Document:

Exhibit 4.2

 

AMENDMENT NO. 1 TO SHAREHOLDER RIGHTS
AGREEMENT

 

1.                                       General Background and Appointment of Successor Rights
Agent.  In accordance with
Sections 21 and 27 of the Shareholder Rights Agreement between State Street
Bank and Trust Company (the “Rights Agent”) and Brooktrout, Inc., f/k/a
Brooktrout Technology, Inc. (“Brooktrout”),  dated
as of September 9, 1998 (the “Agreement”), the Rights Agent and Brooktrout
desire to (a) appoint EquiServe Trust Company, N.A. as the successor Rights
Agent and (b) make certain amendments to the Agreement as set forth below.

 

2.                                       Effective Date and Defined Terms.  This Amendment No. 1 to Rights
Agreement shall be effective as of March 1, 2002 (the “Amendment”) and all
defined terms and definitions in the Agreement shall have the same meanings in
the Amendment except as may otherwise be specifically set forth in the
Amendment.

 

3.                                       Amendment of the Agreement.   Section 21 of the Agreement (entitled
“Change of Rights Agent”) is hereby deleted in its entirety and replaced with
the following:

 

“Section 21.  Change of
Rights Agent.  The Rights Agent or
any successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty 30 days’ notice in writing mailed to the Company and
to each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail and to the holders of the Right Certificates by first class
mail.  The Company may remove the Rights
Agent or any successor Rights Agent (with or without cause), effective
immediately or on a specified date, by written notice given to the Rights Agent
or successor Rights Agent, as the case may be, and to each transfer agent of
the Common Stock or Preferred Stock by registered or certified mail and by
giving notice to the holders of the Right Certificates by any means reasonably
determined by the Company to inform such holders of such removal (including
without limitation, by including such information in one or more of the
Company’s reports to shareholders or reports or filings with the Securities and
Exchange Commission).If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent.  If the Company shall
fail to make such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit such
holder’s Right Certificate for inspection by the Company), then the incumbent
Rights Agent or the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation or trust
company organized and doing business under the laws of the United States or of
the Commonwealth of Massachusetts or the State of New York (or of any other state
of the United States so long as such corporation or trust company is authorized
to do business as a banking institution

 

 

in the
Commonwealth of Massachusetts or the State of New York), in good standing,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or
state authority and which has individually or combined with an affiliate at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $100,000,000.  After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose.  Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock or Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Right Certificates.  Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.”

 

4.                                       Except
as amended hereby, the Agreement and all exhibits thereto shall remain in full
force and effect.

 

IN
WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed in their names and on their behalf by and through
their duly authorized officers, as of this 1st day of March, 2002.

 

 

	
  Brooktrout, Inc.

  	
  State Street Bank and Trust Company

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Robert
  C. Leahy

  	
   

  	
  /s/ Margaret
  Prentice

  	
   

  
	
  By: Robert
  C. Leahy

  	
  By:  Margaret Prentice

  
	
  Title:  Vice President

  	
  Title:  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EquiServe Trust Company, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Margaret
  Prentice

  	
   

  
	
   

  	
  By:  Margaret Prentice

  
	
   

  	
  Title:  Managing Director

  
				

 

2Exhibit 10.5

 

BROOKTROUT, INC.

 

AMENDED AND RESTATED 1992 STOCK INCENTIVE
PLAN

 

SECTION 1.           General Purpose of the Plan;
Definitions.

 

The name of
the plan is the Brooktrout, Inc. Amended and Restated 1992 Stock Incentive Plan
(the “Plan”).  The purpose of the Plan
is to encourage and enable the officers, employees and Directors of Brooktrout,
Inc. (the “Company”) and its Subsidiaries upon whose judgment, initiative and
efforts the Company largely depends for the successful conduct of its business
to acquire a proprietary interest in the Company.  It is anticipated that providing such persons with a direct stake
in the Company’s welfare will assure a closer identification of their interests
with those of the Company, thereby stimulating their efforts on the Company’s
behalf and strengthening their desire to remain with the Company.

 

The following
terms shall be defined as set forth below:

 

“Act” means
the Securities Exchange Act of 1934, as amended.

