Document:

Exhibit 10.10

 

CONSTRUCTION
LOAN AGREEMENT

 

between

 

ONEBEACON
INSURANCE COMPANY

 

and

 

CITIZENS
BANK OF MASSACHUSETTS

 

December
16, 2005

 

 

Table
of Contents

 

	
  1.     DEFINITIONS
  AND RULES OF INTERPRETATION

  	
  6

  
	
  1.1 

  	
  Definitions

  	
  6

  
	
  1.2 

  	
  Rules of Interpretation

  	
  12

  
	
   

  	
   

  	
   

  
	
  2.     AGREEMENT
  TO MAKE ADVANCES: LIMITATIONS

  	
  13

  
	
  2.1 

  	
  Agreement to Make Advances

  	
  13

  
	
  2.2 

  	
  Project Budget

  	
  13

  
	
  2.3 

  	
  Amount of Advances

  	
  13

  
	
  2 4 

  	
  Quality of Work

  	
  13

  
	
  2.5 

  	
  Cost Overruns and Savings

  	
  13

  
	
  2.6 

  	
  Contingency Reserve

  	
  13

  
	
  2.7 

  	
  Stored Materials

  	
  13

  
	
   

  	
   

  	
   

  
	
  3.     MAKING
  THE ADVANCES

  	
  14

  
	
  3.1 

  	
  Draw Request

  	
  14

  
	
  3.2 

  	
  Notice and Frequency of Advances

  	
  15

  
	
  3.3 

  	
  Deposit of Funds Advanced

  	
  15

  
	
  3.4 

  	
  Advances to Contractor; to Others

  	
  15

  
	
  3.5 

  	
  Advances Do Not Constitute a Waiver

  	
  16

  
	
  3.6 

  	
  Right to Retain the Construction Inspector

  	
  16

  
	
   

  	
   

  	
   

  
	
  4.     THE
  NOTE, INTEREST RATE OPTIONS, REPAYMENT OF LOAN

  	
  16

  
	
  4.1 

  	
  The Note

  	
  17

  
	
  4.2 

  	
  The Record

  	
  17

  
	
  4.3 

  	
  Interest on the Loan

  	
  17

  
	
  4.4 

  	
  Default Interest/Late Charge

  	
  17

  
	
  4.5 

  	
  Prepayment

  	
  17

  
	
  4.6 

  	
  Maturity

  	
  18

  
	
   

  	
   

  	
   

  
	
  5.     COMMITMENT
  FEE: PAYMENTS AND COMPUTATIONS

  	
  18

  
	
  5.1 

  	
  Commitment and Appraisal Fees

  	
  18

  
	
  5.2 

  	
  Payments

  	
  18

  
	
  5.5 

  	
  Charges Against Loan Checking Account

  	
  18

  
	
   

  	
   

  	
   

  
	
  6. 

  	
  COLLATERAL SECURITY AND GUARANTY

  	
  18

  
	
   

  	
   

  	
   

  
	
  7.     REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  	
  18

  
	
  7.1 

  	
  Organization; Authority, Etc.

  	
  18

  
	
  (a) 

  	
  Organization; Good Standing

  	
  18

  
	
  (b) 

  	
  Authorization

  	
  19

  
	
  (c) 

  	
  Enforceability

  	
  19

  
	
  7.2 

  	
  Title to Assets

  	
  19

  
	
  7.3 

  	
  No Material Changes, Etc.

  	
  19

  
	
  7.4 

  	
  Franchises, Patents, Copyrights, Etc.

  	
  19

  
	
  7.5 

  	
  Litigation

  	
  19

  
	
  7.6 

  	
  No Materially Adverse Contracts, Etc.

  	
  20

  
	
  7.7 

  	
  Compliance With Other Instruments, Laws, Etc.

  	
  20

  
	
  7.8 

  	
  Tax Status

  	
  20

  
	
  7.9 

  	
  Setoff Etc.

  	
  20

  
	
  7.10 

  	
  Availability of Utilities

  	
  20

  

 

2

 

	
  7.11 

  	
  Access

  	
  20

  
	
  7.12 

  	
  Condition of Project

  	
  21

  
	
  7.13 

  	
  Compliance with Requirements

  	
  21

  
	
  7.14 

  	
  Violations

  	
  21

  
	
  7.15 

  	
  Project Budget

  	
  21

  
	
  7.16 

  	
  Effect of Draw Request

  	
  21

  
	
   

  	
   

  
	
  8.         AFFIRMATIVE
  COVENANTS OF THE BORROWER

  	
  21

  
	
  8.1 

  	
  Punctual Payment

  	
  21

  
	
  8.2 

  	
  Commencement, Pursuit and Completion of Construction

  	
  21

  
	
  8.3 

  	
  Correction of Defects

  	
  22

  
	
  8.4 

  	
  Records and Accounts

  	
  22

  
	
  8.5 

  	
  Financial Statements, Certificates and Information

  	
  22

  
	
  8.6 

  	
  Insurance; Bonds

  	
  22

  
	
  8.7 

  	
  Liens and Other Charges

  	
  22

  
	
  8.8 

  	
  Inspection of Project and Books, Appraisals

  	
  22

  
	
  8.9 

  	
  Compliance with Laws Contracts. Licenses and Permits

  	
  23

  
	
  8.10 

  	
  Use of Proceeds

  	
  23

  
	
  8.11 

  	
  Project Costs

  	
  23

  
	
  8.12 

  	
  Cash Equity and Insufficiency of Loan Proceeds

  	
  24

  
	
  8.13 

  	
  Laborers, Subcontractors and Materialmen

  	
  24

  
	
  8.14 

  	
  Publicity

  	
  24

  
	
  8.15 

  	
  Sign Regarding Construction Financing

  	
  24

  
	
  8.15 

  	
  Further Assurances

  	
  24

  
	
  (a)    Regarding
  Construction

  	
  24

  
	
  (b)    Regarding
  Preservation of Collateral

  	
  24

  
	
  (c)    Regarding
  this Agreement

  	
  24

  
	
  8.17 

  	
  Notices

  	
  24

  
	
  8.18 

  	
  Other Affirmative Covenants

  	
  25

  
	
  8.19 

  	
  Financial Covenants

  	
  25

  
	
  (a)    Loan to
  Value

  	
  25

  
	
  (b)    Minimum
  Statutory Capital & Surplus

  	
  25

  
	
  (c)    Total
  Debt to Statutory Capital & Surplus

  	
  26

  
	
   

  	
   

  	
   

  
	
  9.         NEGATIVE
  COVENANTS OF THE BORROWER

  	
  26

  
	
  9.1 

  	
  Restrictions on Change Order

  	
  26

  
	
  9.2 

  	
  Restrictions on Easements, Covenants and
  Restrictions

  	
  27

  
	
  9.3 

  	
  No Amendments, Terminations or Waivers

  	
  27

  
	
  9.4 

  	
  Restrictions on Liens, Etc.

  	
  27

  
	
  9.5 

  	
  Disposition of Project

  	
  28

  
	
  9.6 

  	
  Financial Covenants

  	
  28

  
	
  9.7 

  	
  Other Negative Covenants

  	
  28

  
	
   

  	
   

  	
   

  
	
  10.       CONDITIONS
  TO CLOSING AND INITIAL ADVANCE

  	
  28

  
	
  10.1 

  	
  Loan Documents

  	
  28

  
	
  10.2 

  	
  Construction Documents

  	
  28

  
	
  10.3 

  	
  Certified Copies of Organization Documents

  	
  28

  
	
  10.4 

  	
  Resolutions

  	
  28

  
	
  10.5 

  	
  Incumbency Certificate: Authorized Signers

  	
  29

  
	
  10.6 

  	
  Validity of Liens

  	
  29

  
	
  10.7 

  	
  Deliveries

  	
  29

  
	
  (a)    Title Commitment

  	
  29

  
	
  (b)    Insurance

  	
  29

  
	
  (c)    Evidence
  of Sufficiency of Funds

  	
  29

  
	
  (d)    Evidence
  of Access, Availability of Utilities, Project Approvals

  	
  29

  

 

3

 

	
  (e)    Environmental Report

  	
  30

  
	
  (f)    Survey
  and Taxes

  	
  30

  
	
  (g)    First
  Draw Request

  	
  30

  
	
  10.8

  	
  Legal and Other Opinions

  	
  30

  
	
  10.9

  	
  Lien Search

  	
  30

  
	
  10.10

  	
  Mechanic’s Lien Law

  	
  30

  
	
  (a) Initial Advance

  	
  30

  
	
  10.11

  	
  Appraisal

  	
  30

  
	
  10.12

  	
  Commitment and Appraisal Fees

  	
  30

  
	
  10.13

  	
  Performance; No Default

  	
  30

  
	
  10.14

  	
  Representations and Warranties

  	
  31

  
	
  10.15

  	
  Proceedings and Documents

  	
  31

  
	
  10.16

  	
  Waiver

  	
  31

  
	
   

  	
   

  
	
  11.       CONDITIONS
  OF SUBSEOUENT ADVANCES

  	
  31

  
	
  11.1

  	
  Prior Conditions Satisfied

  	
  31

  
	
  11.2

  	
  Performance, No Default

  	
  31

  
	
  11.3

  	
  Representations and Warranties

  	
  31

  
	
  11.4

  	
  No Damage

  	
  31

  
	
  11.5

  	
  Receipt of the Lender

  	
  31

  
	
  (a)    Draw Request

  	
  31

  
	
  (b)    Endorsement
  to Title Policy

  	
  31

  
	
  (c)    Construction Contract

  	
  32

  
	
  (d)    Plans and Specifications

  	
  32

  
	
  (e)    Approval by Construction Inspector

  	
  32

  
	
  (f)    Contracts

  	
  32

  
	
  (g)    Approval

  	
  32

  
	
  (h)    Project Budget

  	
  32

  
	
  11.6

  	
  Release of Retainage

  	
  32

  
	
  (a)    Project Approvals

  	
  33

  
	
  (b)    Approval by Construction Inspector

  	
  33

  
	
  (c)    Contractor’s
  and Engineer’s Certificates of Substantial Completion

  	
  33

  
	
  (e)    Payment of Costs

  	
  33

  
	
  (f)    Final
  Lien Waivers

  	
  33

  
	
  (g)    Mechanic’s Lien Law

  	
  33

  
	
  (h)    Consent
  by Surety

  	
  33

  
	
  (i)    Warranties

  	
  33

  
	
  (j)    Insurance

  	
  33

  
	
  11.7

  	
  Waiver

  	
  33

  
	
   

  	
   

  
	
  12.       EVENTS
  OF DEFAULT AND REMEDIES

  	
  34

  
	
  12.1

  	
  Events of Default

  	
  34

  
	
  12.2

  	
  Termination of Advances and Acceleration

  	
  35

  
	
  12.3

  	
  Completion of Project

  	
  35

  
	
  12.4

  	
  Other Remedies

  	
  36

  
	
  12.5

  	
  Distribution of Collateral Proceeds

  	
  37

  
	
  12.6

  	
  Power of Attorney

  	
  37

  
	
  12.7

  	
  Waivers

  	
  37

  
	
   

  	
   

  
	
  13.       EXPENSES

  	
  38

  
	
   

  	
   

  
	
  14.       INDEMNIFICATION

  	
  38

  
	
   

  	
   

  
	
  15.       LIABILITY
  OF THE LENDER

  	
  39

  

 

4

 

	
  16.       RIGHTS
  OF THIRD PARTIES

  	
  39

  
	
   

  	
   

  
	
  17.       SURVIVAL
  OF COVENANTS, ETC.

  	
  40

  
	
   

  	
   

  
	
  18.       ASSIGNMENT
  AND PARTICIPATION

  	
  40

  
	
  18.1

  	
  No Assignment by the Borrower

  	
  40

  
	
   

  	
   

  
	
  19.       RELATIONSHIP

  	
  40

  
	
   

  	
   

  
	
  20.       NOTICES

  	
  40

  
	
   

  	
   

  
	
  21.       GOVERNING
  LAW

  	
  41

  
	
   

  	
   

  
	
  22.       CONSENT
  TO JURISDICTION: WAIVERS

  	
  41

  
	
   

  	
   

  
	
  23.       HEADINGS

  	
  41

  
	
   

  	
   

  
	
  24.       COUNTERPARTS

  	
  42

  
	
   

  	
   

  
	
  25.       ENTIRE
  AGREEMENT, ETC.

  	
  42

  
	
   

  	
   

  
	
  26.       CONSENTS,
  AMENDMENTS, WAIVERS, ETC.

  	
  42

  
	
   

  	
   

  
	
  27.       TIME
  OF THE ESSENCE

  	
  42

  
	
   

  	
   

  
	
  28.       SEVERABILITY

  	
  42

  
	
   

  	
   

  
	
  29.       LENDER
  RESPONSE/LENDER DELAY

  	
  42

  
			

 

5

 

CONSTRUCTION LOAN AGREEMENT

 

This CONSTRUCTION
LOAN AGREEMENT is made as of the 16th day of December, 2005, by and
among ONEBEACON INSURANCE COMPANY, a Pennsylvania Corporation, having a
principal place of business at One Beacon Street, Boston, Massachusetts 02108 (the
“Borrower”) and CITIZENS BANK OF MASSACHUSETTS having its principal offices at
28 State Street, Boston, Massachusetts 02109 (the “Lender”).

