the Participant exercises such Option more than three
months following the Date of the Participant’s cessation of employment (12 months if the cessation
was on account of disability within the meaning of Code section 422). An Incentive Stock Option may
not be exercised for fractional shares.

     (d) Termination of Employment (General). Unless otherwise determined by the
Committee, upon the termination of a Participant’s employment or other service for any reason other
than Retirement, Disability or death, or Termination for Cause, the Participant may exercise only
those Incentive Stock Options that were immediately exercisable by the Participant at the date of
such termination and only for a period of three months following the date of such termination, or,
if sooner, the expiration of the term of the Incentive Stock Option.

10

 

     (e) Termination of Employment (Retirement). Unless otherwise determined by the
Committee, in the event of a Participant’s Retirement, the Participant may exercise only those
Incentive Stock Options that were immediately exercisable by the Participant at the date of
Retirement and only for a period of three years following the date of Retirement, or, if sooner,
the expiration of the term of the Incentive Stock Option.

     (f) Termination of Employment (Disability or Death). Unless otherwise determined by
the Committee, in the event of the termination of a Participant’s employment or other service due
to Disability or death, all Incentive Stock Options held by such Participant shall immediately
become exercisable and remain exercisable for a period of one year following the date of such
termination, or, if sooner, the expiration of the term of the Incentive Stock Option.

     (g) Termination of Employment (Termination for Cause). Unless otherwise determined by
the Committee, in the event of an Employee’s Termination for Cause, all rights under such
Employee’s Incentive Stock Options shall expire immediately upon the effective date of such
Termination for Cause.

     (h) Acceleration Upon a Change in Control. Notwithstanding anything to the contrary
in Section 7(c), in the event of a Change in Control, all Incentive Stock Options held by such a
Participant shall become immediately exercisable and, subject to Section 16, shall remain
exercisable until the expiration of the term of the Incentive Stock Option.

     (i) Payment. Payment due to a Participant upon the exercise of an Incentive Stock
Option shall be made in the form of Shares.

     (j) Disqualifying Dispositions. Each Award Agreement with respect to an Incentive
Stock Option shall require the Participant to notify the Committee of any disposition of Shares
issued pursuant to the exercise of such Option under the circumstances described in section 421(b)
of the Code (relating to certain disqualifying dispositions), within 10 days of such disposition.

8. STOCK AWARDS

     The Committee may, subject to the limitations of the Plan and the availability of Shares
reserved but not previously awarded under this Plan, grant Stock Awards to eligible individuals
upon such terms and conditions as it may determine to the extent such terms and conditions are
consistent with the following provisions:

     (a) Payment of the Stock Award. The Stock Award may only be made in whole Shares.

     (b) Terms of the Stock Awards. The Committee shall determine the dates on which Stock
Awards granted to a Participant shall vest and any specific conditions or performance goals which
must be satisfied prior to the vesting of any installment or portion of the Stock Award; provided,
however, that, unless the Committee determines otherwise, Stock Awards shall not vest at a rate in
excess of 20% per year over five (5) years from the date of grant except that vesting may be
accelerated in the event of death, Disability or written approval of the Massachusetts Commissioner
of Banks. The acceleration of any Stock Award under the authority

11

 

of this subsection shall create no right, expectation or reliance on the part of any other
Participant or that certain Participant regarding any other unaccelerated Stock Awards.

     (c) Termination of Employment or Service (General). Unless otherwise determined by
the Committee, upon the termination of a Participant’s employment or other service for any reason
other than Disability, death, Retirement or Termination for Cause, the Participant’s unvested Stock
Awards as of the date of termination shall be forfeited and any rights the Participant had to such
unvested Stock Awards shall become null and void. In the event of termination of the Participant’s
service due to Disability or death, all unvested Stock Awards held by such Participant, including
any portion of a Stock Award subject to a performance goal, shall immediately vest and, in the
event of the Participant’s Termination for Cause, the Participant’s unvested Stock Awards as of the
date of such termination shall be forfeited and any rights the Participant had to such unvested
Stock Awards shall become null and void.

     (d) Termination of Employment (Retirement). Unless otherwise determined by the
Committee, in the event of a Participant’s Retirement, the Participant’s unvested Stock Awards as
of the date of termination shall be forfeited and any rights the Participant had to such unvested
Stock Awards shall become null and void.

