Document:

exv10w1

 

Exhibit 10.1

FIRST AMENDMENT TO

MANAGEMENT CONTINUITY AGREEMENT

(EFFECTIVE JUNE 4, 2006)

     This First Amendment (“First Amendment”) to the Management Continuity Agreement that was
entered into effective as of June 4, 2006 (the “Agreement”) by and between Laserscope, a California
corporation (the “Company”) and ___(the “Employee”) (together the “Parties”), is made
part of the Agreement and is effective as of June 4, 2006.

     WHEREAS, the Parties previously agreed in Section 6 of the Agreement to amend the Agreement so
that no payment made or to be made thereunder shall be subject to the provisions of Code Section
409A(a)(1)(B); and

     WHEREAS, Parties desire to clarify certain of the terms of the Agreement in order to provide
greater certainty that the original intentions of the Parties will be honored;

     NOW, THEREFORE, in consideration of the mutual promises contained herein and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the
Employee hereby agree as follows:

	 	1.	 	All terms defined in the Agreement that are used in this First Amendment shall
have the same meanings as they do in the Agreement. Capitalized terms used herein but
not otherwise defined shall have the same meanings set forth in the Agreement.
	 
	 	2.	 	Clause (ii) of Section 1 of the Agreement hereby is deleted. Clause (iii)
thereof hereby is re-numbered to be clause (ii) and restated to read as follows: “(ii)
the date that is twenty-four (24) months after a Change of Control.”
	 
	 	3.	 	Subsection 3(a)(ii) of the Agreement hereby is amended and restated to read in
its entirety as follows:

          “(ii) Involuntary Termination. If the Employee’s employment is terminated within 12 months of
the Change of Control as a result of Involuntary Termination other than for Cause, the Employee
shall be entitled to receive the sum of (a) 24 months of base salary plus (b) an additional amount
equal to 40% multiplied by such 24 months of base salary as severance payments provided, however,
if the Employee’s employment is terminated after 12 months but within 24 months after the Change of
Control, the Employee shall be entitled to receive the sum of (c) [___]1 months of base
salary plus (d) an additional amount equal to 40% multiplied by such [___] months of base salary as
severance payments (such 12 or 24 month period as applicable, the “Severance Period”). The amount
of the Employee’s severance payments shall be determined using the annual base salary which the
Employee was receiving immediately prior to the

 

			
	1	 	Number of months should equal and not differ
from the number of months set forth in the Employee’s Agreement.

 

 

Change of Control (or, if higher, immediately prior
to Employee’s termination) and shall be fully paid to the Employee in a single cash lump sum within
ten (10) days of the Employee’s termination date subject to Internal Revenue Code Section 409A. In
addition, for the Severance Period, the Company shall continue to pay the Company’s portion of the
Employee’s premium for his/her
group medical insurance coverage with health insurance benefits substantially identical to those to
which the Employee was entitled immediately prior to the Change of Control (or immediately prior to
Employee’s termination if such benefits are superior to the pre-Change of Control benefits). The
Employee’s entitlement to receive health insurance benefits shall continue through the entire
Severance Period even if such Severance Period is longer than 18 months (which is generally the
maximum time required to provide health insurance benefits pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1986 (“COBRA”)). In addition, to the extent (i) any compensation or
benefits to which Employee becomes entitled under this Agreement, or any agreement or plan
referenced herein, in connection with Employee’s termination of employment with the Company
constitute deferred compensation subject to Section 409A of the Internal Revenue Code (the “Code”)
and (ii) Employee is deemed at the time of such termination of employment to be a “specified
employee” under Section 409A of the Code, then such compensation or benefits shall not be made or
commence until the earliest of (i) the expiration of the six (6)-month period measured from the
date of Employee’s “separation from service” (as such term is at the time defined in the Treasury
Regulations promulgated under Section 409A of the Code) with the Company; (ii) the date Employee
becomes “disabled” (as defined in Section 409A of the Code); or (iii) the date of Employee’s death
following such separation from service; provided, however, that such deferral shall only be
effected to the extent required to avoid adverse tax treatment to Employee, including (without
limitation) the additional twenty percent (20%) tax for which Employee would otherwise be liable
under Section 409A(a)(1)(B) of the Code in the absence of such deferral.”