 

1.         DEFINITIONS AND RULES OF INTERPRETATION.

 

1.1       Definitions. The following terms
as used in this Agreement, any Exhibit hereto, or in any other Loan Document
(unless otherwise defined therein) shall have the meanings set forth in this
§1.

 

Advance.
Any disbursement of proceeds of the Loan made or to be made by the Lender
pursuant to the terms of this Agreement.

 

Affiliate.
With reference to any Person, (i) any director or executive officer of that
Person, (ii) any other Person controlling, controlled by or under direct or
indirect common control of that Person, (iii) any other Person directly or
indirectly holding 10% or more of any class of the capital stock or other
equity interests (including options, warrants, convertible securities and
similar rights) of that Person and (iv) any other Person 10% or more of any
class of whose capital stock or other equity interests (including options,
warrants, convertible securities and similar rights) is held directly or
indirectly by that Person.

 

Agreement.
This Loan Agreement, including the Schedules and Exhibits hereto.

 

Appraisal.
An appraisal of the market value of the Project performed by a qualified
independent appraiser approved by the Lender from time to time.

 

Appraised Value.
The market value of the Project determined by the most recent Appraisal
obtained pursuant hereto, as such may be reviewed and adjusted by the Lender to
correct factual errors and/or faulty assumptions by the appaiser.

 

Balance Sheet Date.
June 30, 2005.

 

Borrower’s
Requisition. See §3.1

 

Business Day.
Business Day means:

 

(a)       any day which is neither a Saturday or
Sunday nor a legal holiday on which commercial banks are authorized or required
to be closed in Boston, Massachusetts;

 

(b)       when such term is used to describe a day
on which a borrowing, payment, prepaying, or repaying is to be made in respect
of any LIBOR Rate Loan, any day which is:

 

6

 

(i) neither a Saturday or
Sunday nor a legal holiday on which commercial banks are authorized or required
to be closed in New York City; and (ii) a London Banking Day; and

 

(c)       when such term is used to describe a day
on which an interest rate determination is to be made in respect of any LIBOR
Rate Loan, any day which is a London Banking Day.

 

Closing Date.
The first date on which all of the conditions set forth in §10 have been
satisfied in the Lender’s sole discretion reasonably exercised for the Initial
Advance.

 

Code.
The Internal Revenue Code of 1986 and the regulations thereunder, all as
amended and in effect from time to time.

 

Collateral.
As defined in the Security Deed.

 

Construction Contract. The contract to be made between the Borrower and the Contractor,
providing for the construction of the Improvements for the Project which shall
be on a fixed or maximum gross price basis.

 

Construction Inspector. The Construction Inspector to be appointed by the Lender. The
Construction Inspector shall be reasonably acceptable to the Borrower and
review quarterly requisitions on behalf of the Lender, and review all costs
associated with the Project. All reasonable inspection fees will be paid for by
the Borrower during the construction of the Improvements as part of the
quarterly requisition.

 

Contingency Reserve. The amount allocated as contingency reserve in the Project Budget, to
be advanced only in accordance with the provisions of §2.6 hereof.

 

Contractor. The
general contractor of the Construction Contract whose financial condition must
be approved by Lender, such approval not to be unreasonably withheld, delayed
or conditioned.

 

Default Rate.
See §4.5.

 

Direct Costs.
The costs of all Project Approvals, labor, materials, fixtures, machinery,
tools and equipment required to construct, equip and complete the Improvements
in accordance with the Plans and Specifications.

 

Disbursement Schedule. The schedule attached hereto as Exhibit D.

 

Drawdown Date.
The date on which any Advance is made or is to be made.

 

Draw Request.
With respect to each Advance, the Borrower’s Requisition for such Advance and
all other documents required by this Agreement to be furnished to the Lender as
a condition to such Advance.

 

7

 

Engineer. The
Borrower’s construction consultant is Peter Barber of NDC Development which
Lender has approved. Any change in the Borrower’s choice of Engineer shall be
subject to Lenders approval, such approval not to be unreasonably withheld,
delayed or conditioned.

 

Environmental
Indemnity. That certain Environmental Indemnity Agreement of
even date herewith.

 

Environmental Laws.
As specifically defined in the Security Deed and Environmental Indemnity.

 

Event of Default.
See §12.1.

 

Financing
Statements. Uniform Commercial Code Form 1 Financing
Statement(s) from the Borrower in favor of the Lender.

 

Governmental
Authority. The United States of America, the State in which
the Land is located, the city or town in which the Land is located, and any
political subdivision, agency, authority, department, commission, board,
bureau, or instrumentality of any of them.

 

Improvements.
The improvements to be made to the approximately 280,000 square foot office
building located at 150 Royall Street, Canton, MA pursuant to the plans and
specifications, and the pre-construction demolition to be undertaken with
respect thereto.

 

Indebtedness.
The following obligations that in accordance with statutory accounting
principles are classified on the Borrower’s balance sheet as liabilities
without duplication: (a) all debt for borrowed money (the “Debt”); (b) all
liabilities secured by any mortgage, pledge, security interest, lien, charge,
or other encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; (c) all
liabilities under capitalized leases; and (d) all guaranties, endorsements and
other contingent obligations whether direct or indirect in respect of indebtedness
of others, including the obligations to reimburse the issuer in respect of any
letters of credit, but excluding surplus notes.

 

Indemnity
Agreement. The Indemnity Agreement Regarding Hazardous
Materials, dated or to be dated on or prior to the Closing Date, made by the
Borrower in favor of the Lender.

 

Indirect Costs.
All title insurance premiums, survey charges, engineering fees, architectural
fees, legal fees, overhead and administrative costs, and all other expenses as
shown on the Project Budget which are expenditures relating to the Project and
are not Direct Costs.

 

Initial Advance.
See Section 3.1.

 

Key Contracts.
Any contract for the construction of Improvements or purchase of Personal
Property for the Project which has a face amount of $1 million or more.

 

Land.
The real property located in Canton, Norfolk County, Massachusetts, and
described in Exhibit A to the Security Deed.

 

8

 

Leases.
Any and all leases, licenses and agreements, whether written or oral, relating
to the use or occupation of space in the Improvements or on the Land by Persons
other than the Borrower.

 

Lien Waiver.
See §3.1.

 

Loan.
The loan or any portion thereof which is the subject of this Agreement.

 

Loan Amount.
$40,800,000.00.

 

Loan Documents.
This Agreement, the Note, the Environmental Indemnity and the Security
Documents, and all other agreements, documents and instruments now or hereafter
evidencing, securing or otherwise relating to the Loan.

 

Loan Fee.
$183,600.00

 

Loan to Value
Ratio. The ratio of (i) the indebtedness of the Borrower to
the Lender evidenced by the Note outstanding on the date of the computation of
the Loan to Value Ratio to (ii) the Appraised Value.

 

Mechanics Lien.
Any statutory lien or common law lien relating to claims for labor, materials,
or supplies.

 

Maturity Date.
December 15, 2023.

 

Note.
The Note in the principal face amount of the Loan Amount dated as of the date
hereof, made by the Borrower to the order of the Lender, together with any extension,
renewal, replacement, substitution, or modification thereof.

 

Operating Account.
See § 3.3

 

Organizational
Documents. The constituent documents pursuant to which the
Borrower has been established or organized, as such documents may be amended
from time to time provided such alteration or amendment does not result in an
Event of Default. Borrower shall provide to Lender notice of any such
amendments which relate to the capital structure of the Borrower together with
copies of such documentation effecting such amendments.

 

Permitted Liens.
Liens, security interests and other encumbrances, permitted by §9.4.

 

Person.
Any individual, corporation, partnership, trust, unincorporated association,
business, or other legal entity, and any government or any governmental agency
or political subdivision thereof.

 

Personal Property.
All materials, furnishings, fixtures, furniture, machinery, equipment and all
items of tangible or intangible personal property now or hereafter owned or
acquired by

 

9

 

the Borrower, in which
the Lender has been, or will be granted an interest to secure the Project
Obligations.

 

Plans and
Specifications. The plans and specifications for the
Improvements prepared by the Borrower’s architect and reviewed and approved by
the Lender which approval shall not be unreasonably withheld, conditioned or
delayed.

 

Premises.
The real property located at 150 Royall Street, Canton, Massachusetts.

 

Project.
The Land, Improvements and Personal Property.

 

Project Approvals.
All material approvals, consents, waivers, orders, agreements, acknowledgments,
authorizations, permits and licenses required under applicable Requirements or
under the terms of any restriction, covenant or easement affecting the Project,
necessary for the construction the Improvements, whether obtained from a
Governmental Authority or any other Person which shall all be in form and
substance reasonably acceptable to the Lender.

 

Project Budget.
The budget for total estimated Project Costs has been submitted by the Borrower
to the Lender and the Construction Inspector in the form of Exhibit C attached
hereto. Prior to the first subsequent Advance, the Project Budget shall be
revised to include: (a) a detailed line item cost breakdown for Direct Costs by
trades, jobs and subcontractors; and (b) a detailed line item cost breakdown
for Indirect Costs. The Project budget carries a line item for interest reserve
sufficient in amount to service interest due on the Loan for a 12 month
renovation period. The interest reserve shall be calculated assuming an annual
interest rate equal to the greater of (i) 6.25% or (ii) the actual interest
rate accruing under the Hedge Contract(s) (the “Interest Reserve”).
There is a line item for contingencies for Project Cost overruns equal to not
less than 7.5% of the final budgeted Project Cost line items.

 

Project Completion.
With respect to the construction of the Improvements, the reasonable
determination by the Lender that (i) the Borrower has substantially completed
(i.e. minor details of the Improvements remain to be completed which would not
materially interfere with Borrower’s use and occupancy of the Project) the
construction of the Improvements in substantial accordance with the Plans and
Specifications and the terms and conditions hereof and (ii) the Borrower has
satisfied all of the conditions of §11.6, hereof, for the release of the
Retainage.

 

Project Completion
Date. January 31, 2007.

 

Project Costs.
The Borrower’s acquisition cost of the Premises (including, without limitation,
all title insurance premiums, survey charges, deed stamps, recording fees,
engineering fees, architectural fees, and legal fees) and all Direct Costs and
Indirect Costs that will be incurred by the Borrower in connection with the
construction, equipping and completion of the Improvements and pre-construction
demolition.

 

Project
Obligations. All indebtedness, obligations and liabilities of
the Borrower to the Lender existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or

 

10

 

several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Agreement or any of the other Loan Documents or in respect
of any of the Advances, the Note, or the Hedge Obligations (defined in the
Note).

 

Record.
Any record, including computer records, maintained by the Lender with respect
to the balance due under the Loan.

 

Registry.
Norfolk County Registry of Deeds.

 

Requirements.
Any law, ordinance, code, order, rule or regulation of any Governmental
Authority relating in any way to the acquisition, ownership, construction, use,
occupancy and operation of the Project and the Improvements.

 

Retainage.
See §2.3.

 

Security Deed.
The Mortgage and Security Agreement of even date herewith made by the Borrower
in favor of the Lender.

 

Security Documents.
The Security Deed, the Collateral Assignment and Security Agreement in Respect
of Contracts, Licenses, Permits, Approvals, Agreements and Warranties dated as
of the date hereof, and the Financing Statements and any other agreement,
document or instrument now or hereafter securing the Project Obligations.

 

Stored Materials.
See §2.7.

 

Subsidiary.
Any corporation, partnership, association, trust, or other business entity of
which the designated parent shall at any time own directly, or indirectly
through a Subsidiary or Subsidiaries, at least a majority (by number of votes)
of the outstanding voting interests therein.

 

Survey.
An instrument ALTA survey of the Land and the existing Improvements prepared in
accordance with the Lender’s survey requirements, such survey to be
satisfactory to the Lender in form and substance.

 

Surveyor
Certificate. With respect to any Survey, a certificate
executed by the surveyor who prepares such Survey dated as of a recent date and
containing such information relating to the Project as the Lender or the Title
Insurance Company may require, such certificate to be satisfactory to the
Lender in form and substance.

 

Taking.
Any condemnation for public use of, or damage by reason of, the action of any
Governmental Authority, or any transfer by private sale in lieu thereof, either
temporarily or permanently.