 

“Award” or
“Awards”, except where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Qualified Stock Options,
Restricted Stock Awards, Unrestricted Stock Awards and Performance Share
Awards.

 

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

 

“Cause” means
and shall be limited to a vote of the Board of Directors resolving that the
participant should be dismissed as a result of (i) any material breach by the
participant of any agreement to which the participant and the Company are
parties, (ii) any act (other than retirement) or omission to act by the
participant which may have a material and adverse effect on the business of the
Company or any Subsidiary or on the participant’s ability to perform services
for the Company or any Subsidiary, including, without limitation, the
commission of any crime (other than ordinary traffic violations), or (iii) any
material misconduct or neglect of duties by the participant in connection with
the business or affairs of the Company or any Subsidiary.

 

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

 

“Committee”
means any Committee of the Board referred to in Section 2.

 

“Disability”
means disability as set forth in Section 22(e)(3) of the Code.

 

 “Effective Date” means the date on which the
Plan is approved by stockholders as set forth in Section 14.

 

“Eligible
Director” means any Director referred to in Section 5(c)(i).

 

1

 

 “Fair Market Value” on any given date means
the last reported sale price at which Stock is traded on such date or, if no
Stock is traded on such date, the most recent date on which Stock was traded,
as reflected on the NASDAQ National Market System or, if applicable, any other
national stock exchange on which the Stock is traded.

 

“Incentive
Stock Option” means any Stock Option designated and qualified as an “incentive
stock option” as defined in Section 422 of the Code.

 

“Non-Employee
Director” means a member of the Board who is not also an employee of the
Company or any Subsidiary.

 

 “Non-Qualified Stock Option” means any Stock
Option that is not an Incentive Stock Option.

 

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

 

“Performance
Share Award” means Awards granted pursuant to Section 8.

 

“Restricted
Stock Award” means Awards granted pursuant to Section 6.

 

“Stock” means
the Common Stock, $.01 par value per share, of the Company, subject to
adjustments pursuant to Section 3.

 

“Subsidiary”
means any corporation or other entity (other than the Company) in any unbroken
chain of corporations or other entities, beginning with the Company if each of
the corporations or entities (other than the last corporation or entity in the
unbroken chain) owns stock or other interests possessing 50% or more of the
total combined voting power of all classes of stock or other interests in one
of the other corporations or entities in the chain.

 

“Unrestricted
Stock Award” means Awards granted pursuant to Section 7.

 

SECTION 2.           Administration of Plan; Committee
Authority to Select Participants and Determine Awards.

 

(a)           Committee.  The Plan shall be administered by all of the
Non-Employee Director members of the Compensation Committee of the Board, or
any other committee of not less than two Non-Employee Directors performing
similar functions, as appointed by the Board from time to time (the
“Committee”).

 

(b)           Powers of Committee.  The Committee shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:

 

(i)            to select the
officers and other employees of the Company and its Subsidiaries to whom Awards
may from time to time be granted;

 

(ii)           to determine the
time or times of grant, and the extent, if any, of Incentive Stock Options,
Non-Qualified Stock Options, Restricted Stock, Unrestricted Stock and

2

 

Performance Shares, or any combination of the foregoing, granted to any
one or more participants;

 

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

 

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

 

(v)           to accelerate the
exercisability or vesting of all or any portion of any Option;

 

(vi)          subject to the
provisions of Section 5(a)(ii), to extend the period in which Stock Options may
be exercised;

 

(vii)         to determine
whether, to what extent, and under what circumstances Stock and other amounts
payable with respect to an Award shall be deferred either automatically or at
the election of the participant and whether and to what extent the Company
shall pay or credit amounts equal to interest (at rates determined by the
Committee) or dividends or deemed dividends on such deferrals; and

 

(viii)        to adopt, alter and
repeal such rules, guidelines and practices for administration of the Plan and
for its own acts and proceedings as it shall deem advisable; to interpret the
terms and provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in connection with
the Plan; and to otherwise supervise the administration of the Plan.

 

All decisions
and interpretations of the Committee shall be binding on all persons, including
the Company and Plan participants.

 

SECTION 3.           Shares Issuable under the Plan;
Mergers; Substitution.