     4. Section 3(b) of the Agreement hereby is amended by adding thereto the
following:

     “Notwithstanding the foregoing, this Agreement shall remain effective if, in connection with
an impending Change of Control that is actually consummated, the Employee’s employment is
terminated by the Company without Cause. The Company’s Board of Directors shall determine in good
faith whether such a termination is occurring in connection with an impending Change of Control.
However, such a termination shall in any event be deemed to be in connection with an impending
Change of Control if such termination (i) is required by the merger agreement or other instrument
relating to such Change of Control or (ii) is made at the express request of the other party (or
parties) to the transaction constituting such Change of Control. In the event of such a
termination in connection with a Change of Control, the Employee shall be eligible to receive the
payments and benefits provided in Sections 2 and 3(a)(ii) (and with a Severance Period of 24
months).”

     5. Clause (i) of Section 4(c) of the Agreement hereby is amended and restated to
read as follows:

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          “(i) a material reduction in job responsibilities inconsistent with the Employee’s position
with the Company and the Employee’s prior responsibilities as in effect immediately prior to the
Change of Control, e.g., the Employee’s position is at a subsidiary and not the ultimate parent
entity,”

Section 4(c) hereby is further amended by adding the following sentence thereto: “‘Involuntary
Termination’ shall include (x) termination of the Employee’s employment by the Company
without Cause, (y) termination of the Employee’s employment due to the Employee’s death or due to
the Employee becoming ‘disabled’ (as defined in Section 409A of the Code.”

[ [6]. [Section 5 of the Agreement hereby is amended and restated in its entirety to read as
follows:

“In the event that it is determined that any payment or distribution of any type to or for the
benefit of the Employee made by the Company, by any of its affiliates, by any person who acquires
ownership or effective control of the Company or ownership of a substantial portion of the
Company’s assets (within the meaning of section 280G of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (the “Code”)) or by any affiliate of such person, whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise (the “Total Payments”), would be subject to the excise tax imposed by section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise tax, together with
any such interest or penalties, are collectively referred to as the “Excise Tax”), then such
payments or distributions shall be payable either in (x) full or (y) as to such lesser amount which
would result in no portion of such payments or distributions being subject to the Excise Tax and
Employee shall receive the greater, on an after-tax basis, of (x) or (y) above. All mathematical
determinations and all determinations of whether any of the Total Payments are “parachute payments”
(within the meaning of section 280G of the Code) that are required to be made under this Section 5,
shall be made by the independent auditors retained by the Company most recently prior to the
Corporate Transaction (the “Auditors”), who shall provide their determination, together with
detailed supporting calculations regarding the amount of any relevant matters, both to the Company
and to the Employee within seven (7) business days of the Employee’s termination date, if
applicable, or such earlier time as is requested by the Company. If the Auditors determine no
Excise Tax is due, then the Auditors shall furnish the Employee with a written statement that such
Auditors have concluded that no Excise Tax is payable (including the reasons thereof) and that the
Employee has substantial authority not to report any Excise Tax on the Employee’s federal income
tax return. Any determination by the Auditors shall be binding upon the Company and the Employee,
absent manifest error. The Company shall pay the fees and costs of the Auditors which are incurred
in connection with this Section 5. If the Auditors do not agree to perform the tasks

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 contemplated
by this Section 5, then the Company shall promptly select another qualified accounting firm to
perform such tasks.”]2