 

Title Insurance
Company. Fidelity National Title Insurance Company.

 

11

 

Title Commitment.
The commitment issued by the Title Insurance Company in form and substance
acceptable to the Lender obligating said insurer to issue the Title Policy
after satisfaction of the conditions contained therein.

 

Title Policy.
An ALTA standard form title insurance policy issued by the Title Insurance
Company (with such reinsurance or co-insurance as the Lender may require, any
such reinsurance to be with direct access endorsements) in an amount not less
than the Loan Amount insuring the priority of the Security Deed and that the
Borrower holds marketable fee simple title to the Project, subject only to such
exceptions as the Lender may approve, and shall contain such endorsements and
affirmative insurance as the Lender in its discretion may require.

 

1.2       Rules of Interpretation.

 

(a)       A reference to any Loan Document,
agreement, budget, document or schedule shall include such agreement, budget,
document or schedule as revised, amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Agreement.

 

(b)       A reference to any Exhibit hereto shall
be deemed to specifically incorporate the terms and provisions of such Exhibit
herein.

 

(c)       The singular includes the plural and the
plural includes the singular.

 

(d)       A reference to any law includes any
amendment or modification to such law.

 

(e)       A reference to any Person includes its
permitted successors and permitted assigns.

 

(f)        Accounting terms herein have the meaning
assigned to them by statutory accounting principles applied on a consistent
basis.

 

(g)       Unless expressly stated to the contrary,
in any instance where the consent or approval of Lender or the Construction
Inspector is required, such consent shall not be unreasonably withheld,
conditioned or delayed.

 

(h)       Reference to a particular “§” refers to
that section of this Agreement unless otherwise indicated.

 

(i)        Any requirement of either party
hereunder or in any of the other Loan Documents to pay the costs or expenses of
the other party shall be limited to the actual, reasonable, out-of-pocket costs
or expenses, as applicable, of such party.

 

(j)        In any instance
hereunder where a statement, certification, representation or warranty of
Borrower is to its “knowledge” such knowledge shall be limited to the actual
knowledge of (i) John F. Ferrari, Vice President of Real Estate of Borrower and
any such individual who shall succeed him in said position, and (ii) Frederick
J. Turcotte, Vice President and Treasurer of Borrower and any such individual
who shall succeed him in said position, without further inquiry.

 

12

 

2.         AGREEMENT TO MAKE ADVANCES; LIMITATIONS.

 

2.1       Agreement to Make Advances.
Subject to the terms and conditions of this Agreement, the Lender agrees to
lend to the Borrower and the Borrower agrees to borrow from time to time after
the Closing Date and until the Project Completion Date, such amounts as are
requested by the Borrower up to the Loan Amount to pay for Project Costs
actually incurred by the Borrower and reflected in the Project Budget.

 

2.2       Project Budget. When delivered,
the Project Budget will reflect Borrower’s good faith statement of the purposes
and the amounts for which funds are to be advanced by the Lender under this
Agreement.

 

2.3       Amount of Advances. In no event
shall the Lender be obligated to advance more than the Loan Amount. In no event
shall any Advance for Direct Costs exceed an amount equal to the total cost of
the labor, materials, fixtures, machinery and equipment completed, approved and
incorporated, subject to Section 2.6 below, into the Improvements prior to the
date of the Draw Request for such Advance.

 

2.4       Quality of Work. No Advance shall
be due unless all work which is the subject to the Draw Request for such
Advance is submitted is done in a good and workmanlike manner and without
material defects, as confirmed by the report of the Construction Inspector.

 

2.5       Cost Overruns and Savings. (a) If
the Borrower becomes aware of any change in Project Costs which will increase
or decrease a category or line item of Project Costs reflected on the Project
Budget, the Borrower shall promptly notify the Lender in writing and submit to
the Lender a revised Project Budget.

 

(b)       If the revised Project Budget indicates
an increase in a category or line item of Project Costs, Borrower shall have
the right to offset such increase by the amount of savings in other categories
or line items which Borrower reasonably demonstrates to the Lender.

 

2.6       Contingency Reserve. The amount
allocated as Contingency Reserve in the Project Budget may be disbursed upon
the prior notice to the Lender other than the Interest Reserve. l/12th of the
Interest Reserve shall be available for disbursement each month after the
Closing Date provided the applicable payment of interest under the Note is paid
for such month.

 

2.7       Stored Materials. The Lender shall
not be required to disburse any funds for any materials, furnishings, fixtures,
machinery or equipment not yet incorporated into the Improvements (“Stored
Materials”), subject to Retainage, and shall be contingent upon the Lender
receiving satisfactory evidence that:

 

(a)       the Stored Materials are components in a
form ready for incorporation into the Improvements;

 

(b)       the Stored Materials are stored at the
Land, or at such other site as the Lender

 

13

 

shall approve, and are
physically separated from other goods, and materials not comprising Stored Materials, and protected against theft
and damage;

 

(c)       the Stored Materials have
been paid for in full, or will be paid for by a pending Advance and all lien
rights and claims of the supplier have been released or will be released upon
payment of the pending Advance;

 

(d)       the Lender has or will have upon payment
of the pending Advance perfected, first priority security interest in the
Stored Materials; and

 

(e)       the Stored Materials are
insured for an amount equal to their replacement cost.

 

3.         MAKING THE ADVANCES.

 

3.1       Draw Request. Except in connection
with the initial Advance of $18.4 million (which shall be funded by Lender at Closing in accordance with Section 10
below) (the “Initial Advance”), at such time as the Borrower shall desire to
obtain a subsequent Advance, the Borrower shall complete, execute and deliver
to the Lender the Borrower’s Requisition in the form of Exhibit A attached
hereto. Each Borrower’s Requisition shall be accompanied by:

 

(a)       If the Borrower’s
Requisition includes amounts to be paid to the Contractor under the
Construction Contract: (i) a completed and fully itemized Application and
Certificate for Payment (AIA Document G702 or similar form approved by the Lender)
containing the certification of the Contractor and the Engineer as to the
accuracy of same; and (ii) copies of requisitions and invoices from
subcontractors and materialmen supporting all items of Direct Cost covered by
such application;

 

(b)       If the Borrower’s
Requisition includes payments for Indirect Costs, it shall be accompanied by
invoices for all items of Indirect Costs covered thereby;

 

(c)       If requested by the Lender
or if a mechanics or materialmen lien has been filed, an accurately completed and
valid lien waiver with respect to work performed to date for which payment has
been received (hereinafter, the “Lien Waiver”) in the form attached hereto as Exhibit
B shall be executed by the Contractor or the applicable subcontractor,
laborer, or materialmen; and

 

(d)       Copies of all change
orders and construction change directives, accompanied by a change order
summary prepared by and executed by the Borrower, and, to the extent requested
by the Lender within three (3) Business Days of receipt of Borrower’s
Requisition, of all inspection or test reports and other documents relating to
the construction of the Improvements, which are in existence and not previously
delivered to the Lender;

 

(e)       If the Borrower’s
Requisition includes payment for Stored Materials, it shall be accompanied by
evidence as to the satisfaction of the requirements set forth in §2.7 hereof;
and

 

(f)        Such other documentation
which is in existence as the Lender shall reasonably

 

14

 

request within three (3)
Business Days of receipt of Borrower’s Requisition.

 

Each Draw Request shall
constitute a certification by the Borrower that to its knowledge all of the
conditions set forth in this Agreement to such Advance, including, without
limitation, §11, have been satisfied on the date of such Draw Request. Lender
shall advance more for one particular category or line item than is reflected
in the Project Budget for such category or line item and less for another
category or line item than is reflected in the Project Budget for such category
or line item so long as the total amount of the Project Budget does not change
as a result in accordance with § 2.5(b) hereof.

 

3.2       Notice and Frequency of Advances.
Each Draw Request shall be submitted to the Lender at least five (5) Business
Days prior to the date of the requested Advance, and no more frequently than
once each month. Lender shall promptly notify Borrower of any deficiencies in a
Draw Request and any failure to notify of such deficiencies within five (5)
Business days of receipt shall be deemed approval of the same. Notwithstanding
anything contained herein to the contrary, any failure by Lender to notify
Borrower of any such deficiencies within the specified time shall not
constitute a waiver of Lender’s right to object to such approval at a later
time.

 

3.3       Deposit of Funds Advanced. The
Borrower shall open and maintain a non-interest bearing loan checking account
with the Lender (the “Operating Account”). Except as otherwise provided for in
§3.4, the Lender shall deposit the proceeds of each Advance into the Operating
Account within five (5) Business Days of a complete Draw Request.

 

3.4       Advances to Contractor, to Others, or
in Escrow. At its option, but only after an Event of Default that is continuous,
the Lender may but without any obligation to do such, make any or all Advances
(a) for Direct Costs incurred under the Construction Contract directly to
Contractor for deposit in an appropriately designated special bank account, (b)
through the Title Insurance Company, (c) to any Person to whom the Lender in
good faith determines payment is due, or (d) in escrow as more fully provided
in the immediately following paragraph. Any portion of the Loan so disbursed by
the Lender shall be deemed disbursed as of the date on which the Lender makes
such disbursement and all such advances shall satisfy pro  tanto
the obligations of the Lender hereunder and shall be secured by the Security
Deed and the other Security Documents as fully as if made directly to the
Borrower. The execution of this Agreement by the Borrower shall, and hereby
does, constitute an irrevocable authorization to so advance the proceeds of the
Loan. No further authorization from the Borrower shall be necessary to warrant
such advances.

 

The Borrower
acknowledges the existence of Hedging Contracts and corresponding Hedging
Obligations thereunder as more fully described in the Note. The effectiveness
of the Hedging Contracts depends in part upon the proper implementation of the
Disbursement Schedule. If during the term of this Agreement Borrower makes a
Draw Request for an Advance less than the amount specified for such quarter on
the Disbursement Schedule, then the amount of the Draw Request shall be
disbursed as provided in Section 3.3 above (absent an Event of Default that is
then continuing), and the difference between the amount of the Draw Request and
the amount so specified on the Disbursement Schedule shall be deposited by the
Lender into an interest bearing escrow account (the “Advance Escrow Account”)
to be applied by the Lender against future Draw Requests. The amounts placed in
the Advance Escrow Account (or any

 

15

 

portion thereof), plus
accrued interest on the portion to be disbursed, shall be disbursed to Borrower
by Lender upon receipt of a Draw Request evidencing expenditures of Project
Costs by Borrower for which an Advance has not previously been made hereunder.

 

If during the term of this Agreement Borrower makes a Draw Request for
an Advance which is more than the amount specified for such quarter on the
Disbursement Schedule, then the entire Draw Request shall be disbursed as in
Section 3.3 above (absent an Event of Default that is then continuing), and
Borrower acknowledges that that portion of the Draw Request in excess of the
amount specified on the Disbursement Schedule shall accrue interest under the Note
without effect being given by the Hedge Contract(s).

 

If an Event of Default is continuing at the time a Draw Request is
funded, then the greater of (a) the Draw Request, or (b) the amount scheduled
to be advanced as shown on the Disbursement Schedule shall be advanced and
deposited by the Lender into the Advance Escrow Account to fund future Draw
Requests if, as and when the Event of Default(s) are cured.

 

Notwithstanding
any of the foregoing which may be construed to the contrary, all advances
described in this Section 3.4 shall be treated as Advances for all purposes
contained in the Note, this Agreement, and to the extent applicable, the other
Loan Documents.

 

3.5       Advances Do Not Constitute a Waiver.
No Advance made by the Lender shall constitute a waiver of any of the
conditions to the Lender’s obligation to make further Advances nor any of the
terms and conditions of this Agreement, nor, in the event the Borrower fails to
satisfy any such condition, shall any such Advance have the effect of
precluding the Lender from thereafter declaring such failure to satisfy a
condition to be an Event of Default.

 

3.6       Right to Retain the Construction
Inspector.

 

(a)       The Lender shall retain, at the Borrower’s
cost and expense (provided the same are commercially reasonable), the
Construction Inspector to perform various services on behalf of the Lender,
including, without limitation, to review the Project Budget and the Plans and
Specifications, to make periodic inspections of the Project (near the date of
each Draw Request) for the purpose of assuring that construction of the
Improvements to date is substantially in accordance with the Plans and
Specifications, to advise the Lender of the anticipated cost of and time for
completion of construction of the Improvements and the adequacy of any
Contingency Reserve and to review the Construction Contract and Key Contracts.

 

(b)       The reasonable fees of the Construction
Inspector shall be paid by the Borrower within thirty (30) days of billing
therefor and expenses incurred by the Lender on account thereof shall be
reimbursed to the Lender by the Borrower within thirty (30) days of request
therefor.