 

(a)           Shares Issuable.  The maximum number of shares of Stock
reserved and available for issuance under the Plan shall be four million two
hundred seventy-five thousand (4,275,000). 
For purposes of this limitation, the shares of Stock underlying any
Awards which are forfeited, canceled, reacquired by the Company, satisfied
without the issuance of Stock or otherwise terminated (other than by exercise)
shall be added back to the shares of Stock available for issuance under the
Plan so long as the participants to whom such Awards had been previously
granted received no benefits of ownership of the underlying shares of Stock to
which the Award related.  Subject to
such overall limitation, shares may be issued up to such maximum number
pursuant to any type or types of Award, including Incentive Stock Options.  Shares issued under the Plan may be
authorized but unissued shares or shares reacquired by the Company.

 

(b)           Stock Dividends, Mergers, etc.  In the event of a stock dividend, stock
split or similar change in capitalization affecting the Stock, the Committee
shall make appropriate adjustments in (i) the number and kind of shares of
stock or securities on which Awards may

 

3

 

thereafter be granted, (ii) the
number and kind of shares remaining subject to outstanding Awards, and (iii)
the option or purchase price in respect of such shares.  In the event of any merger, consolidation,
dissolution or liquidation of the Company, the Committee in its sole discretion
may, as to any outstanding Awards, make such substitution or adjustment in the
aggregate number of shares reserved for issuance under the Plan and in the number
and purchase price (if any) of shares subject to such Awards as it may
determine and as may be permitted by the terms of such transaction, or
accelerate, amend or terminate such Awards upon such terms and conditions as it
shall provide (which, in the case of the termination of the vested portion of
any Award, shall require payment or other consideration which the Committee
deems equitable in the circumstances).

 

(c)           Substitute Awards.  The Committee may grant Awards under the
Plan in substitution for stock and stock-based awards held by employees of
another corporation who concurrently become employees of the Company or a
Subsidiary as the result of a merger or consolidation of the employing
corporation with the Company or a Subsidiary or the acquisition by the Company
or a Subsidiary of property or stock of the employing corporation.  The Committee may direct that the substitute
awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.  Any
substitute Award granted under the Plan shall not count against the share
limitation set forth in Section 3(a).

 

SECTION 4.           Eligibility.

 

Participants
in the Plan will be such full or part-time officers and other employees of the
Company and its Subsidiaries who are responsible for or contribute to the
management, growth or profitability of the Company and its Subsidiaries and who
are selected from time to time by the Committee, in its sole discretion.  Non-Employee Directors are also eligible to
participate in the Plan but only to the extent provided in Section 5(c) and
Section 7 below.

 

SECTION 5.           Stock Options.

 

Any Stock
Option granted under the Plan shall be in such form as the Committee may from
time to time approve.

 

Stock Options
granted under the Plan may be either Incentive Stock Options or Non-Qualified
Stock Options.  To the extent that any
option does not qualify as an Incentive Stock Option, it shall constitute a
Non-Qualified Stock Option.

 

No Incentive
Stock Option shall be granted under the Plan after August 17, 2002.

 

(a)           Stock Options Granted to Employees.  The Committee in its discretion may grant
Stock Options to employees of the Company or any Subsidiary.  Stock Options granted to employees pursuant
to this Section 5(a) shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:

 

(i)            Exercise Price.  The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5(a) shall be
determined by the Committee at the time of grant but shall be, in the case of
Incentive Stock Options, not less than

 

4

 

100% of Fair
Market Value on the date of grant and, in the case of Non-Qualified Stock
Options, not less than 85% of Fair Market Value on the date of grant.  If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation and an Incentive Stock Option
is granted to such employee, the option price shall be not less than 110% of
Fair Market Value on the grant date.

 

(ii)           Option Term.  The term of each Stock Option shall be fixed
by the Committee, but no Incentive Stock Option shall be exercisable more than
ten years after the date the option is granted.  If an employee owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any Subsidiary or parent
corporation and an Incentive Stock Option is granted to such employee, the term
of such option shall be no more than five years from the date of grant.