     6. Section 6 of the Agreement hereby is amended and restated to read in its
entirety as follows:

“This Agreement is not intended to constitute a “nonqualified deferred compensation plan” within
the meaning of Section 409A of the Code. Notwithstanding the foregoing, in the event this Agreement
or any compensation or benefit paid to Employee hereunder is deemed to be subject to Section 409A
of the Code, Employee and the Company agree to negotiate in good faith to adopt such amendments
that are necessary to comply with Section 409A of the Code or to exempt such compensation or
benefits from Section 409A. In addition, to the extent (i) any compensation or benefits to which
Employee becomes entitled under this Agreement, or any
agreement or plan referenced herein, in connection with Employee’s termination of employment with
the Company constitute deferred compensation subject to Section 409A of the Code and (ii) Employee
is deemed at the time of such termination of employment to be a “specified employee” under Section
409A of the Code, then such compensation or benefits shall not be made or commence until the
earliest of (i) the expiration of the six (6)-month period measured from the date of Employee’s
“separation from service” (as such term is at the time defined in the Treasury Regulations
promulgated under Section 409A of the Code) with the Company; (ii) the date Employee becomes
“disabled” (as defined in Section 409A of the Code); or (iii) the date of Employee’s death
following such separation from service; provided, however, that such deferral shall only be
effected to the extent required to avoid adverse tax treatment to Employee, including (without
limitation) the additional twenty percent (20%) tax for which Employee would otherwise be liable
under Section 409A(a)(1)(B) of the Code in the absence of such deferral. During any period
compensation or benefits to Employee are deferred pursuant to the foregoing, Employee shall be
entitled to earn interest on such deferral at an interest rate equal to the highest rate of
interest applicable to six (6)-month certificates of deposit on accounts then offered by the
following institutions: Citibank N.A., Wells Fargo Bank, N.A. or Bank of America, as of the date of
Employee’s separation from service. Upon the expiration of the applicable deferral period, any
compensation or benefits which would have otherwise been paid during that period (whether in a
single sum or in installments) in the absence of this paragraph plus the interest accrued pursuant
to this paragraph shall be paid to Employee or Employee’s beneficiary in one cash lump sum.”

     7. Section 9(f) of the Agreement is hereby amended by adding thereto the following
sentence: “In the event that the Employee incurs legal fees and related costs in order
to enforce his/her right to receive payments and benefits under this Agreement, then
the Company shall advance full payment of such fees/costs (on an as-incurred basis)
subject to refund back to the Company to the extent that the Employee does not
ultimately prevail in the dispute as set forth in a final and binding arbitration
decision.”

 

			
	2	 	This provision is to be included only in the
Agreement between the Company and its Vice President, Legal Affairs and
Business Development, General Counsel and Secretary.

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     8. No provision of this First Amendment shall be modified, waived, discharged or
amended unless the modification, waiver, discharge or amendment is agreed to in writing
and signed by Employee and by an authorized officer of the Company (other than
Employee). No waiver by either party of any breach of, or of compliance with, any
condition or provision of this First Amendment by the other party shall be considered a
waiver of any other condition or provision or of the same condition or provision at
another time. This First Amendment and the Agreement contain the entire agreement of
the Parties with respect to the subject matter hereof and it replaces and supersedes
any agreements, representations or understandings (whether oral or written and whether
express or implied) that are not expressly set forth in this First Amendment and
Agreement that have been made or entered into by either party with respect to the
subject matter hereof. Except as expressly set forth in this First Amendment, the
Agreement shall remain unchanged and in full force and effect. This First Amendment
may be executed in counterparts, each of which shall be deemed an original, but all of
which together will constitute one and the same instrument. The validity,
interpretation, construction and performance of this First
Amendment shall be governed by the laws of the State of California without reference to
conflict of law provisions.

* * * * * *

IN WITNESS WHEREOF, each of the Parties has executed this First Amendment as of the date
and year first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	LASERSCOPE	 	 	 	EMPLOYEE:
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 

	 	 

5exv10w1

 

Exhibit 10.1

LSB CORPORATION

2006 Stock Option and Incentive Plan

1.    Purpose

        This 2006 Stock Option and Incentive Plan (this “Plan”) is intended as a performance incentive
for Directors, officers and full-time employees of LSB Corporation (the “Company”) or its
Subsidiaries (as hereinafter defined) to enable the persons to whom awards (“Awards”) of options or
restricted stock are granted (the “Grantees”) to acquire or increase a proprietary interest in the
success of the Company. The Company intends that this purpose will be effected by the granting of
Awards of “incentive stock options” (“Incentive Options”) as defined in Section 422(b) of the
Internal Revenue Code of 1986, as amended (the “Code”), non-qualified stock options (“Nonqualified
Options,” and collectively with Incentive Options, “Options”), and restricted stock (“Restricted
Stock”) under the Plan. As used herein, the term “Subsidiaries” includes any corporations and
limited liability companies in which stock or managing membership interests possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock or managing
membership interests is owned directly or indirectly by the Company.