 

(c)       Neither the Lender nor the Construction
Inspector shall have any liability to the Borrower on account of (i) the
services performed by the Construction Inspector, (ii) any neglect or failure
on the part of the Construction Inspector to properly perform its services, or
(iii) any approval by the Construction Inspector of the construction of the
Improvements. Neither the

 

16

 

Lender nor the
Construction Inspector assumes any obligation to the Borrower or any other
Person concerning the quality of construction of the Improvements or the
absence therefrom of defects.

 

4.         THE NOTE, INTEREST RATE OPTIONS, REPAYMENT OF LOAN.

 

4.1       The Note. The obligation of the
Borrower to pay the Loan Amount or, if less, the aggregate unpaid principal
amount of all Advances made by the Lender hereunder plus accrued interest
thereon, shall be evidenced by the Commercial Real Estate Promissory Note. In
the event the Note is lost, destroyed or mutilated at any time prior to payment
in full of the indebtedness evidenced thereby, the Borrower shall execute a new
note in the form of the Note provided Lender delivers a “lost note” affidavit
to Borrower indemnifying and defending Borrower with respect to any claims
arising out of the original Note. The Note shall not be necessary to establish
the indebtedness of the Borrower to the Lender on account of Advances made
under this Agreement, and the Lender may, with the Borrowers consent, rely on
the Record.

 

4.2       The Record. The Borrower irrevocably
authorizes the Lender to make or cause to be made, at or about the time of the
Drawdown Date of any Advance or at the time of receipt of any payment of the
principal of the Note, an appropriate notation on the Lender’s Record
reflecting the making of such Advance or (as the case may be) the receipt of
such payment. The outstanding amount of the Loan set forth on the Lender’s
Record shall be prima facie evidence of the principal amount thereof
owing and unpaid to the Lender, but the failure to record, or any error in so
recording, any such amount on the Lender’s Record shall not limit or otherwise
affect the obligations of the Borrower hereunder or under the Note to make
payments of principal or interest on the Note when due. Further, the outstanding
amount of the Loan as reflected on the Record from time to time shall be
considered correct and binding on the Borrower unless the Borrower shall notify
the Lender to the contrary.

 

4.3       Interest on the Loan. The Loan
shall bear interest at the interest rates, and such interest shall be payable,
as set forth in the Note.

 

4.4       Default Interest/Late Charge.

 

(a)       Upon the occurrence of an Event of
Default, at the Lender’s option, the Loan and all other amounts payable
hereunder or under any of the other Loan Documents shall bear interest payable
on demand at a rate per annum equal to the Default Rate provided in the Note
until such Event of Default is cured.

 

(b)       In addition to other charges described in
the Loan Documents, and without derogating from the right of the Lender to
accelerate the Obligations upon the occurrence of an Event of Default, the
Borrower shall pay to the Lender a late charge provided in the Note.

 

4.5       Prepayment. The Borrower shall
have the right at any time to prepay the Note before the Maturity Date, in
whole or in part, subject to the terms and conditions provided in the Note.

 

17

 

4.6       Maturity. The Borrower promises to
pay on the Maturity Date, and there shall become absolutely due and payable on
the Maturity Date, all principal of the Loan outstanding on such date, together with any and all accrued and
unpaid interest thereon.

 

5.         COMMITMENT AND APPRAISAL FEES; PAYMENTS AND COMPUTATIONS.

 

5.1       Commitment and Appraisal Fees. The
Borrower agrees to pay to the Lender on or prior to the Closing Date the Loan Fee less any
prepayments thereof. The Lender acknowledges payment of the $5,050.00 appraisal
fee.

 

5.2.      Payments.

 

(a)       All payments of principal, interest, fees
and any other amounts due under the Note or under any of the other Loan
Documents shall be sent to the Lender at its principal office in Boston,
Massachusetts, or at such other location that the Lender may from time to time
designate, in the billing invoice or otherwise, in immediately available funds
in lawful money of the United States.

 

(b)       All payments by the Borrower under the
Note and under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied by
any jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such
deduction or withholding.

 

5.3       Charges Against Loan Checking Account.
The Lender shall have the right, and the Borrower hereby irrevocably authorizes
the Lender, to charge the Borrower’s designated Operating Account maintained
with the Lender without the further approval of the Borrower, for any regular
installment of interest or principal due under the Note. The Borrower shall at
all times maintain and keep collected balances in the Operating Account sufficient
in amount to satisfy the foregoing obligations on the respective due dates
thereof.

 

6.         COLLATERAL SECURITY. The Project Obligations shall be
secured by the Collateral as evidenced by the Security Documents to which the
Borrower is a party.

 

7.         REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Borrower represents, warrants, and covenants to the Lender as of the date
hereof:

 

7.1       Organization; Authority. Etc.

 

(a)       Organization; Good Standing. The
Borrower is a corporation duly organized, existing and in good standing under
the laws of the Commonwealth of Pennsylvania pursuant to the Borrower’s
Organizational Documents, and is validly existing and in good standing under
the laws of such commonwealth. The Borrower is licensed as an insurance company
in the Commonwealth of Massachusetts, and has all requisite power to own its
property and conduct its business as now conducted and as presently
contemplated.

 

18

 

(b)       Authorization. The execution,
delivery and performance of this Agreement and the other Loan Documents to
which Borrower is or is to become a party and the transactions contemplated
hereby and thereby (i) are within the authority of the Borrower, (ii) have been
duly authorized by all necessary proceedings on the part of the Borrower, (iii)
do not conflict with or result in any breach or contravention of any provision
of law, statute, rule or regulation to which the Borrower is subject or any
judgment, order, writ, injunction, license or permit applicable to the
Borrower, (iv) do not conflict with any provision of the Organizational
Documents of Borrower, and (v) do not require the approval or consent of, or
filing with, any governmental agency or authority other than those already
obtained and the filing of the Security Documents and the Financing Statements
in the appropriate public records with respect thereto.

 

(c)       Enforceability. The execution and
delivery of this Agreement and the other Loan Documents to which the Borrower
is or is to become a party will result in valid and legally binding obligations
of the Borrower enforceable against it in accordance with the respective terms
and provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors’ rights and except to the
extent that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding therefor
may be brought.

 

7.2       Title to Assets. Except as set
forth in the following sentence, the Borrower owns all of the assets reflected
in the balance sheet of the Borrower as at the Balance Sheet Date (except
property and assets sold or otherwise disposed of in the ordinary course of
business since that date). Borrower sold 100% of the stock of Traders &
Pacific Insurance Company on August 1, 2005.

 

7.3       No Material Changes, Etc. Since
the Balance Sheet Date, there has occurred no material adverse change in the
financial condition or business of the Borrower.

 

7.4       Franchises Patents Copyrights, Etc.
The Borrower possesses, or will possess, all franchises, patents, copyrights,
trademarks, trade names, licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of its business substantially as now
conducted or as it is intended to be conducted on the Premises, without known
conflict with any rights of others.

 

7.5       Litigation. Other than in the
ordinary course of its insurance business, there are no actions, suits,
proceedings or investigations of any kind pending or to Borrower’s knowledge,
threatened against the Borrower or any Affiliate of the Borrower before any
court, tribunal or administrative agency or board or any mediator or arbitrator
that, if adversely determined, might, either in any case or in the aggregate,
materially adversely affect the business, assets or financial condition of the
Borrower, or which question the validity of this Agreement or any of the other
Loan Documents, any action taken or to be taken pursuant hereto or thereto, or
any lien or security interest created or intended to be created pursuant hereto
or thereto, or which will adversely affect the ability of the Borrower to
construct, use and occupy the Improvements or to

 

19

 

pay
and perform the Project Obligations in the manner contemplated by this
Agreement and the other Loan Documents.

 

7.6       No Materially Adverse Contracts. Etc.
As of the date hereof, Borrower is not subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation
that has a materially adverse effect on the business, assets or financial
condition of the Borrower. As of the date hereof, the Borrower is not a party
to any contract or agreement that is expected, to Borrower’s knowledge, to have
any materially adverse effect on the business of the Borrower.

 

7.7       Compliance With Other Instruments,
Laws, Etc. As of the date hereof, the Borrower is not in violation of any
provision of its Organizational Documents or any agreement or instrument to
which it may be subject or by which it or any of its properties may be bound or
any decree, order, judgment,
statute, license, rule or regulation, in any of the foregoing cases in a manner
that could materially and adversely affect the Project.

 

7.8       Tax Status. The Borrower and any
Subsidiary of Borrower (a) has made or filed, all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject, (b) has paid all taxes and other governmental assessments
and charges shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and by appropriate proceedings,
(c) has set aside on its books provisions reasonably adequate for the payment
of all taxes for periods subsequent to the period to which such returns,
reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers, and directors of the Borrower know of no basis for any such claim.
The Borrower has filed all of such tax returns, reports, and declarations
either (i) separately from any parent or Affiliate or (ii) if part of a
consolidated filing, as a separate member of any such consolidated group.

 

7.9       Setoff, Etc. The Collateral and
the Lender’s rights with respect to the Collateral are not subject to any
setoff, claims, withholdings or other defenses by Borrower.

 

7.10     Availability of Utilities. To
Borrower’s knowledge, all utility services necessary and sufficient for the
construction, development and operation of the Project are presently, available
to the boundaries of the Land through dedicated public rights of way or through
perpetual private easements.

 

7.11     Access. The rights of way for all
roads necessary for access to the Improvements for their intended purposes have
either been acquired by the appropriate Governmental Authority or have been dedicated
to public use and accepted by such Governmental Authority. All such roads shall
have been completed, or all necessary steps have been taken by the Borrower and
such Governmental Authority to assure the complete construction and
installation thereof prior to the date upon which access to the Project via
such roads will be necessary, and the right to use all such roads, or suitable
substitute rights of way approved by the Lender, shall be maintained at all
times for the Project to the extent within Borrower’s control. All curb cuts,
driveways and traffic signals shown on the Plans and Specifications are
existing or have been fully approved by the appropriate Governmental Authority
and after the completion thereof, shall be maintained at all times for the
Project to the extent within Borrower’s control.

 

20

 

7.12     Condition of Project. Neither the
Project nor any part thereof is now damaged or injured in any material respect
as result of any fire, explosion, accident, flood or other casualty or has been
the subject of any Taking (except as indicated in the Title Commitment), and to
the knowledge of the Borrower, no Taking is pending or contemplated.

 

7.13     Compliance with Requirements. The
construction of the Improvements and the use and occupancy of the Project
contemplated thereby comply with all Requirements in all material respects. The
Borrower will give all such notices to, and take all such other reasonable
actions with respect to, such Governmental Authority as may be reasonably
required under applicable Requirements to construct the Improvements and to
use, occupy and operate the Project following Project Completion.

 

7.14     Violations. The Borrower has
received no notices of, or has any knowledge of, any violations of, any
applicable Requirements or Project Approvals then received, if any.

 

7.15     Project Budget. To Borrower’s
knowledge the Project Budget reflects, as of the date hereof, all Project
Costs.

 

7.16     Effect of Draw Request Each Draw
Request submitted to the Lender as provided in §3.1 hereof shall constitute an
affirmation that the representations and warranties contained in this
Agreement, other than as set forth in §7.2 hereof, and in the other Loan
Documents, remain true and correct to Borrower’s Knowledge as of the date
thereof; and unless the Lender is notified to the contrary, in writing, prior
to the Drawdown Date of the requested Advance or any portion thereof, shall
constitute an affirmation that the same, other than as set forth in §7.2 hereof,
remain true and correct to Borrower’s Knowledge on the Drawdown Date.

 

8.         AFFIRMATIVE COVENANTS OF THE
BORROWER. The Borrower covenants and agrees that, so long as the Loan is
outstanding or the Lender has any obligation to make any Advances:

 

8.1       Punctual Payment. The Borrower
will duly and punctually pay or cause to be paid the principal and interest on
the Loan and all other amounts provided for in the Note, this Agreement and the
other Loan Documents to which the Borrower is a party, all in accordance with
the terms of the Note, this Agreement and such other Loan Documents.

 

8.2       Commencement, Pursuit and Completion
of Construction. Provided Lender responds to requests for approvals and/or
consents within the time periods specified hereunder, as of the date hereof the
Borrower intends to commence construction, which term shall include pre-
construction demolition, not later than January 9, 2006 and will diligently
pursue construction of the Improvements, will use commercially reasonable
efforts to attain Project Completion by the Project Completion Date, and will
pay all reasonable sums and perform all such acts as may be reasonably
necessary or appropriate (without the obligation to perform “after-hours” work
or utilize other extraordinary measures) to complete such construction,
substantially in accordance with the Plans and Specifications, in substantial
compliance with all restrictions, covenants and easements affecting the
Project, all Requirements, all Project Approvals, and with all terms and

 

21

 

conditions of the Loan
Documents without material deviation from the Plans and Specifications unless
the Borrower obtains the prior approval of the Lender, which approval shall not
be unreasonably withheld or delayed. Such construction shall be completed free
from any liens, claims or assessments (actual or contingent) asserted against
the Project for any material, labor or other items furnished in connection
therewith subject to Section 8.7 below.