     (e) Acceleration Upon a Change in Control. Notwithstanding Section 8(b), in the event
of a Change in Control, all Stock Awards held by a Participant, whether or not vested at such time,
shall become vested to the Participant or his legal representatives or beneficiaries upon the
Change in Control.

     (f) Dividends and Other Distributions. Whenever Shares underlying a Stock Award are
distributed to a Participant or beneficiary thereof under the Plan, then unless otherwise provided
in the applicable Award Agreement, such Participant or beneficiary shall also be entitled to
receive, with respect to each such Share distributed, a payment equal to any cash dividends or
distributions (other than distributions in Shares) and the number of Shares equal to any stock
dividends, declared and paid with respect to a Share of the Common Stock if the record date for
determining shareholders entitled to receive such dividends falls between the Date of Grant of the
relevant Stock Award and the date the relevant Stock Award or installment thereof is vested.

     (g) Voting of Stock Awards. After a Stock Award has been granted, but for which
Shares covered by such Stock Award have not yet been earned and distributed to the Participant
pursuant to the Plan, the Participant shall be entitled to direct the Trustee as to the voting of
such Shares which the Stock Award covers subject to the rules and procedures adopted by the
Committee for this purpose. All Shares of Common Stock held by the Trust as to which Participants
are not entitled to direct, or have not directed the voting, shall be voted by the Trustee in the
same proportion as the Common Stock covered by Stock Awards which have been awarded is voted.

9. PERFORMANCE-BASED STOCK AWARDS

     (a) Purpose. The purpose of this Section 9 is to provide the Committee the ability to
qualify Stock Awards as Qualified Performance-Based Awards. If the Committee, in its

12

 

discretion, decides to grant to a Covered Employee a Stock Award that is intended to
constitute Qualified Performance-Based Award, the provisions of this Section 9 shall control over
any contrary provision contained herein; provided, however, that the Committee may in its
discretion grant Stock Awards to Covered Employees that are based on Performance Criteria or
Performance Goals but that do not satisfy the requirements of this Section 9.

     (b) Applicability. This Section 9 shall apply only to those Covered Employees
selected by the Committee to receive Qualified Performance-Based Awards. The designation of a
Covered Employee as a Participant for a Performance Period shall not in any manner entitle the
Participant to receive an Award for the relevant Performance Period. Moreover, designation of a
Covered Employee as a Participant for a particular Performance Period shall not require designation
of such Covered Employee as a Participant in any subsequent Performance Period and designation of
one Covered Employee as a Participant shall not require designation of any other Covered Employees
as a Participant in such period or in any other period.

     (c) Procedures with Respect to Qualified Performance-Based Awards. To the extent
necessary to comply with the Qualified Performance-Based Award requirements of section 162(m)(4)(C)
of the Code, with respect to any Stock Award that may be granted to one or more Covered Employees,
no later than 90 days following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be required or permitted
by section 162(m) of the Code), the Committee shall, in writing, (a) designate one or more Covered
Employees, (b) select the Performance Criteria applicable to the Performance Period, (c) establish
the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such
Performance Period, and (d) specify the relationship between Performance Criteria and the
Performance Goals and the amounts of such Stock Awards, as applicable, to be earned by each Covered
Employee for such Performance Period. Following the completion of each Performance Period, the
Committee shall certify in writing whether the applicable Performance Goals have been achieved for
such Performance Period. No Stock Award or portion thereof that is subject to the satisfaction of
any condition shall be considered to be earned or vested until the Committee certifies in writing
that the conditions to which the distribution, earning or vesting of such Stock Award is subject
have been achieved. The Committee may not increase during a year the amount of a Qualified
Performance-Based Award that would otherwise be payable upon satisfaction of the conditions but may
reduce or eliminate the payments as provided for in the Award Agreement.

     (d) Payment of Qualified Performance-Based Awards. Unless otherwise provided in the
applicable Award Agreement, a Participant must be employed by the Holding Company or a subsidiary
on the day a Qualified Performance-Based Award for such Performance Period is paid to the
Participant. Furthermore, a Participant shall be eligible to receive payment pursuant to a
Qualified Performance-Based Award for a Performance Period only if the Performance Goals for such
period are achieved.