2.    Plan Administration

        (a)    This Plan shall be administered by a committee (the “Option Committee”) of not less than
three Directors appointed by the Board of Directors of the Company. None of the members of the
Option Committee shall be an officer or other full-time employee of the Company or any Subsidiary
and is considered independent as defined in the Nasdaq Stock Market, Inc. (the “NASD”) Independence
Rules (the “NASD Independence Rules”). It is the intention of the Company that the Plan shall be
administered, in accordance with the provisions of Section 4 hereof, in a manner consistent with
provisions of and regulations adopted by the Securities and Exchange Commission (the “SEC”) under
Section 16 of the Securities Exchange Act of 1934, as amended (the “1934 Act”). Action by the
Option Committee shall require the affirmative vote of a majority of all its members.

        (b)    Subject to the terms and conditions of this Plan, the Option Committee shall have the
power and authority to grant Awards under this Plan, including the power and authority:

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

(ii)   To determine the time or times of grant and the number, if any, of Incentive
Options, Nonqualified Options, and shares of Restricted Stock, or any combination of
the foregoing, to be granted to one or more Grantees;

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

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

(v)   To accelerate at any time the right to exercise or vesting of all or any portion
of any Award;

(vi)  Subject to the provisions of Section 5(a) hereof, to extend at any time the
period in which Stock Options may be exercised;

(vii) To determine at any time whether, to what extent, and under what circumstances
distribution or the receipt of Stock and other amounts payable with respect to an
Award shall be deferred whether automatically or at the election of the Grantee and
whether and to what extent the Company shall pay or credit amounts constituting
interest (at rates determined by the Option Committee) or dividends or deemed
dividends on such deferrals;

(viii) At any time to adopt, alter and repeal such rules, guidelines and practices
for administration of this Plan and for its own acts and proceedings as it shall deem
advisable and to interpret the terms and provisions of this Plan and any Award
(including related written instruments);

 

 

(ix)  To make any and all determinations it deems advisable for the administration of
this Plan, decide all disputes arising in connection with the Plan, and otherwise
supervise the administration of this Plan; and

(x)   Generally, to exercise such powers and to perform such acts as are deemed
necessary or expedient to promote the best interests of the Company with respect to
this Plan.

3.    Stock

        (a)    The stock to be reserved and available for issuance under this Plan shall be shares of the
Company’s common stock, par value $.10 per share (the “Common Stock”). The maximum number of
shares of Common Stock reserved and available for issuance that may be issued pursuant to Awards
granted under this Plan shall be 400,000 shares of Common Stock, provided that no more than 100,000
shares shall be issued under this Plan in the form of Restricted Stock Awards. Such maximums shall
be subject to adjustment as provided in Section 7 hereof.

        (b)    Subject to such overall limitations, shares of Common Stock may be issued up to such
maximum number pursuant to any type or types of Award; provided, however, that Options with respect
to no more than 25,000 shares of Common Stock may be granted to any one Grantee during any 12-month
period. The shares available for issuance under this Plan may be authorized but unissued shares of
Common Stock or shares of Common Stock reacquired by the Company and held in its treasury.

4.    Eligibility

        (a)    Awards of Incentive Options may be granted only to officers and other full-time employees
of the Company or its Subsidiaries, including members of the Board of Directors who are also
employees of the Company or its Subsidiaries. Awards of Nonqualified Options and Restricted Stock
may be granted to officers or other full-time employees of the Company or its Subsidiaries and to
members of the Board of Directors (regardless of whether they are also employees).

        (b)    No person shall be eligible to receive any Award of an Option or Restricted Stock under
the Plan if at the date of grant such person beneficially owns ten percent or more of the
outstanding Common Stock of the Company.

        (c)    No person shall be eligible to receive Incentive Options under the Plan and incentive
stock options under any other option plan of the Company (or a parent or subsidiary as respectively
defined in Section 424(e) and (f) of the Code) in an amount exercisable for the first time during
any calendar year covering stock having an aggregate fair market value (determined at the time and
in the order the option is granted), in excess of $100,000, within the meaning of Section 422(d) of
the Code. Any option granted in excess of the foregoing limitations shall be a Nonqualified Option
and shall be clearly and specifically designated as such.