 

8.3       Correction of Defects. The
Borrower will correct or cause to be corrected all material defects in the
Improvements or any material departure from the Plans and Specifications not
previously approved by the Lender.

 

8.4       Records and Accounts. The Borrower
will (a) keep true and accurate records and books of account in which full,
true and correct entries will be made in accordance with statutory basis
accounting principles acquisition and construction of the Project, and (b) in
order to assist the Lender in monitoring the financial condition of the
Collateral, maintain, or cause to be maintained, at the Lender the Operating
Account with respect to the Project.

 

8.5       Financial Statements, Certificates and
Information. The Annual Statement of Borrower will be delivered to Lender
not later than ninety (90) days after the Borrower’s fiscal year end which
reports will include an operating statement, balance sheet, and statement of
cash flows.

 

8.6       Insurance. The Borrower will
obtain and maintain insurance with respect to the Project and the operations of
the Borrower as required by the Security Deed, and will provide or will cause
the Contractor to provide the Lender with certificates evidencing such
insurance as the Lender may reasonably request which may include, without
limitation, an all Risk Builder’s policy.

 

8.7       Liens and Other Charges. The
Borrower will duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue all claims for labor, materials, or
supplies that if unpaid might by law become a lien or charge upon any of its
property, however, the Borrower may contest payment in good faith, provided
that Borrower posts a lien bond if so requested by the Lender. Notwithstanding
anything to the contrary herein contained, the Lender shall not withhold an
advance under this Agreement (nor shall Borrower be deemed in violation of this
Agreement) solely because the contractor or subcontractor to be paid from such
advance has recorded or filed a statement of account under M.G.L. c. 254, Section
1 or a notice of contract under M.G.L. c. 254, Sections 2 or 4 provided the
Lender receives from such contractor or subcontractor a Lien Waiver as provided
herein.

 

8.8       Inspection of Project and Books,
Appraisals.

 

(a)       The Borrower shall permit the Lender and
Construction Inspector, at the Borrower’s expense, to visit and inspect during
Borrower’s normal business hours and upon reasonable advance notice, the
Project and all materials to be used in the construction thereof and will
cooperate with the Lender and Construction Inspector during such inspections
(including making available working drawings of the Plans and Specifications); provided
that this provision shall not be deemed to impose on the Lender or the
Construction Inspector any obligation to undertake such inspections.

 

22

 

(b)       The Borrower shall permit, or cause to
permit, the Lender at the Borrower’s expense to visit and inspect the Project,
to examine the books of account of the Borrower related to the Project (and to
make copies thereof and extracts therefrom) and to discuss the affairs,
finances and accounts of the Borrower as they relate to the Project with, and
to be advised as to the same by, its officers, partners, or trustees, all at such
reasonable times and intervals as the Lender may reasonably request; provided
that so long as no Event of Default shall have occurred and be continuing, the
Borrower shall only be obligated to pay the expenses associated with one (1)
such investigation of the books of account of the Borrower related to the
Project during any twelve (12) month period.

 

(c)       The Lender shall have the right to obtain
from time to time, at the Borrower’s cost and expense, updated Appraisals of
the Project, provided that so long as no Event of Default shall have
occurred and be continuing, (i) the Borrower shall only be obligated to pay for
the costs and expenses associated with one (1) such Appraisal during any
thirty-six month period, and (ii) the first appraisal at Borrower’s expense may
not occur earlier than the date three years from the date of this Agreement.

 

(d)       The reasonable actual out-of-pocket costs
and expenses incurred by the Lender in obtaining such Appraisals or obtaining
such Construction Inspector’s services shall be paid by the Borrower within
thirty (30) days of billing or request by the Lender for reimbursement
therefor.

 

8.9       Compliance with Laws, Contracts,
Licenses, and Permits. The Borrower will comply in all material respects
with (a) the applicable laws and regulations wherever its business is
conducted, including all Environmental Laws and all Requirements, (b) the
provisions of its Organizational Documents, (c) all agreements and instruments
to which it is a party relating to Project, and all restrictions, covenants and
easements affecting the Project, (d) all applicable decrees, orders and
judgments relating to the Project, and (e) all licenses and permits required by
applicable laws and regulations for the conduct of its business at, or the
ownership, use or operation of, the Project, including, without limitation, all
Project Approvals.

 

8.10     Use of Proceeds. The Borrower will
use the proceeds of the Loan solely for the purpose of paying for Project
Costs, including reimbursement in the form of the Initial Advance of those
Project Costs incurred prior to the date of this Agreement.

 

8.11     Project Costs. The Borrower will pay
when due all Project Costs in excess of the Loan Amount, regardless of the
amount.

 

8.12     Cash Equity and Insufficiency of Loan Proceeds.
Without limiting the requirements of Section 8.11 above, Borrower shall pay
from its own funds not less than 15% of the total Project Costs.

 

8.13     Laborers, Subcontractors and Materialmen.
The Borrower will furnish to the Lender, upon request at any time, and from
time to time, in connection with work performed pursuant to all Key Contracts,
affidavits listing all laborers, subcontractors, materialmen, and any other

 

23

 

Persons
who might or could claim statutory or common law liens and are furnishing or
have furnished labor or material to the Project or any part thereof.

 

8.14     Publicity The Borrower, subject to
its right of review and approval not to be unreasonably withheld delayed or
conditioned, will permit the Lender to obtain publicity in connection with the
construction of the Improvements through press releases and participation in
such events as ground breaking and opening ceremonies.

 

8.15     Sign Regarding Construction Financing
If requested by the Lender, the Borrower will, at the Lender’s cost and expense
and subject to Borrower’s approval not to be unreasonably withheld, delayed or
conditioned, erect and maintain on a suitable location on the Land a sign
indicating that the construction financing for the Project is being provided by
the Lender, such location and sign to be subject to the approval of the Lender.

 

8.16     Further Assurances.

 

(a)       Regarding Construction. Upon
request of Lender, the Borrower will furnish or cause to be furnished to the
Lender and the Construction Inspector all instruments, documents, boundary
surveys, footing or foundation surveys, certificates, plans and specifications,
title and other insurance, reports and agreements and each and every other
document and instrument required to be furnished by the terms of this Agreement
or the other Loan Documents, all at the Borrower’s expense.

 

(b)       Regarding Preservation of Collateral.
The Borrower will execute and deliver to the Lender such further documents,
instruments, assignments and other writings, and will do such other acts
reasonably necessary, to preserve and protect the Collateral at any time
securing or intended to secure the Obligations, as the Lender may reasonably
require.

 

(c)       Regarding this Agreement. Both the
Borrower and Lender will cooperate with one another, and will do such further
acts and execute such further instruments and documents as they each shall
reasonably request of the other to carry out to their respective satisfaction
the transactions contemplated by this Agreement and the other Loan Documents.

 

8.17     Notices. The Borrower will promptly
notify the Lender in writing of (i) the occurrence of any Event of Default of
which Borrower has knowledge; (ii) the occurrence of any other event which may
have a material adverse effect on the Project; or (iii) the receipt by the
Borrower of any notice of default or notice of termination with respect to any
material contract or agreement relating to the ownership, construction,
operation, or use of the Project, including, without limitation, the
Construction Contract.

 

8.18     Other Affirmative Covenants. The
Borrower will:

 

(a)       Remain solvent and pay all
of its Indebtedness from its assets as the same become due;

 

(b)       At all times hold itself out to the
public as a legal entity, separate and distinct

 

24

 

from
any other Person, including any Affiliate of the Borrower consistent with the
manner in which Borrower conducts its business at of the date of this
Agreement; and

 

(c)       Occupy not less than 50%
of the leaseable area of the Premises with employees of the Borrower on or
before September 30, 2007.

 

(d)       Continuously pursue the
completion of the Project Improvements and use all reasonably commercial
efforts to do so by the Project Completion Date.

 

8.19     Financial Covenants.

 

(a)       Loan to Value. The
Borrower shall not permit the Loan to Value Ratio to exceed the following
ratios expressed as a percentage as of the date set forth below measured
pursuant to the Appraisal as provided below:

 

(i)        76% as of the sixth anniversary of the
date of this Agreement;

 

(ii)       70% as of the ninth anniversary of the
date of this Agreement;

 

(iii)      64% as of the twelfth anniversary of the
date of this Agreement; and

 

(iv)      57% as of the fifteenth anniversary of the
date of this Agreement.

 

Commencing
no earlier than sixth anniversary of the date of this Agreement, Lender may
test the Loan to Value Ratio once every three (3) years during the first
fifteen years of term at the Borrower’s cost utilizing an updated or new
Appraisal, as the Lender may decide in its sole discretion. Lender may update
or order a new Appraisal at the Borrower’s cost at any time after an Event of
Default relating to payment or breach of covenant that continues. In the event
that such Appraisal indicates the Loan to Value requirement set forth above is
not satisfied, Lender may notify Borrower, and Borrower shall have ten (10)
Business Days after notice from Lender to pay down the Loan in such amount
sufficient to satisfy the Loan to Value requirement. Until such time as
Borrower fails to make such payment, Borrower shall not be deemed in violation
of this covenant

 

(b)       Minimum Statutory
Capital & Surplus. The minimum Statutory Capital & Surplus (Surplus
as regards policyholders) as reported on the Annual Statement of Borrower shall
not be less than $1 billion plus fifty (50%) percent of the Borrower’s net
income each fiscal year commencing with the fiscal year ending December 31,
2005 less cash dividends paid in such fiscal year.

 

(c)       Total Debt to Statutory
Capital & Surplus. The ratio of total Debt to Statutory Capital &
Surplus expressed as a percentage shall not exceed 20% at any time during the
term of the Loan.

 

25

 

8.20     Project Approvals.

 

(a)       Prior to any subsequent
Advance, Borrower shall obtain all material Project Approvals. Lender, its
counsel and Construction
Inspector shall have the right to review any and all Project Approvals obtained
by the Borrower but such review shall only be a condition precedent to the
first subsequent Advance. The Borrower has no reason to believe that any of the
Project Approvals not heretofore obtained by the Borrower will not be obtained
by the Borrower in the ordinary course. To Borrower’s knowledge, no Project
Approvals will terminate, or become void or voidable or terminable, upon any
sale, transfer or other disposition of the Project, including any transfer
pursuant to foreclosure sale under the Security Deed.

 

(b)       The Borrower will diligently
pursue all Project Approvals not heretofore obtained by the Borrower and any
other Project Approvals which may hereafter become required or necessary and
will furnish the Lender with evidence that the Borrower has obtained such
Project Approvals promptly upon its request.

 

(c)       The Borrower will duly
perform and comply with all of the terms and conditions of all Project
Approvals obtained at any time.

 

8.21     Construction Contract. Prior to any
subsequent Advance pursuant to § 11.0 hereof, the Borrower will furnish the
Lender with the Construction Contract.

 

8.22     Plans and Specifications. Prior to
the first subsequent Advance pursuant to § 11.0 hereof, the Borrower will
furnish the Lender with true and complete sets of the Plans and Specifications.
The Plans and Specifications so furnished to the Lender shall comply in all
material respects with all Requirements, all Project Approvals, and all
restrictions, covenants and easements affecting the Project, and be approved by
the Contractor, the Engineer, the Construction Inspector.

 

9.         NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as the Loan is outstanding or
the Lender has any obligation to make any Advances:

 

9.1       Restriction on Change Orders.
Subject to Section 2.5(b) the Borrower will not cause, permit or suffer to
exist any material deviations from the Plans and Specifications and will not
approve or consent to any single change order in excess of $250,000 or multiple
change orders which exceed $3,000,000 in the aggregate or any construction
change directive without the prior approval of the Lender, and, if existing,
the surety company or companies issuing any Payment and Performance Bonds. In
no event shall Borrower approve or consent to any change order or construction
change directive which increases the Project Budget without the Lender’s prior
approval.

 

9.2       Restrictions on Easements. Covenants
and Restrictions. The Borrower will not create or suffer to be created or
to exist any easement, right of way, restriction, covenant, condition, license
or other right in favor of any Person which affects or might affect title to
the Project or the use and occupancy of the Project or any part thereof without
obtaining the prior approval of the Lender (other than as permitted by Section
8.7 or otherwise under the Security Deed).

 

26

 

9.3       No Amendments, Terminations or Waivers

 

(a)       The Borrower will not amend, supplement
or otherwise modify, whether by change order (except as permitted above) or
otherwise, any of the material terms and conditions of the Construction
Contract without obtaining the prior approval of the Lender and if applicable,
any surety or surety companies issuing any Site Payment and Performance Bonds,
if any exist.