 

(iii)          Exercisability;
Rights of a Stockholder.  Stock
Options shall become vested and exercisable at such time or times, whether or
not in installments, as shall be determined by the Committee at or after the
grant date.  The Committee may at any
time accelerate the exercisability of all or any portion of any Stock
Option.  An optionee shall have the
rights of a stockholder only as to shares acquired upon the exercise of a Stock
Option and not as to unexercised Stock Options.

 

(iv)          Method of
Exercise.  Stock Options may be
exercised in whole or in part, by giving written notice of exercise to the
Company, specifying the number of shares to be purchased.  Payment of the purchase price may be made by
one or more of the following methods:

 

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

 

(B)           Through the delivery
(or attestation of ownership) of shares of Stock that have been purchased by
the optionee on the open market or that have been beneficially owned by the
optionee for at least six months and are not then subject to restrictions under
any Company plan.  Such surrendered
shares shall be valued at Fair Market Value on the exercise date;

 

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

 

(D)          By the optionee
delivering to the Company a promissory note if the Board has expressly
authorized the loan of funds to the optionee for the purpose of enabling or
assisting the optionee to effect the exercise of his Stock

 

5

 

Option;
provided that at least so much of the exercise price as represents the par
value of the Stock shall be paid other than with a promissory note.

 

Payment
instruments will be received subject to limitation.  The delivery of certificates representing shares of Stock to be
purchased pursuant to the exercise of a Stock Option shall be contingent upon
receipt from the Optionee (or a purchaser acting in his stead in accordance
with the provisions of the Stock Option) by the Company of the full purchase
price for such shares and the fulfillment of any other requirements contained
in the Stock Option or applicable provisions of law.  In the event the optionee chooses to pay the purchase price by
previously owned shares of Stock through the attestation method, the number of
shares of Stock transferred to the optionee upon the exercise of the Stock
Option shall be net of the number of shares attested to.

 

(v)           Non-transferability
of Options.  No Stock Option shall
be transferable by the optionee otherwise than by will or by the laws of
descent and distribution and all Stock Options shall be exercisable, during the
optionee’s lifetime, only by the optionee, or by the optionee’s legal
representative or guardian in the event of the optionee’s incapacity.  Notwithstanding the foregoing, the
Committee, in its sole discretion, may provide in the Award agreement regarding
a given Option that the optionee may transfer his Non-Qualified Stock Options
to members of his immediate family, to trusts for the benefit of such family
members, or to partnerships in which such family members are the only partners,
provided that the transferee agrees in writing with the Company to be bound by
all of the terms and conditions of this Plan and the applicable Option.

 

(vi)          Termination by
Death.  If any optionee’s employment
by the Company and its Subsidiaries terminates by reason of death, the Stock
Option may thereafter be exercised, to the extent exercisable at the date of
death, by the legal representative or legatee of the optionee, for a period of
180 days (or such longer period as the Committee shall specify at any time)
from the date of death, or until the expiration of the stated term of the
Option, if earlier.

 

(vii)         Termination by
Reason of Disability.

 

(A)          Any Stock Option held
by an optionee whose employment by the Company and its Subsidiaries has
terminated by reason of Disability may thereafter be exercised, to the extent
it was exercisable at the time of such termination, for a period of twelve
months (or such longer period as the Committee shall specify at any time) from
the date of such termination of employment, or until the expiration of the
stated term of the Option, if earlier.

 

(B)           The Committee shall
have sole authority and discretion to determine whether a participant’s
employment has been terminated by reason of Disability.

 

(C)           Except as otherwise
provided by the Committee at the time of grant, the death of an optionee during
a period provided in this Section 5(a)(vii) for the exercise of a Non-Qualified
Stock Option, shall extend such period for 180 days from the date of death,
subject to termination on the expiration of the stated term of the Option, if
earlier.

 

6

 

(viii)        Termination for
Cause.  If any optionee’s employment
by the Company and its Subsidiaries has been terminated for Cause, any Stock
Option held by such optionee shall immediately terminate and be of no further
force and effect; provided, however, that the Committee may, in its sole discretion,
provide that such stock option can be exercised for a period of up to 30 days
from the date of termination of employment or until the expiration of the
stated term of the Option, if earlier.