        (d)    The aggregate number of shares of Restricted Stock and Common Stock subject to
Nonqualified Options granted to non-employee Directors (as a class) pursuant to this Plan shall at
no time exceed 20% of the aggregate number of shares of Common Stock subject to this Plan; provided
that the aggregate number of shares of Restricted Stock and Common Stock subject to all
Nonqualified Options granted to any such Director (individually) pursuant to this Plan shall at no
time exceed 2% of the aggregate number of shares of Common Stock subject to this Plan. The
aggregate number of shares of Restricted Stock and Common Stock subject to Nonqualified Options and
Incentive Options granted to Directors who are employees shall at no time exceed 50% of the
aggregate number of shares of Common Stock subject to this Plan; provided that the aggregate number
of shares of Restricted Stock and Common Stock subject to all Nonqualified Options and Incentive
Options granted to any such Director individually shall at no time exceed 20% of the aggregate
number of shares of Common Stock subject to this Plan.

5.    Options

        Options granted under this Plan may be either Incentive Options or Nonqualified Options and
shall be evidenced by a written agreement (the “Option Agreement”) executed by an authorized
representative of the Option Committee and the Optionee. Each Option Agreement shall contain such
provisions as the Option Committee shall from time to time deem appropriate. Option Agreements
need not be identical, but each Option Agreement by appropriate language shall include the
substance of such of the following provisions that are by their terms required to be so included
and may include the substance of such of the following provisions that may by their terms be so
included:

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        (a)    Expiration. Notwithstanding any other provision of this Plan or of any Option Agreement,
each Option shall expire on the expiration date specified in the Option Agreement, which date shall
not be later than the tenth anniversary of the date on which the Option is granted and, in the case
of Incentive Options, the expiration of any shorter period specified in Section 422 of the Code, if
applicable.

        (b)    Minimum Shares Exercisable. The minimum number of shares with respect to which an Option
may be exercised at any one time shall be 100 shares, or such lesser number as is subject to
exercise under the Option at such time.

        (c)    Exercise.

        (i)     Each Option shall be exercisable in such installments (which need not be equal) and
at such times as may be designated as permitted by the Option Committee. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or in part, at any time
after becoming exercisable, but not later than the date the Option expires.

        (ii)    In the event of a Change in Control of the Company (as defined below in paragraph
(f)), all Options outstanding as of the date of such Change in Control shall become
immediately exercisable.

        (iii)   Notwithstanding any other provisions of the Plan, an Optionee must notify the
Company promptly in the event that he or she sells, transfers, exchanges or otherwise
disposes of any shares of Common Stock issued upon exercise of an Incentive Option before the
later of (i) the second anniversary of the date of grant of the Incentive Option and (ii) the
first anniversary of the date on which the shares were issued upon the exercise of an
Incentive Option.

        (d)    Purchase Price. The purchase price per share of Common Stock under each Option shall be
not less than the fair market value of the Common Stock on the date the Option is granted and, in
the case of Incentive Options, any such greater amount as may be required under Section 422 of the
Code. For purposes of this Plan, the fair market value of the Common Stock shall be the closing
price of the common stock on the date of the grant.

        (e)    Rights of Optionees. No Optionee shall be deemed for any purpose to be the owner of any
shares of Common Stock subject to any Option unless and until (i) the Option shall have been
exercised pursuant to the terms thereof, (ii) the Company shall have issued and delivered the
shares to the Optionee, and (iii) the Optionee’s name (or the name of the Optionee’s permitted
designee) shall have been entered as a stockholder of record on the books of the Company.
Thereupon, the Optionee (or such designee) shall have full voting, dividend and other ownership
rights with respect to such shares of Common Stock.