 

(b)       Except in connection with a breach or
default by the other party thereto, the Borrower will not, directly or
indirectly, terminate or cancel, or cause or permit to exist any condition
which would result in the termination or cancellation of, or which would
relieve the performance of any material obligations of any other party under
the Construction Contract.

 

(c)       The Borrower will not, directly or
indirectly, waive or agree or consent to the waiver of, the performance of any
material obligation of any other party under the Construction Contract.

 

(d)       The Borrower will not, directly or
indirectly, amend, or allow the amendment of, any of its Organizational
Documents in any material manner relating to its capital structure without the
prior notice to the Lender.

 

9.4       Restrictions on Liens, Etc. The
Borrower will not (a) create or incur or suffer to be created or incurred or to
exist any lien, encumbrance, mortgage, pledge, charge, restriction or other
security interest of any kind upon the Land, Improvement or Project (b)
transfer any portion of the Land, Improvement or Project; (c) suffer to exist
for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over Lender as to the Collateral; or (d) sell, assign, pledge or
otherwise transfer any Collateral (other than in the ordinary course of
business), with or without recourse; provided that the Borrower may
create or incur or suffer to be created or incurred or to exist:

 

(a)       statutory liens relating to the Project
to secure taxes, assessments and other governmental charges or claims for
labor, material or supplies in respect of obligations not overdue;

 

(b)       liens in favor of the Lender under the
Loan Documents;

 

(c)       other liens on the Project consisting of
easements, rights of way, covenants and restrictions if and to the extent the
same are disclosed on the Title Policy and have been approved by the Lender or
as permitted under the Security Deed; and

 

(d)       notwithstanding any provision of this
Agreement or any other Loan Document to the contrary, the filing of a Notice of
Contract by the Contractor, any subcontractor or supplier shall not be deemed a
violation of this Agreement or any other Loan Document provided a lien waiver
is delivered for such Contractor, subcontractor or supplier in connection with
each Borrower Requisition for work covered by such Requisition in the form of
Exhibit B.

 

27

 

9.5       Disposition of Project.

 

(a)       The Borrower will not become a party to
or agree to or effect any disposition of the Project or any part thereof
without the Lender’s prior written approval unless the payment of the
outstanding balance of the Note prior to, or concurrently with, the disposition
is contemplated by Borrower.

 

9.6       Financial Covenants. The Borrower
covenants and agrees that, so long as the Loan is outstanding, the Borrower
will not permit violation of the financial covenants provided in §8.19.

 

9.7       Other Negative Covenants. The
Borrower will not commingle any of its accounts with accounts of any other
Person, including, any Affiliate of the Borrower except in accordance with
Borrower’s practice as of the date of this Agreement.

 

10.       CONDITIONS TO CLOSING AND INITIAL
ADVANCE. The obligation of the Lender to make the Initial Advance shall be
subject to the satisfaction of all of the following conditions precedent (and
such conditions other than such recordings as set forth in Section 10.7 below
shall be deemed satisfied at the Closing and evidenced by Lender’s execution of
this Agreement) and Lender shall advance such Initial Advance upon notice from
the Title Insurance Company that the conditions contained in Section 10.6 are
satisfied:

 

10.1     Loan Documents. Each of the Loan
Documents shall have been duly executed and delivered by the respective parties
thereto, shall be in full force and effect and shall be in form and substance
satisfactory to the Lender.

 

10.2     INTENTIONALLY DELETED.

 

10.3     Certified Copies of Organization
Documents. The Lender shall have received from Borrower a certified copy of
its Organization Documents as in effect on such date of certification.

 

10.4     Resolutions. All action necessary
for the valid execution, delivery and performance by the Borrower of this
Agreement and the other Loan Documents to which it is or is to become a party
shall have been duly and effectively taken, and evidence thereof satisfactory
to the Lender shall have been provided to the Lender. The Lender shall have
received from Borrower true copies of the resolutions authorizing the
transactions described herein, each certified as of a recent date to be true
and complete.

 

10.5     Incumbency Certificate: Authorized
Signers. The Lender shall have received from Borrower an incumbency
certificate, dated as of the Closing Date, giving the name and bearing a
specimen signature of each individual who shall be authorized: (a) to sign, in
the name and on behalf of Borrower each of the Loan Documents to which Borrower
is or is to become a party; and (b) to give notices and to take other action on
its behalf under the Loan Documents.

 

10.6     Validity of Liens. All UCC filings
and the Security Agreement recording shall have been duly effected.

 

28<Page>

                                                                    Exhibit 10.3

                                 METABOLIX, INC.

                      2006 STOCK OPTION AND INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS

     The name of the plan is the Metabolix, Inc. 2006 Stock Option and Incentive
Plan (the "Plan"). The purpose of the Plan is to encourage and enable the
officers, employees, Non-Employee Directors and other key persons (including
consultants and prospective employees) of Metabolix, 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 and its stockholders, 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 Act of 1933, as amended, and the rules and
regulations thereunder.

     "AWARD" or "AWARDS," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Deferred Stock Awards, Restricted Stock
Awards, Unrestricted Stock Awards, Cash-based Awards and Dividend Equivalent
Rights.

     "AWARD AGREEMENT" means a written or electronic agreement setting forth the
terms and provisions applicable to an Award granted under the Plan. Each Award
Agreement is subject to the terms and conditions of the Plan.

     "BOARD" means the Board of Directors of the Company.

     "CASH-BASED AWARD" means an Award entitling the recipient to receive a
cash-denominated payment.

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

     "COMMITTEE" means the compensation committee of the Board or a similar
committee performing the functions of the compensation committee and which is
comprised of not less than two Non-Employee Directors who are independent.

     "COVERED EMPLOYEE" means an employee who is a "Covered Employee" within the
meaning of Section 162(m) of the Code.

     "DEFERRED STOCK AWARD" means an Award of phantom stock units to a grantee.

<Page>

     "DIVIDEND EQUIVALENT RIGHT" means an Award entitling the grantee to receive
credits based on cash dividends that would have been paid on the shares of Stock
specified in the Dividend Equivalent Right (or other award to which it relates)
if such shares had been issued to and held by the grantee.

     "EFFECTIVE DATE" means the date on which the Plan is approved by
stockholders as set forth in Section 20.

     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.

     "FAIR MARKET VALUE" of the Stock on any given date means the fair market
value of the Stock determined in good faith by the Committee; provided, however,
that if the Stock is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), NASDAQ National System
or a national securities exchange, the determination shall be made by reference
to market quotations. If there are no market quotations for such date, the
determination shall be made by reference to the last date preceding such date
for which there are market quotations; provided further, however, that if the
date for which Fair Market Value is determined is the first day when trading
prices for the Stock are reported on NASDAQ or on a national securities
exchange, the Fair Market Value shall be the "Price to the Public" (or
equivalent) set forth on the cover page for the final prospectus relating to the
Company's Initial Public Offering.

     "INCENTIVE STOCK OPTION" means any Stock Option designated and qualified as
an "incentive stock option" as defined in Section 422 of the Code.

     "INITIAL PUBLIC OFFERING" means the consummation of the first fully
underwritten, firm commitment public offering pursuant to an effective
registration statement under the Act covering the offer and sale by the Company
of its equity securities, or such other event as a result of or following which
the Stock shall be publicly held.

     "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-BASED AWARD" means any Restricted Stock Award, Deferred Stock
Award or Cash-based Award granted to a Covered Employee that is intended to
qualify as "performance-based compensation" under Section 162(m) of the Code and
the regulations promulgated thereunder.

     "PERFORMANCE CRITERIA" means the criteria that the Committee selects for
purposes of establishing the Performance Goal or Performance Goals for an
individual for a Performance Cycle. The Performance Criteria (which shall be
applicable to the organizational level specified

                                        2

<Page>

by the Committee, including, but not limited to, the Company or a unit,
division, group, or Subsidiary of the Company) that will be used to establish
Performance Goals are limited to the following: earnings before interest, taxes,
depreciation and amortization, net income (loss) (either before or after
interest, taxes, depreciation and/or amortization), changes in the market price
of the Stock, economic value-added, funds from operations or similar measure,
sales or revenue, mergers, acquisitions, financing, corporate partnering or
strategic transactions, operating income (loss), cash flow (including, but not
limited to, operating cash flow and free cash flow), return on capital, assets,
equity, or investment, stockholder returns, return on sales, gross or net profit
levels, productivity, expense, margins, operating efficiency, customer
satisfaction, working capital, earnings (loss) per share of Stock, sales or
market shares and number of customers, branding establishment or awareness,
technical or product development advances, research and development and/or
engineering milestones, and achievement of corporate collaborative agreement
milestones, 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.

     "PERFORMANCE CYCLE" means one or more periods of time, which may be of
varying and overlapping durations, as the Committee may select, over which the
attainment of one or more Performance Criteria will be measured for the purpose
of determining a grantee's right to and the payment of a Restricted Stock Award,
Deferred Stock Award or Cash-based Award.

     "PERFORMANCE GOALS" means, for a Performance Cycle, the specific goals
established in writing by the Committee for a Performance Cycle based upon the
Performance Criteria.

     "RESTRICTED STOCK AWARD" means an Award entitling the recipient to acquire,
at such purchase price (which may be zero) as determined by the Committee,
shares of Stock subject to such restrictions and conditions as the Committee may
determine at the time of grant.

     "SALE EVENT" shall mean (i) the dissolution or liquidation of the Company,
(ii) the sale of all or substantially all of the assets of the Company on a
consolidated basis to an unrelated person or entity, (iii) a merger,
reorganization or consolidation in which the outstanding shares of Stock are
converted into or exchanged for securities of the successor entity and the
holders of the Company's outstanding voting power immediately prior to such
transaction do not own a majority of the outstanding voting power of the
successor entity immediately upon completion of such transaction, or (iv) the
sale of all of the Stock of the Company to an unrelated person or entity.

     "SALE PRICE" means the value as determined by the Committee of the
consideration payable, or otherwise to be received by stockholders, per share of
Stock pursuant to a Sale Event.

     "SECTION 409A" means Section 409A of the Code and the regulations and other
guidance promulgated thereunder.

     "STOCK" means the Common Stock, par value $0.01 per share, of the Company,
subject to adjustments pursuant to Section 3.

     "STOCK APPRECIATION RIGHT" means an Award entitling the recipient to
receive shares of Stock having a value equal to the excess of the Fair Market
Value of the Stock on the date of

                                       3

<Page>

exercise over the exercise price of the Stock Appreciation Right multiplied by
the number of shares of Stock with respect to which the Stock Appreciation Right
shall have been exercised.

     "SUBSIDIARY" means any corporation or other entity (other than the Company)
in which the Company has at least a 50 percent interest, either directly or
indirectly.

     "TEN PERCENT OWNER" means an employee who owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10
percent of the combined voting power of all classes of stock of the Company or
any parent or subsidiary corporation.

     "UNRESTRICTED STOCK AWARD" means an Award of shares of Stock free of any
restrictions.

SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT GRANTEES AND
           DETERMINE AWARDS

     (a) Committee. The Plan shall be administered by 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 individuals 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, Stock Appreciation
Rights, Restricted Stock Awards, Deferred Stock Awards, Unrestricted Stock
Awards, Cash-based Awards and Dividend Equivalent Rights, or any combination of
the foregoing, granted to any one or more grantees;

          (iii) to determine the number of shares of 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 the Plan,
of any Award, which terms and conditions may differ among individual Awards and
grantees, and to approve the form of written instruments evidencing the Awards;

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

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

          (vii) at any time 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.

                                       4

<Page>

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

     (c) Delegation of Authority to Grant Awards. The Committee, in its
discretion, may delegate to the Chief Executive Officer of the Company, or other
officers of the Company as permitted by applicable law, all or part of the
Committee's authority and duties with respect to the granting of Awards, to
individuals who are (i) not subject to the reporting and other provisions of
Section 16 of the Exchange Act or (ii) not Covered Employees. Any such
delegation by the Committee shall include a limitation as to the amount of
Awards that may be granted during the period of the delegation and shall contain
guidelines as to the determination of the exercise price of any Stock Option or
Stock Appreciation Right, the conversion ratio or price of other Awards and the
vesting criteria. The Committee may revoke or amend the terms of a delegation at
any time but such action shall not invalidate any prior actions of the
Committee's delegate or delegates that were consistent with the terms of the
Plan.

     (d) Award Agreement. Awards under the Plan shall be evidenced by Award
Agreements that set forth the terms, conditions and limitations for each Award
which may include, without limitation, the term of an Award, the provisions
applicable in the event employment or service terminates, and the Company's
authority to unilaterally or bilaterally amend, modify, suspend, cancel or
rescind an Award.