     (e) Additional Limitations. Notwithstanding any other provision of the Plan, any
Stock Award granted to a Covered Employee that is intended to constitute a Qualified
Performance-Based Award shall be subject to any additional limitations set forth in section 162(m)
of the Code (including any amendment to section 162(m) of the Code) or any regulations or rulings
issued thereunder that are requirements for qualification as qualified performance-

13

 

based compensation as described in section 162(m)(4)(C) of the Code, and the Plan shall be
deemed amended to the extent necessary to conform to such requirements.

     (f) Effect on Other Plans and Arrangements. Nothing contained in the Plan will be
deemed in any way to limit or restrict the Committee from making any award or payment to any person
under any other plan, arrangement or understanding, whether now existing or hereafter in effect.

10. STOCK APPRECIATION RIGHTS

     (a) Grants. Subject to the terms and conditions of the Plan, the Committee is
authorized to make Awards of SARs to eligible individuals in such amounts and subject to such terms
as may be selected by the Committee. An Award of Stock Appreciation Rights will be evidenced by an
Award Agreement that will specify the exercise price, the term of the SAR, the conditions of
exercise, and such other terms and conditions as the Committee, in its sole discretion, will
determine.

     (b) Terms of Grant. SARs may be granted in tandem with or with reference to a related
Option, in which case the Participant may elect to exercise the Option or the SAR, or a SAR may be
granted independently of an Option. A SAR may not be exercised more than ten (10) years after the
Grant Date. Unless the Committee determines otherwise, a SAR shall not vest at a rate in excess of
20% per year over five (5) years from the date of grant except that vesting shall accelerate in the
event of death, Disability or written approval of the Massachusetts Commissioner of Banks. The per
share price of the SAR shall be no less than 100% of the Fair Market Value of a Share at the time
the SAR is granted. Prior to the exercise of a SAR the holder shall have no rights as a stockholder
with respect to Shares subject to such SAR, including the right to receive dividends or dividend
equivalents. Notwithstanding other paragraphs in this Section 10, the Committee may, in its sole
discretion, grant SARs with per share prices less than Fair Market Value if such actions comply
with applicable law.

     (c) Payment Upon Exercise. Upon the exercise of a SAR, a Participant will be entitled
to receive a payment from the Holding Company in an amount determined by multiplying (i) the
difference between the Fair Market Value of a Share on the date of exercise over the exercise
price, times (ii) the number of Shares with respect to which the SAR is exercised. At the
discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent
value, or in some combination thereof.

     (d) Termination of Employment or Service (General). Unless otherwise determined by
the Committee, upon the termination of a Participant’s employment or other service for any reason
other than Retirement, Disability or death, or Termination for Cause, the Participant may exercise
only those SARs that were immediately exercisable by the Participant at the date of such
termination and only for a period of three months following the date of such termination, or, if
sooner, the expiration of term of the SAR.

     (e) Termination of Employment or Service (Retirement). Unless otherwise determined by
the Committee, in the event of a Participant’s Retirement, the Participant’s may exercise only
those SARs that were immediately exercisable by the Participant at the date of

14

 

Retirement and only for a period of three years following the date of Retirement, or, if
sooner, the expiration of term of the SAR.

     (f) Termination of Employment or Service (Disability or Death). Unless otherwise
determined by the Committee, in the event of the termination of a Participant’s employment or other
service due to Disability or death, all SARs held by such Participant shall immediately become
exercisable and remain exercisable for a period of one year following the date of such termination,
or, if sooner, the expiration of term of the SAR.

     (g) Termination of Employment or Service (Termination for Cause). Unless otherwise
determined by the Committee, in the event of a Participant’s Termination for Cause, all rights with
respect to the Participant’s SARs shall expire immediately upon the effective date of such
Termination for Cause.

     (h) Acceleration Upon Change in Control. Notwithstanding anything to the contrary in
Section 10(b), in the event of a Change in Control, all SARs held by a Participant shall
immediately become exercisable and, subject to Section 16, shall remain exercisable until the
expiration of the term of the SARs.

11. [Reserved.]