        (f)    Change in Control. For purposes of this Plan, a “Change in Control” shall be deemed to
have occurred in either of the following events: (i) if there has occurred a change in control
which the Company would be required to report as such in a current report on Form 8-K as
prescribed by applicable regulations promulgated under the 1934 Act by the SEC or (ii) when any
“person” (as such term is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes a
“beneficial owner” (as such term is defined in Rule 13d-3 of the SEC promulgated under the 1934
Act), directly or indirectly, of securities of the Company representing twenty-five percent (25%)
or more of the total number of votes that may be cast for the election of Directors of the Company
and, in the case of either (i) or (ii) above, the Company’s Board of Directors has not consented to
such event by a two-thirds vote of all the members of the Board of Directors then in office adopted
prior to such event. In addition, a Change in Control shall be deemed to have occurred if, as the
result of, or in connection with, any tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the foregoing
transactions, the persons who were Directors of the Company before such transaction shall cease to
constitute a majority of the Board of Directors of the Company or of any successor institution.

        (g)    Limitation on Change in Control Compensation. An Optionee shall not be entitled to
receive any compensation or other amounts paid or payable pursuant to the Plan resulting from a
Change in Control which would, with respect to the Optionee, either separately or in the aggregate
with any other compensation or amounts paid or payable under any other agreement, plan or program
applicable to the Optionee, constitute an “excess parachute payment” for purposes of Section 280G
of the Code. In the event any such compensation, either separately or in the aggregate with any
such other amounts resulting from a Change in Control would, with respect to the Optionee,
constitute such an “excess parachute payment,” the Optionee shall have the right to designate which
portion or components of such compensation or other amounts resulting from a Change in Control will
be reduced or eliminated so that the Optionee will not receive any such “excess parachute payment.”

        (h)    Transferability of Options. No Options shall be transferable by the Optionee, other than
by will or by the laws of descent and distribution. All Options may be exercised during the
Optionee’s lifetime only by the Optionee, or by his or her guardian

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or legal representative. Notwithstanding the preceding sentences of this Section 5(h), however,
the Option Committee may specify in an Option Agreement that pertains to a Nonqualified Option that
the Optionee may transfer the Nonqualified Option to a member of the Immediate Family (as
hereinafter defined) of the Optionee, to a trust solely for the benefit of the Optionee and the
Optionee’s Immediate Family or to a partnership or limited liability company whose only partners or
members are the Optionee and members of the Optionee’s Immediate Family. “Immediate Family” shall
mean, with respect to any Optionee, the Optionee’s child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, and shall include adoptive relationships.

        (i)    Method of Exercise. Any Option granted under the Plan may be exercised in whole or in
part by the Optionee by delivering to the Option Committee on any business day a written notice of
intent to exercise the Option with respect to a specified number of shares of Common Stock the
Optionee then desires to purchase (the “Notice”).

        (j)    Payment of Purchase Price. Payment for the shares of Common Stock purchased pursuant to
the exercise of an Option shall be made in any one of the following ways: (i) in cash or by check
in an amount equal to the aggregate option price for the number of shares specified in the Notice
(the “Total Option Price”); (ii) by actual or constructive transfer to the Company of
nonforfeitable, nonrestricted shares of Common Stock having a fair market value, determined as
provided in Section 5(d) hereof, equal to or less than the Total Option Price, plus cash or
certified check in an amount equal to the excess, if any, of the Total Option Price over the fair
market value of such shares of Common Stock; or (iii) by means of a “cashless exercise” procedure
permitted by law and acceptable to the Option Committee, whereby the Optionee shall deliver to the
Option Committee the Notice, together with an order to a registered broker-dealer or equivalent
third party to sell some or all of the Common Stock subject to the Option and to deliver enough of
the proceeds of such sale to the Company to pay the Total Option Price and any applicable taxes
required to be withheld upon the exercise of the Option.

6.    Restricted Stock

        (a)    Nature of Restricted Stock Awards. A Restricted Stock Award is an Award entitling the
recipient to acquire, at a purchase price determined by the Option Committee, shares of Common
Stock, subject to such restrictions and conditions as the Option Committee may determine at the
time of grant (“Restricted Stock”). Conditions may be based on continuing employment (or other
service relationship) with the Company or any of its subsidiaries and/or achievement of specified
future performance goals and objectives. The grant of a Restricted Stock Award is contingent on
the Grantee executing the Restricted Stock Award Agreement. The terms and conditions of each such
Agreement, including any applicable purchase price, shall be determined by the Stock Option
Committee, and such terms and conditions may differ among individual Awards and Grantees.