     (e) Indemnification. Neither the Board nor the Committee, nor any member of
either or any delegate thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with the Plan, and the members of the Board and the Committee (and any delegate
thereof) shall be entitled in all cases to indemnification and reimbursement by
the Company in respect of any claim, loss, damage or expense (including, without
limitation, reasonable attorneys' fees) arising or resulting therefrom to the
fullest extent permitted by law and/or under the Company's articles or bylaws or
any directors' and officers' liability insurance coverage which may be in effect
from time to time and/or any indemnification agreement between such individual
and the Company.

     (f) Foreign Award Recipients. Notwithstanding any provision of the Plan to
the contrary, in order to comply with the laws in other countries in which the
Company and its Subsidiaries operate or have employees or other individuals
eligible for Awards, the Committee, in its sole discretion, shall have the power
and authority to: (i) determine which Subsidiaries shall be covered by the Plan;
(ii) determine which individuals outside the United States are eligible to
participate in the Plan; (iii) modify the terms and conditions of any Award
granted to individuals outside the United States to comply with applicable
foreign laws; (iv) establish subplans and modify exercise procedures and other
terms and procedures, to the extent the Committee determines such actions to be
necessary or advisable (and such subplans and/or modifications shall be attached
to this Plan as appendices); provided, however, that no such subplans and/or
modifications shall increase the share limitations contained in Section 3(a)
hereof; and (v) take any action, before or after an Award is made, that the
Committee determines to be necessary or advisable to obtain approval or comply
with any local governmental regulatory exemptions or approvals. Notwithstanding
the foregoing, the Committee may not take any actions hereunder, and no Awards
shall be granted, that would violate the Exchange Act

                                       5

<Page>

or any other applicable United States securities law, the Code, or any other
applicable United States governing statute or law.

SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

     (a) Stock Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan (subject to adjustment as provided in
Section 3(b)) shall be 2,500,000 shares plus on each January 1, beginning in
2007, an additional number of shares equal to 4.5% of the outstanding number of
shares of Stock on the immediately preceding December 31; provided that the
maximum aggregate number of shares of Stock reserved and available for issuance
under the Plan and under the Company's 1995 Stock Plan and 2005 Option Plan may
not exceed 25% of the total number of outstanding shares of Stock; and provided
further that not more than 10,000,000 shares shall be issued under the Plan.
Without limiting the generality of the foregoing, not more than 10,000,000
shares shall be issued in the form of Incentive Stock Options under the Plan.
For purposes of this limitation, the shares of Stock underlying any Awards under
the Plan that are forfeited, canceled, held back upon exercise of an Option or
settlement of an Award to cover the exercise price or tax withholding,
reacquired by the Company prior to vesting, 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. Subject to such
overall limitations, shares of Stock may be issued up to such maximum number
pursuant to any type or types of Award; provided, however, that Stock Options or
Stock Appreciation Rights with respect to no more than 750,000 shares of Stock
may be granted to any one individual grantee during any one calendar year
period. The shares available for issuance under the Plan may be authorized but
unissued shares of Stock or shares of Stock reacquired by the Company.

     (b) Changes in Stock. Subject to Section 3(c) hereof, if, as a result of
any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in the Company's capital
stock, the outstanding shares of Stock are increased or decreased or are
exchanged for a different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or other securities of
the Company or other non-cash assets are distributed with respect to such shares
of Stock or other securities, or, if, as a result of any merger or
consolidation, sale of all or substantially all of the assets of the Company,
the outstanding shares of Stock are converted into or exchanged for securities
of the Company or any successor entity (or a parent or subsidiary thereof), the
Committee shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options or Stock Appreciation Rights that can be granted to any one
individual grantee and the maximum number of shares that may be granted under a
Performance-based Award, (iii) the number and kind of shares or other securities
subject to any then outstanding Awards under the Plan, (iv) the repurchase
price, if any, per share subject to each outstanding Restricted Stock Award, (v)
the price for each share subject to any then outstanding Stock Options and Stock
Appreciation Rights under the Plan, without changing the aggregate exercise
price (i.e., the exercise price multiplied by the number of Stock Options and
Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation
Rights remain exercisable, and (vi) the number of Stock Options automatically
granted to Non-Employee Directors. The Committee shall also adjust the number of
shares subject to outstanding Awards and the exercise price and the terms of

                                       6

<Page>

outstanding Awards to take into consideration, extraordinary dividends,
acquisitions or dispositions of stock or property to the extent necessary to
avoid distortion in the value of Awards. The adjustment by the Committee shall
be final, binding and conclusive. No fractional shares of Stock shall be issued
under the Plan resulting from any such adjustment, but the Committee in its
discretion may make a cash payment in lieu of fractional shares.

     No adjustment shall be made under this Section 3(b) in the case of an
Option or Stock Appreciation Right, without the consent of the grantee, if it
would constitute a modification, extension or renewal of the Option within the
meaning of Section 424(h) of the Code or a modification of the Option or Stock
Appreciation Right such that the Option or Stock Appreciation Right becomes
treated as "nonqualified deferred compensation" subject to Section 409A.

     (c) Mergers and Other Transactions. In the case of a Sale Event, the
parties to such Sale Event shall provide for the assumption or continuation of
Awards by the successor entity, or the substitution of such Awards with new
Awards of the successor entity or parent thereof, with appropriate adjustment as
to the number and kind of shares and, if appropriate, the per share exercise
prices, as such parties shall agree (after taking into account any acceleration
hereunder). If the parties to such Sale Event do not provide for such
assumption, continuation or substitution, then subject to the consummation of
such Sale Event, all Options and Stock Appreciation Rights that are not
exercisable immediately prior to the effective time of the Sale Event shall
become fully exercisable as of the effective time of the Sale Event and all
other Awards shall become fully vested and nonforfeitable as of the effective
time of the Sale Event, except as the Committee may otherwise specify with
respect to particular Awards in the relevant Award documentation, and Awards
with conditions and restrictions relating to the attainment of performance goals
may become vested and nonforfeitable in connection with such Sale Event in the
Committee's discretion. In addition, if Awards are not assumed, continued or
substituted, then upon the effective time of the Sale Event, the Plan and all
outstanding Awards will terminate. In the event of such termination, each
grantee shall be permitted, within a specified period of time prior to the
consummation of the Sale Event as determined by the Committee, to exercise all
outstanding Options and Stock Appreciation Rights held by such grantee,
including any that may become exercisable upon the consummation of the Sale
Event; provided, however, that the exercise of Options and Stock Appreciation
Rights not exercisable prior to the Sale Event shall be subject to the
consummation of the Sale Event.

     Notwithstanding anything to the contrary in this Section 3(c), in the event
of a Sale Event pursuant to which holders of the Stock of the Company will
receive upon consummation thereof a cash payment for each share surrendered in
the Sale Event, the Company shall have the right, but not the obligation, to
make or provide for a cash payment to the grantees holding Options and Stock
Appreciation Rights, in exchange for the cancellation thereof, in an amount
equal to the difference between (A) the Sale Price times the number of shares of
Stock subject to outstanding Options and Stock Appreciation Rights (to the
extent then exercisable at prices not in excess of the Sale Price) and (B) the
aggregate exercise price of all such outstanding Options and Stock Appreciation
Rights.

     (d) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees, directors or
other key persons

                                       7

<Page>

of another corporation in connection with the 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 Awards granted under the Plan shall not count against the share
limitation set forth in Section 3(a).

SECTION 4. ELIGIBILITY

     Grantees under the Plan will be such full or part-time officers and other
employees, Non-Employee Directors and key persons (including consultants and
prospective employees) of the Company and its Subsidiaries as are selected from
time to time by the Committee in its sole discretion.

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. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.

     (a) Stock Options Granted to Employees and Key Persons. The Committee in
its discretion may grant Stock Options to eligible employees and key persons of
the Company or any Subsidiary. Stock Options granted 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. If the Committee so determines,
Stock Options may be granted in lieu of cash compensation at the optionee's
election, subject to such terms and conditions as the Committee may establish.

          (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 not be less than 100 percent of the
Fair Market Value on the date of grant. In the case of an Incentive Stock Option
that is granted to a Ten Percent Owner, the option price of such Incentive Stock
Option shall be not less than 110 percent of the Fair Market Value on the grant
date.

          (ii) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years after
the date the Stock Option is granted. In the case of an Incentive Stock Option
that is granted to a Ten Percent Owner, the term of such Stock Option shall be
no more than five years from the date of grant.

          (iii) Exercisability; Rights of a Stockholder. Stock Options shall
become 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

                                       8

<Page>

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 to the extent provided in the Option Award
Agreement:

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

               (B) Through the delivery (or attestation to the ownership) of
     shares of Stock that have been purchased by the optionee on the open market
     or that are beneficially owned by the optionee 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. To the extent required to
     avoid variable accounting treatment under FAS 123R or other applicable
     accounting rules, such surrendered shares shall have been owned by the
     optionee for at least six months; or

               (C) At the discretion of the Committee, in accordance with a
     cashless exercise program established with a securities brokerage firm and
     approved by the Committee; 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.

Payment instruments will be received subject to collection. The transfer to the
optionee on the records of the Company or of the transfer agent of the shares of
Stock to be purchased pursuant to the exercise of a Stock Option will 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 Option Award Agreement or applicable provisions of laws
(including the satisfaction of any withholding taxes that the Company is
obligated to withhold with respect to the optionee). In the event an 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. In the event that the Company establishes, for itself or
using the services of a third party, an automated system for the exercise of
Stock Options, such as a system using an internet website or interactive voice
response, then the paperless exercise of Stock Options may be permitted through
the use of such an automated system.

          (v) 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 shares
of Stock with respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its parent and subsidiary corporations
become exercisable for the first time by an optionee during any calendar

                                       9

<Page>

year shall not exceed $100,000 or such other limit in effect from time to time
under the Code. To the extent that any Stock Option exceeds this limit, it shall
constitute a Non-Qualified Stock Option.

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

          (i) Automatic Grant of Options.

               (A) Each person who is a Non-Employee Director on the effective
     date of the Initial Public Offering shall be granted a Non-Qualified Stock
     Option to acquire 20,000 shares of Stock, less the number of shares subject
     to outstanding Stock Options held by such Director on such effective date.
     Each such Option shall be fully vested and exercisable from the date of
     grant.

               (B) Each Non-Employee Director who is first elected to serve as a
     Director after the Initial Public Offering shall be granted, on the fifth
     business day after his election, a Non-Qualified Stock Option to acquire
     20,000 shares of Stock. Each such Option shall be fully vested and
     exercisable from the date of grant.

               (C) Each Non-Employee Director who is serving as a Director of
     the Company on the fifth business day after each annual meeting of
     stockholders, beginning with the 2007 annual meeting, shall automatically
     be granted on such day a Non-Qualified Stock Option to acquire 10,000
     shares of Stock. Each such Option shall be vest and become exercisable one
     year after the date of grant.

               (D) The exercise price per share for the Stock covered by a Stock
     Option granted under this Section 5(b) shall be equal to the Fair Market
     Value of the Stock on the date the Stock Option is granted.

               (E) The Committee, in its discretion, may grant additional
     Non-Qualified Stock Options to Non-Employee Directors. Any such grant may
     vary among individual Non-Employee Directors.

          (ii) Exercise; Termination.

               (A) Unless otherwise determined by the Committee, an Option
     granted under Section 5(b)(E) shall be exercisable in full as of the grant
     date. An Option issued under this Section 5(b) shall not be exercisable
     after the expiration of ten years from the date of grant.

               (B) Options granted under this Section 5(b) 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.

                                       10

<Page>

SECTION 6. STOCK APPRECIATION RIGHTS

     (a) Exercise Price of Stock Appreciation Rights. The exercise price of a
Stock Appreciation Right shall not be less than 100 percent of the Fair Market
Value of the Stock on the date of grant (or more than the Stock Option exercise
price per share, if the Stock Appreciation Right was granted in tandem with a
Stock Option).

     (b) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation
Rights may be granted by the Committee in tandem with, or independently of, any
Stock Option granted pursuant to Section 5 of the Plan. In the case of a Stock
Appreciation Right granted in tandem with a Non-Qualified Stock Option, such
Stock Appreciation Right may be granted either at or after the time of the grant
of such Option. In the case of a Stock Appreciation Right granted in tandem with
an Incentive Stock Option, such Stock Appreciation Right may be granted only at
the time of the grant of the Option.

     A Stock Appreciation Right or applicable portion thereof granted in tandem
with a Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Option.

     (c) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined from
time to time by the Committee, subject to the following:

          (i) Stock Appreciation Rights granted in tandem with Options shall be
exercisable at such time or times and to the extent that the related Stock
Options shall be exercisable.

          (ii) Upon exercise of a Stock Appreciation Right, the applicable
portion of any related Option shall be surrendered.