12. METHOD OF EXERCISE OF OPTIONS

     Subject to any applicable Award Agreement, any Option may be exercised by the Participant in
whole or in part at such time or times, and the Participant may make payment of the Exercise Price
in such form or forms, including, without limitation, payment by delivery of cash, Common Stock or
other consideration (including, where permitted by law and the Committee, Awards) having a Fair
Market Value on the exercise date equal to the total Exercise Price, or by any combination of cash,
Shares and other consideration, including exercise by means of a cashless exercise arrangement, as
the Committee may specify in the applicable Award Agreement.

13. RIGHTS OF PARTICIPANTS

     No Participant shall have any rights as a shareholder with respect to any Shares covered by an
Option until the date of issuance of a stock certificate for such Common Stock. Nothing contained
in this Plan or in any Award Agreement confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the right of the
Holding Company or an Affiliate to terminate a Participant’s services.

14. DESIGNATION OF BENEFICIARY

     A Participant may, with the consent of the Committee, designate a person or persons to
receive, in the event of death, any Award to which the Participant would then be entitled. Such
designation will be made upon forms supplied by and delivered to the Holding Company and may be
revoked in writing. If a Participant fails effectively to designate a beneficiary, then the
Participant’s estate will be deemed to be the beneficiary.

15

 

15. TRANSFERABILITY OF AWARDS

     (a) Incentive Stock Options. Incentive Stock Options are not transferable,
voluntarily or involuntarily, other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code. During a Participant’s
lifetime, his Incentive Stock Options may be exercised only by him.

     (b) Awards Other Than Incentive Stock Options. All Awards granted pursuant to this
Plan other than Incentive Stock Options are transferable only by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by the Code; provided,
however, with the approval of the Committee, a Participant may transfer an Award (other than an
Incentive Stock Option) for no consideration to or for the benefit of one or more Family Members of
the Participant subject to such limits as the Committee may establish, and the transferee shall
remain subject to all the terms and conditions applicable to the Award prior to such transfer. The
transfer of an Award pursuant to this Section shall include a transfer of the rights of a
Participant under this Plan to consent to certain amendments to the Plan or an Award Agreement and,
in the discretion of the Committee, shall also include transfer of ancillary rights associated with
the Award. For purposes of this Section 15, “Family Members” mean with respect to a Participant,
any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the Participant’s household
(other than a tenant or employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the Participant) control the
management of assets, and any other entity in which these persons (or the Participant) own more
than 50% of the voting interests. The provisions of this Section 15 shall not apply to any Common
Stock issued pursuant to an Award for which all restrictions have lapsed and is fully vested.

16. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.

     (a) Adjustment Clause. In the event of (i) a stock dividend, stock split, reverse
stock split, share combination, or recapitalization or similar event affecting the capital
structure of the Holding Company (each, a “Share Change”), or (ii) a merger, consolidation,
acquisition of property or shares, separation, spin-off, reorganization, stock rights offering,
liquidation, Disaffiliation, or similar event affecting the Holding Company or any of its
subsidiaries (each, a “Organic Change”), the Committee shall make such substitutions or adjustments
as it deems appropriate and equitable to (i) the Share limitations set forth in Section 4 hereof,
(ii) the number and kind of Shares covered by each outstanding Award, and (iii) the price per Share
subject to each such outstanding Award. In the case of an Organic Change, the Committee shall make
an equitable adjustment to prevent dilution but shall have discretion in how the adjustment is
made. In the case of Organic Changes, such adjustments may include, without limitation:

     (i) the cancellation of outstanding Awards in exchange for payments of cash, property or a
combination thereof having an aggregate value equal to the value of such Awards, as determined by
the Committee or the Board in its sole discretion (it being understood that in the case of an
Organic Change with respect to which shareholders receive consideration other than publicly traded
equity securities of the ultimate surviving entity, any such determination by the

16

 

Committee that the value of an Option shall for this purpose be deemed to equal the excess, if
any, of the value of the consideration being paid for each Share pursuant to such Organic Change
over the exercise price of such Option shall conclusively be deemed valid);

     (ii) the substitution of other property (including, without limitation, cash or other
securities of the Holding Company and securities of entities other than the Holding Company) for
Shares subject to outstanding Awards; and

     (iii) in connection with any Disaffiliation, arranging for the assumption of Awards, or
replacement of Awards with new awards based on other property or other securities (including,
without limitation, other securities of the Holding Company and securities of entities other than
the Holding Company), by the affected subsidiary, affiliate, or division or by the entity that
controls such subsidiary, affiliate, or division following such Disaffiliation (as well as any
corresponding adjustments to Awards that remain based upon Holding Company securities).