        (b)    Rights as a Stockholder. Upon execution of the Restricted Stock Award Agreement and
payment of any applicable purchase price, a Grantee shall have the rights of a stockholder with
respect to the voting of the Restricted Stock, subject to any conditions contained in the
Restricted Stock Award Agreement. Unless the Option Committee shall otherwise determine,
certificates evidencing the Restricted Stock shall not be issued to the Grantee until such
Restricted Stock is vested as provided in Section 6(d) below, and the Grantee shall be required, as
a condition of the grant, to deliver to the Company a stock power for the Restricted Stock,
endorsed in blank.

        (c)    Restrictions. Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of except as specifically provided herein or in the Restricted
Stock Award Agreement. If a Grantee’s employment (or other service relationship) with the Company
and its Subsidiaries terminates for any reason, or if other conditions specified in the Restricted
Stock Agreement are not satisfied within the time or times allowed therefore, the Company shall
have the right to repurchase from the Grantee or the Grantee’s legal representative at its original
purchase price specified in the Restricted Stock Agreement any such Restricted Stock that has not
yet vested.

        (d)    Vesting of Restricted Stock. The Option Committee at the time of grant shall specify the
date or dates and/or the pre-established performance goals, objectives and other conditions upon
the attainment or satisfaction of which the non-transferability of the Restricted Stock and the
Company’s right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other conditions, the
shares on which all restrictions have lapsed shall no longer be Restricted Stock and shall be
deemed “vested.” Except as may otherwise be provided by the Option Committee either in the
Restricted Stock Award Agreement or, subject to Section 11 below, in writing after the Award
Agreement is issued, a Grantee’s rights in any shares of Restricted Stock that have not vested
shall automatically terminate upon the Grantee’s termination of employment (or other service
relationship) with the Company and its Subsidiaries and such shares shall be subject to the
Company’s right of repurchase as provided in Section 6(c) above.

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7.    Adjustment Upon Changes in Capitalization

        (a)    If the shares of the Company’s Common Stock as a whole are increased, decreased, changed
into or exchanged for a different number or kind of shares or securities of the Company, whether
through merger, consolidation, reorganization, recapitalization, reclassification, stock dividend,
stock split, combination of shares, exchange of shares, change in corporate structure or the like,
an appropriate and proportionate adjustment shall be made in the number and kind of shares subject
to this Plan, and in the number, kind and per share exercise price of shares subject to unexercised
Options or Restricted Stock Awards or portions thereof granted under this Plan prior to any such
change. In any event of any such adjustment in an outstanding Option or Restricted Stock Award,
the Grantee thereafter shall have the right to purchase the number of shares under such Option or
Restricted Stock Award at the per share price, as so adjusted, which the Optionee could have
purchased at the total purchase price applicable to the Option or Restricted Stock Award
immediately prior to such adjustment.

        (b)    Adjustments under this Section 7 shall be determined by the Option Committee and such
determinations shall be conclusive. The Option Committee shall have discretion and power in any
such event to determine and to make effective provision for acceleration of the time or times at
which any Option or portion thereof shall become exercisable or any Restricted Stock shall vest.
No fractional shares of Common Stock shall be issued under this Plan on account of any adjustment
specified above.

8.    Effect of Certain Transactions

        Except as set forth below, in the case of (i) the dissolution or liquidation of the Company,
(ii) a reorganization, merger or consolidation in which the Company is acquired by another entity
or in which the Company is not the surviving corporation, or (iii) the sale of all or substantially
all of the assets of the Company to another corporation, this Plan and the Options issued hereunder
shall terminate on the effective date of such transaction, unless provision is made in connection
with such transaction for the assumption of Options theretofore granted under this Plan, or the
substitution for such Options of new options of the successor corporation or parent thereof, with
appropriate adjustment as to the number and kind of shares and the per share exercise price, as
provided in Section 7. Optionees shall be given at least 15 days prior written notice of such
termination. In the event of such termination, outstanding Options shall be exercisable in full
for at least fifteen days prior to the date of such termination whether or not otherwise
exercisable during such period.