 

(ix)           Other
Termination.  Unless otherwise
determined by the Committee, if an optionee’s employment by the Company and its
Subsidiaries terminates for any reason other than death, Disability, or for
Cause, any Stock Option held by such optionee may thereafter be exercised, to
the extent it was exercisable on the date of termination of employment, for
three months (or such longer period as the Committee shall specify at any time)
from the date of termination of employment or until the expiration of the
stated term of the Option, if earlier.

 

(x)            Annual Limit on
Incentive Stock Options.  To the
extent required for “incentive stock option” treatment under Section 422 of the
Code, the aggregate Fair Market Value (determined as of the time of grant) of
the Stock with respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its Subsidiaries become exercisable for
the first time by an optionee during any calendar year shall not exceed
$100,000.

 

(xi)           Form of
Settlement.  Shares of Stock issued
upon exercise of a Stock Option shall be free of all restrictions under the
Plan, except as otherwise provided in this Plan.

 

(b)           Reload Options.  At the discretion of the Committee, Options
granted under this Section 5(a) may include a so-called “reload” feature
pursuant to which an optionee exercising an option by the delivery of a number
of shares of Stock in accordance with Section 5(a)(iv)(B) hereof would
automatically be granted an additional Option (with an exercise price equal to
the Fair Market Value of the Stock on the date the additional Option is granted
and with the same expiration date as the original Option being exercised, and
with such other terms as the Committee may provide) to purchase that number of
shares of Stock equal to the number delivered to exercise the original Option.

 

(c)           Stock Options Granted to
Non-Employee Directors.

 

(i)            Grant of Options.  The Administrator, in its discretion, may
grant Non-Qualified Stock Options to non-employee directors who are not
stockholders, or affiliates of a stockholder with beneficial ownership of 10%
or more of the Company’s outstanding Stock (each, an “Eligible Director”).  Any such grant may vary among individual
Eligible Directors.

 

(ii)           Exercise;
Termination; Non-transferability.

 

(A)          Unless otherwise
determined by the Administrator, an Option granted under Section 5(c) shall be
exercisable in full as of the grant date. An

 

7

 

Option issued
under this Section 5(c) shall not be exercisable after the expiration of ten
years from the date of grant.

 

(B)           Options granted
under this Section 5(c) may be exercised only by written notice to the Company
specifying the number of shares to be purchased.  Payment of the full purchase price of the shares to be purchased
may be made by one or more of the methods specified in Section 5(a)(iv).  An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of a Stock Option and
not as to unexercised Stock Options.

 

(C)           No Options granted
under this Section 5(c) shall be transferable by the optionee otherwise than by
will or by the laws of descent and distribution, and such Options shall be
exercisable, during the optionee’s lifetime only by the optionee.  Any Option granted to an Eligible Director
and outstanding on the date of his death may be exercised by the legal
representative or legatee of the optionee for a period of 180 days from the
date of death or until the expiration of the stated term of the option, if
earlier.

 

SECTION 6.           Restricted Stock Awards.

 

(a)           Nature of Restricted Stock Award.  The Committee may grant Restricted Stock
Awards to any employees of the Company or any Subsidiary.  A Restricted Stock Award is an Award
entitling the recipient to acquire, at no cost or for a purchase price
determined by the Committee, shares of Stock subject to such restrictions and
conditions as the Committee may determine at the time of grant (“Restricted
Stock”).  Conditions may be based on
continuing employment and/or achievement of pre-established performance goals and
objectives.  In addition, a Restricted
Stock Award may be granted to an employee by the Committee in lieu of a cash
bonus due to such employee pursuant to any other plan of the Company.

 

(b)           Acceptance of Award.  A participant who is granted a Restricted
Stock Award shall have no rights with respect to such Award unless the
participant shall have accepted the Award within 60 days (or such shorter date
as the Committee may specify) following the award date by making payment to the
Company, if required, by certified or bank check or other instrument or form of
payment acceptable to the Committee in an amount equal to the specified
purchase price, if any, of the shares covered by the Award and by executing and
delivering to the Company a written instrument that sets forth the terms and
conditions of the Restricted Stock in such form as the Committee shall
determine.