     No such adjustments may, however, materially change the value of benefits available to a
Participant under a previously granted Award.

     All Awards under this Plan shall be binding upon any successors or assigns of the Holding
Company.

     (b) Section 409A. Notwithstanding the foregoing: (i) any adjustments made pursuant to
Section 16 hereof to Awards that are considered “deferred compensation” within the meaning of
section 409A of the Code shall be made in compliance with the requirements of section 409A of the
Code unless the Participant consents otherwise; (ii) any adjustments made pursuant to Section 16(a)
of the Plan to Awards that are not considered “deferred compensation” subject to section 409A of
the Code shall be made in such a manner as to ensure that after such adjustment, the Awards either
continue not to be subject to section 409A of the Code or comply with the requirements of section
409A of the Code unless the Participant consents otherwise; and (iii) the Committee shall not have
the authority to make any adjustments pursuant to Section 16(a) of the Plan to the extent that the
existence of such authority would cause an Award that is not intended to be subject to section 409A
of the Code to be subject thereto.

17. TAX WITHHOLDING

     (a) Whenever under this Plan, cash or Shares are to be delivered upon exercise of an Award or
any other event with respect to rights and benefits hereunder, the Committee shall be entitled to
require as a condition of delivery (i) that the Participant remit an amount sufficient to satisfy
all federal, state, and local withholding tax requirements related thereto, (ii) that the minimum
withholding of such sums come from compensation otherwise due to the Participant or from any Shares
due to the Participant under this Plan or (iii) any combination of the foregoing provided, however,
that no amount shall be withheld from any cash payment or Shares relating to an Award which was
transferred by the Participant in accordance with this Plan.

     (b) If any transfer described in Section 15 is made, then the person making such transfer or
election shall remit to the Holding Company or its Affiliates an amount sufficient to satisfy all
federal, state, and local withholding taxes thereby incurred; provided that, in lieu of or

17

 

in addition to the foregoing, the Holding Company or its Affiliates shall have the right to
withhold such sums from compensation otherwise due to the Participant.

18. AMENDMENT OF THE PLAN AND AWARDS

     (a) The Board of Directors may at any time, and from time to time, modify or amend the Plan in
any respect, prospectively or retroactively; provided however, that provisions governing grants of
Incentive Stock Options shall be submitted for shareholder approval to the extent required by such
law or regulation. Failure to ratify or approve amendments or modifications by shareholders shall
be effective only as to the specific amendment or modification requiring such approval or
ratification. Other provisions of this Plan will remain in full force and effect. No such
termination, modification or amendment may adversely affect the rights of a Participant under an
outstanding Award without the written permission of such Participant.

     (b) The Committee may amend any Award Agreement, prospectively or retroactively; provided,
however, that no such amendment shall adversely affect the rights of any Participant under an
outstanding Award without the written consent of such Participant.

19. EFFECTIVE DATE OF PLAN

     The Plan shall be effective come effective immediately upon the affirmative vote of a majority
of the votes cast at the Holding Company’s 2006 special meeting of shareholders.

20. TERMINATION OF THE PLAN

     The right to grant Awards under the Plan will terminate 10 years after the Effective Date. The
Board of Directors has the right to suspend or terminate the Plan at any time, provided that no
such action will, without the consent of a Participant, adversely affect a Participant’s vested
rights under a previously granted Award.

21. APPLICABLE LAW

     The Plan will be administered in accordance with the laws of the Commonwealth of Massachusetts
and applicable federal law.

22. SECTION 409A

     It is the intention of the Holding Company that no Award shall be “deferred compensation”
subject to section 409A of the Code, unless and to the extent that the Committee specifically
determines otherwise, and the Plan and the terms and conditions of all Awards shall be interpreted
accordingly. The terms and conditions governing any Awards that the Committee determines will be
subject to section 409A of the Code, including any rules for elective or mandatory deferral of the
delivery of cash or Shares pursuant thereto, shall be set forth in the applicable Award Agreement,
and shall comply in all respects with section 409A of the Code.

18

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