9.    Forfeiture for Dishonesty or Other Cause

        Notwithstanding anything to the contrary in this Plan or in any Option or Restricted Stock
Award Agreement, if the Grantee’s employment or other service relationship with the Company or its
Subsidiaries is terminated by the Company or any Subsidiary for “cause” in accordance with the
provisions of any applicable employment or other written agreement or, in the absence of any such
agreement, if the Grantee is otherwise terminated by the Company or any Subsidiary for “cause” in
accordance with any applicable provisions of the by-laws of the Company or such Subsidiary, as the
case may be, or if the Company’s Board of Directors otherwise determines that the Grantee has
materially violated any other obligation or covenant to the Company or any Subsidiary that the
Grantee was required to fulfill or satisfy, then the Grantee shall forfeit all Options and rights
to shares of Restricted Stock that have been previously awarded to the Grantee under this Plan and
remain unexercised or restricted, if any, as of the date of such termination of the Grantee or such
determination by the Company’s Board of Directors as the case may be.

10.    Release of Financial Information

          A copy of the Company’s annual report to stockholders shall be delivered to each Grantee of an
Award hereunder at the time such report is distributed to the Company’s stockholders. Upon
request, the Company shall furnish to each Grantee a copy of its most recent annual report and each
quarterly report and current report filed with the SEC under the 1934 Act since the end of the
Company’s prior fiscal year.

11.    Amendment of the Plan

          The Board of Directors of the Company may amend this Plan at any time, and from time to time,
subject to any required regulatory approvals and to the limitation that, except as provided in
Sections 7 and 8 hereof, no amendment shall be effective unless approved by the stockholders of the
Company in accordance with applicable laws and regulations at an annual or special meeting held
within twelve months before or after the date of adoption of such amendment, where such amendment
will:

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        (a)    increase the number of shares of Restricted Stock which may be granted or of shares of
Common Stock as to which Options may be granted under this Plan;

        (b)    change in substance Section 4 hereof relating to eligibility to participate in this Plan;

        (c)    change the minimum Option price;

        (d)    increase the maximum term of Options provided herein; or

        (e)    otherwise materially increase the benefits accruing to participants under the Plan.

        Except as provided in Sections 7 and 8 hereof, rights and obligations under any Option or
Restricted Stock Award granted before any amendment of this Plan shall not be altered or impaired
by such amendment, except with the consent of the Grantee.

12.   Non-Exclusivity of this Plan

        Neither the adoption of this Plan by the Board of Directors of the Company nor the submission
of this Plan to the stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board of Directors to adopt such other incentive arrangements as it
may deem desirable, including, without limitation, the granting of stock options otherwise than
under this Plan, and such arrangement may be either applicable generally or only in specific cases.

13.   Government and Other Regulations; Governing Law

         (a)    The obligation of the Company to sell and deliver shares of Common Stock with respect to
Options and Restricted Stock Awards granted under this Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state securities laws, and the
obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate
by the Option Committee.

         (b)    This Plan shall be governed by Massachusetts law, except to the extent that such law is
preempted by federal law.

         (c)    This Plan is intended to comply with the applicable provisions of the regulations of the
SEC adopted under Section 16 of the 1934 Act. Any provision inconsistent with such provisions
shall be inoperative and shall not affect the validity of this Plan.

         (d)    It is the understanding of the Company’s Board of Directors that the Options and
Restricted Stock that may be granted under the Plan do not constitute a deferral of compensation
subject to Section 409A of the Code and the guidance promulgated by the United States Department of
the Treasury thereunder. In any event, however, if and to the extent that any provision contained
in this Plan or any related Option Agreement or Restricted Stock Award Agreement is inconsistent
with said Section 409A and such guidance, such provision shall be inoperative and shall not affect
the validity of this Plan or any such Option or Restricted Stock Award Agreement.

14.   Effective Date of Plan; Stockholder Approval

         This Plan shall become effective upon its adoption by the Board of Directors of the Company,
subject to the approval of the Company’s stockholders in accordance with applicable laws and
regulations at an annual or special meting held within twelve months of approval of this Plan by
the Board of Directors. No Options granted under this Plan prior to such stockholder approval may
be exercised and no Restricted Stock may be issued under this Plan until such approval has been
obtained. No Option or Restricted Stock Award may be granted under this Plan after the tenth
anniversary of the adoption of this Plan by the Board of Directors.

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