 

(c)           Rights as a Stockholder.  Upon complying with Section 6(b) above, a
participant shall have all the rights of a stockholder with respect to the
Restricted Stock including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase or forfeiture rights
described in this Section 6 and subject to such other conditions contained
in the written instrument evidencing the Restricted Stock Award.  Unless the Committee shall otherwise
determine, certificates evidencing shares of Restricted Stock shall remain in
the possession of the Company until such shares are vested as provided in
Section 6(e) below.

 

8

 

(d)           Restrictions.  Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein.  In the
event of termination of employment by the Company and its Subsidiaries for any
reason (including death, Disability, and for Cause), the Company shall have the
right, at the discretion of the Committee, to repurchase shares of Restricted
Stock with respect to which conditions have not lapsed at their purchase price,
or to require forfeiture of such shares to the Company if acquired at no cost,
from the participant or the participant’s legal representative.  The Company must exercise such right of
repurchase or forfeiture not later than the 90th day following such termination
of employment (unless otherwise specified in the written instrument evidencing
the Restricted Stock Award).

 

(e)           Vesting of Restricted Stock.  The Committee at the time of grant shall
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the non-transferability of the
Restricted Stock and the Company’s right of repurchase or forfeiture shall
lapse.  Subsequent to such date or dates
and/or the attainment of such pre-established performance goals, objectives and
other conditions, the shares on which all restrictions have lapsed shall no
longer be Restricted Stock and shall be deemed “vested.”

 

(f)            Waiver, Deferral and Reinvestment
of Dividends.  The written instrument
evidencing the Restricted Stock Award may require or permit the immediate
payment, waiver, deferral or investment of dividends paid on the Restricted
Stock.

 

SECTION 7.           Unrestricted Stock Awards.

 

(a)           Grant or Sale of Unrestricted
Stock.  The Committee may, in its
sole discretion, grant (or sell at a purchase price determined by the
Committee) to any employees of the Company or any Subsidiary shares of Stock
free of any restrictions under the Plan (“Unrestricted Stock”).  Shares of Unrestricted Stock may be granted
or sold as described in the preceding sentence in respect of past services or
other valid consideration, or in lieu of any cash compensation due to such
employee.

 

(b)           Elections to Receive Unrestricted
Stock In Lieu of Compensation.  Upon
the request of an employee and with the consent of the Committee, each employee
may, pursuant to an irrevocable written election delivered to the Company no
later than the date or dates specified by the Committee, receive a portion of
the cash compensation otherwise due to him in Unrestricted Stock (valued at
Fair Market Value on the date or dates the cash compensation would otherwise be
paid).  Such Unrestricted Stock may be
paid to the employee at the same time as the cash compensation would otherwise be
paid, or at a later time, as specified by the employee in the written election.

 

(c)           Elections to Receive Unrestricted
Stock in Lieu of Directors’ Fees. 
Each Non-Employee Director may, pursuant to an irrevocable written
election delivered to the Company no later than six months prior to the date
the directors’ fees would otherwise be paid, receive all or a portion of such
fees in Unrestricted Stock (valued at Fair Market Value on the date or dates
the directors’ fees would otherwise be paid). 
Such Unrestricted Stock may be paid to the Non-Employee Director at the
same time the directors’ fees would otherwise have been paid, or at a later
time, as specified by the Non-Employee Director in the written election.

 

9

 

(d)           Restrictions on Transfers.  The right to receive Unrestricted Stock may
not be sold, assigned, transferred, pledged or otherwise encumbered, other than
by will or the laws of descent and distribution.

 

SECTION 8.           Performance Share Awards.

 

(a)           Nature of Performance Shares.  A Performance Share Award is an award
entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals.  The
Committee may make Performance Share Awards independently of or in connection with
the granting of any other Award under the Plan.  Performance Share Awards may be granted under the Plan to any
employees of the Company or any Subsidiary, including those who qualify for
awards under other performance plans of the Company.  The Committee in its sole discretion shall determine whether and
to whom Performance Share Awards shall be made, the performance goals
applicable under each such Award, the periods during which performance is to be
measured, and all other limitations and conditions applicable to the awarded
Performance Shares; provided, however, that the Committee may rely on the
performance goals and other standards applicable to other performance unit
plans of the Company in setting the standards for Performance Share Awards under
the Plan.

 

(b)           Restrictions on Transfer.  Performance Share Awards and all rights with
respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.

 

(c)           Rights as a Stockholder.  A participant receiving a Performance Share
Award shall have the rights of a stockholder only as to shares actually
received by the participant under the Plan and not with respect to shares
subject to the Award but not actually received by the participant.  A participant shall be entitled to receive a
stock certificate evidencing the acquisition of shares of Stock under a
Performance Share Award only upon satisfaction of all conditions specified in
the written instrument evidencing the Performance Share Award (or in a
performance plan adopted by the Committee).

 

(d)           Termination.  Except as may otherwise be provided by the
Committee at any time prior to termination of employment, a participant’s
rights in all Performance Share Awards shall automatically terminate upon the
participant’s termination of employment by the Company and its Subsidiaries for
any reason (including death, Disability and for Cause).

 

(e)           Acceleration, Waiver, Etc.  At any time prior to the participant’s
termination of employment by the Company and its Subsidiaries, the Committee
may in its sole discretion accelerate, waive or, subject to Section 11,
amend any or all of the goals, restrictions or conditions imposed under any
Performance Share Award.

 

SECTION 9.           Tax Withholding.

 

(a)           Payment by Participant.  Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other amounts
received thereunder first becomes includable in the gross income of the
participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of any Federal,
state, or local taxes of any kind required by law to be withheld with respect
to such

 

10

 

income.  The Company and its Subsidiaries shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.

 

(b)           Payment in Shares.  A participant may elect to have the minimum
tax withholding obligation satisfied, in whole or in part, by (i) authorizing
the Company to withhold from shares of Stock to be issued pursuant to any Award
a number of shares with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the withholding amount due, or (ii)
transferring to the Company shares of Stock owned by the participant with an
aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the minimum withholding amount due.

 

SECTION 10.         Transfer, Leave of Absence, Etc.

 

For purposes
of the Plan, the following events shall not be deemed a termination of
employment:

 

(a)           a transfer to the employment of the
Company from a Subsidiary or from the Company to a Subsidiary, or from one
Subsidiary to another; or

 

(b)           an approved leave of absence for
military service or sickness, or for any other purpose approved by the Company,
if the employee’s right to re-employment is guaranteed either by a statute or
by contract or under the policy pursuant to which the leave of absence was
granted or if the Committee otherwise so provides in writing.

 

SECTION 11.         Amendments and Termination.

 

The Board may
at any time amend or discontinue the Plan and the Committee may at any time
amend or cancel any outstanding Award (or provide substitute Awards at the same
or reduced exercise or purchase price or with no exercise or purchase price,
but such price, if any, must satisfy the requirements which would apply to the
substitute or amended Award if it were then initially granted under this Plan)
for the purpose of satisfying changes in law or for any other lawful purpose,
but no such action shall adversely affect rights under any outstanding Award
without the holder’s consent.

 

SECTION 12.         Status of Plan.

 

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

 

 

11

 

SECTION 13.         General Provisions.

 

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

 

No shares of
Stock shall be issued pursuant to an Award until all applicable securities law
and other legal and stock exchange requirements have been satisfied.  The Committee may require the placing of
such stop orders and restrictive legends on certificates for Stock and Awards
as it deems appropriate.

 

(b)           Delivery of Stock Certificates.  Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant’s last known address on file with the Company.

 

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

 

(d)           Payment by Promissory Note.  Any payment to be made by a participant in
the Plan to the Company for any reason under the Plan may be satisfied by the
delivery by such participant to the Company of a promissory note if the Board
has expressly authorized the loan of funds to the participant for such purpose;
provided that to the extent any such payment represents the par value of Stock,
such amount shall be paid other than with a promissory note.

 

SECTION 14.         Effective Date of Plan.

 

The Plan shall
become effective upon approval by the holders of a majority of the shares of
capital stock of the Company present or represented and entitled to vote at a
meeting of stockholders.  Subject to
such approval by the stockholders, and to the requirement that no Stock may be
issued hereunder prior to such approval, Stock Options and other Awards may be
granted hereunder on and after adoption of the Plan by the Board.

 

SECTION 15.         Governing Law.

 

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

 

12

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