SECTION 7. RESTRICTED STOCK AWARDS

     (a) Nature of Restricted Stock Awards. The Committee shall determine the
restrictions and conditions applicable to each Restricted Stock Award at the
time of grant. Conditions may be based on continuing employment (or other
service relationship) and/or achievement of pre-established 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 Award Agreement shall be determined by the 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 such conditions contained in the Restricted Stock Award Agreement.
Unless the Committee shall otherwise determine, (i) uncertificated Restricted
Stock shall be accompanied by a notation on the records of the Company or the
transfer agent to the effect that they are subject to forfeiture until such
Restricted Stock are vested as provided in Section 7(d) below, and (ii)
certificated Restricted Stock shall remain in the possession of the Company
until such Restricted Stock is vested as

                                       11

<Page>

provided in Section 7(d) below, and the grantee shall be required, as a
condition of the grant, to deliver to the Company such instruments of transfer
as the Committee may prescribe.

     (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. Except as may otherwise be
provided by the Committee either in the Award Agreement or, subject to Section
17 below, in writing after the Award Agreement is issued, if any, if a grantee's
employment (or other service relationship) with the Company and its Subsidiaries
terminates for any reason, any Restricted Stock that has not vested at the time
of termination shall be repurchased by the Company for the price paid by the
grantee (if any) or, if no purchase price was paid by the grantee, shall
automatically and without any requirement of notice to such grantee from or
other action by or on behalf of, the Company be deemed to have been reacquired
by the Company from such grantee or such grantee's legal representative
simultaneously with such termination of employment (or other service
relationship), and thereafter shall cease to represent any ownership of the
Company by the grantee or rights of the grantee as a stockholder. Following such
repurchase or deemed reacquisition of unvested Restricted Stock that are
represented by physical certificates, a grantee shall surrender such
certificates to the Company upon request without consideration.

     (d) 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." Except as may otherwise be provided by the Committee
either in the Award Agreement or, subject to Section 17 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 provisions of Section
7(c) above.

SECTION 8. DEFERRED STOCK AWARDS

     (a) Nature of Deferred Stock Awards. The Committee shall determine the
restrictions and conditions applicable to each Deferred Stock Award at the time
of grant. Conditions may be based on continuing employment (or other service
relationship) and/or achievement of pre-established performance goals and
objectives. The grant of a Deferred Stock Award is contingent on the grantee
executing the Deferred Stock Award Agreement. The terms and conditions of each
such Award Agreement shall be determined by the Committee, and such terms and
conditions may differ among individual Awards and grantees. At the end of the
deferral period, the Deferred Stock Award, to the extent vested, shall be paid
to the grantee in the form of shares of Stock.

     (b) Election to Receive Deferred Stock Awards in Lieu of Compensation. The
Committee may, in its sole discretion, permit a grantee to elect to receive a
portion of future cash compensation otherwise due to such grantee in the form of
a Deferred Stock Award. Any such election shall be made in writing and shall be
delivered to the Company no later than the date

                                       12

<Page>

specified by the Committee and in accordance with Section 409A and such other
rules and procedures established by the Committee. The Committee shall have the
sole right to determine whether and under what circumstances to permit such
elections and to impose such limitations and other terms and conditions thereon
as the Committee deems appropriate. Any such deferred compensation shall be
converted to a fixed number of phantom stock units based on the Fair Market
Value of Stock on the date the compensation would otherwise have been paid to
the grantee but for the deferral.

     (c) Rights as a Stockholder. During the deferral period, a grantee shall
have no rights as a stockholder; provided, however, that the grantee may be
credited with Dividend Equivalent Rights with respect to the phantom stock units
underlying his Deferred Stock Award, subject to such terms and conditions as the
Committee may determine.

     (d) Termination. Except as may otherwise be provided by the Committee
either in the Award Agreement or, subject to Section 17 below, in writing after
the Award Agreement is issued, a grantee's right in all Deferred Stock Awards
that have not vested shall automatically terminate upon the grantee's
termination of employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.

SECTION 9. UNRESTRICTED STOCK AWARDS

     Grant or Sale of Unrestricted Stock. The Committee may, in its sole
discretion, grant (or sell at par value or such higher purchase price determined
by the Committee) an Unrestricted Stock Award under the Plan. Unrestricted Stock
Awards may be granted in respect of past services or other valid consideration,
or in lieu of cash compensation due to such grantee.

SECTION 10. CASH-BASED AWARDS

     (a) Grant of Cash-based Awards. The Committee may, in its sole discretion,
grant Cash-based Awards to any grantee in such number or amount and upon such
terms, and subject to such conditions, as the Committee shall determine at the
time of grant. The Committee shall determine the maximum duration of the
Cash-based Award, the amount of cash to which the Cash-based Award pertains, the
conditions upon which the Cash-based Award shall become vested or payable, and
such other provisions as the Committee shall determine. Each Cash-based Award
shall specify a cash-denominated payment amount, formula or payment ranges as
determined by the Committee. Payment, if any, with respect to a Cash-based Award
shall be made in accordance with the terms of the Award and may be made in cash
or in shares of Stock, as the Committee determines.

SECTION 11. PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

     (a) Performance-based Awards. Any employee or other key person providing
services to the Company and who is selected by the Committee may be granted one
or more Performance-based Awards in the form of a Restricted Stock Award,
Deferred Stock Award or Cash-based Award payable upon the attainment of
Performance Goals that are established by the Committee and relate to one or
more of the Performance Criteria, in each case on a specified date or dates or
over any period or periods determined by the Committee. The Committee shall
define in an objective fashion the manner of calculating the Performance
Criteria it selects to use

                                       13

<Page>

for any Performance Period. Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit, or an individual. The Committee, in its discretion, may adjust or modify
the calculation of Performance Goals for such Performance Period in order to
prevent the dilution or enlargement of the rights of an individual (i) in the
event of, or in anticipation of, any unusual or extraordinary corporate item,
transaction, event or development, (ii) in recognition of, or in anticipation
of, any other unusual or nonrecurring events affecting the Company, or the
financial statements of the Company, or (iii) in response to, or in anticipation
of, changes in applicable laws, regulations, accounting principles, or business
conditions provided however, that the Committee may not exercise such discretion
in a manner that would increase the Performance-based Award granted to a Covered
Employee. Each Performance-based Award shall comply with the provisions set
forth below.

     (b) Grant of Performance-based Awards. With respect to each
Performance-based Award granted to a Covered Employee, the Committee shall
select, within the first 90 days of a Performance Cycle (or, if shorter, within
the maximum period allowed under Section 162(m) of the Code) the Performance
Criteria for such grant, and the Performance Goals with respect to each
Performance Criterion (including a threshold level of performance below which no
amount will become payable with respect to such Award). Each Performance-based
Award will specify the amount payable, or the formula for determining the amount
payable, upon achievement of the various applicable performance targets. The
Performance Criteria established by the Committee may be (but need not be)
different for each Performance Cycle and different Performance Goals may be
applicable to Performance-based Awards to different Covered Employees.

     (c) Payment of Performance-based Awards. Following the completion of a
Performance Cycle, the Committee shall meet to review and certify in writing
whether, and to what extent, the Performance Goals for the Performance Cycle
have been achieved and, if so, to also calculate and certify in writing the
amount of the Performance-based Awards earned for the Performance Cycle. The
Committee shall then determine the actual size of each Covered Employee's
Performance-based Award, and, in doing so, may reduce or eliminate the amount of
the Performance-based Award for a Covered Employee if, in its sole judgment,
such reduction or elimination is appropriate.

     (d) Maximum Award Payable. The maximum Performance-based Award payable to
any one Covered Employee under the Plan for a Performance Cycle is 750,000
Shares (subject to adjustment as provided in Section 3(b) hereof) or
$10,000,000, in the case of a Performance-based Award that is a Cash-based
Award.

SECTION 12. DIVIDEND EQUIVALENT RIGHTS

     (a) Dividend Equivalent Rights. A Dividend Equivalent Right may be granted
hereunder to any grantee as a component of another Award or as a freestanding
award. The terms and conditions of Dividend Equivalent Rights shall be specified
in the Award Agreement. Dividend equivalents credited to the holder of a
Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at Fair Market Value on the date of
reinvestment or such other price as may then apply under a dividend reinvestment
plan

                                       14

<Page>

sponsored by the Company, if any. Dividend Equivalent Rights may be settled in
cash or shares of Stock or a combination thereof, in a single installment or
installments. A Dividend Equivalent Right granted as a component of another
Award may provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on, such other
Award, and that such Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other Award. A Dividend Equivalent
Right granted as a component of another Award may also contain terms and
conditions different from such other Award.

     (b) Interest Equivalents. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.

     (c) Termination. Except as may otherwise be provided by the Committee
either in the Award Agreement or, subject to Section 17 below, in writing after
the Award Agreement is issued, a grantee's rights in all Dividend Equivalent
Rights or interest equivalents granted as a component of another Award that has
not vested shall automatically terminate upon the grantee's termination of
employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.

SECTION 13. TRANSFERABILITY OF AWARDS

     (a) Transferability. Except as provided in Section 13(b) below, during a
grantee's lifetime, his or her Awards shall be exercisable only by the grantee,
or by the grantee's legal representative or guardian in the event of the
grantee's incapacity. No Awards shall be sold, assigned, transferred or
otherwise encumbered or disposed of by a grantee other than by will or by the
laws of descent and distribution. No Awards shall be subject, in whole or in
part, to attachment, execution, or levy of any kind, and any purported transfer
in violation hereof shall be null and void.

     (b) Committee Action. Notwithstanding Section 13(a), the Committee, in its
discretion, may provide either in the Award Agreement regarding a given Award or
by subsequent written approval that the grantee (who is an employee or director)
may transfer his or her Awards (other than any Incentive Stock Options) to his
or her immediate family members, 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 Award.

     (c) Family Member. For purposes of Section 13(b), "family member" shall
mean a grantee's 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 grantee's household (other than a
tenant of the grantee), a trust in which these persons (or the grantee) have
more than 50 percent of the beneficial interest, a foundation in which these
persons (or the grantee) control the management of assets, and any other entity
in which these persons (or the grantee) own more than 50 percent of the voting
interests.

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     (d) Designation of Beneficiary. Each grantee to whom an Award has been made
under the Plan may designate a beneficiary or beneficiaries to exercise any
Award or receive any payment under any Award payable on or after the grantee's
death. Any such designation shall be on a form provided for that purpose by the
Committee and shall not be effective until received by the Committee. If no
beneficiary has been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall be the
grantee's estate.

SECTION 14. TAX WITHHOLDING

     (a) Payment by Grantee. Each grantee 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 grantee 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 by the Company with respect to such 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
grantee. The Company's obligation to deliver evidence of book entry (or stock
certificates) to any grantee is subject to and conditioned on tax withholding
obligations being satisfied by the grantee.

     (b) Payment in Stock. Subject to approval by the Committee, a grantee may
elect to have the Company's minimum required 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 grantee with an aggregate Fair Market Value (as of
the date the withholding is effected) that would satisfy the withholding amount
due.

SECTION 15. ADDITIONAL CONDITIONS APPLICABLE TO NONQUALIFIED DEFERRED
            COMPENSATION UNDER SECTION 409A.

     In the event any Stock Option or Stock Appreciation Right under the Plan is
materially modified and deemed a new grant at a time when the Fair Market Value
exceeds the exercise price, or any other Award is otherwise determined to
constitute "nonqualified deferred compensation" within the meaning of Section
409A (a "409A Award"), the following additional conditions shall apply and shall
supersede any contrary provisions of this Plan or the terms of any agreement
relating to such 409A Award.

     (a) Exercise and Distribution. Except as provided in Section 15(b) hereof,
no 409A Award shall be exercisable or distributable earlier than upon one of the
following:

          (i) Specified Time. A specified time or a fixed schedule set forth in
the written instrument evidencing the 409A Award.

          (ii) Separation from Service. Separation from service (within the
meaning of Section 409A) by the 409A Award grantee; provided, however, that if
the 409A Award grantee is a "key employee" (as defined in Section 416(i) of the
Code without regard to paragraph (5) thereof) and any of the Company's Stock is
publicly traded on an established securities market or

                                       16

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otherwise, exercise or distribution under this Section 15(a)(ii) may not be made
before the date that is six months after the date of separation from service.

          (iii) Death. The date of death of the 409A Award grantee.

          (iv) Disability. The date the 409A Award grantee becomes disabled
(within the meaning of Section 15(c)(ii) hereof).

          (v) Unforeseeable Emergency. The occurrence of an unforeseeable
emergency (within the meaning of Section 15(c)(iii) hereof), but only if the net
value (after payment of the exercise price) of the number of shares of Stock
that become issuable does not exceed the amounts necessary to satisfy such
emergency plus amounts necessary to pay taxes reasonably anticipated as a result
of the exercise, after taking into account the extent to which the emergency is
or may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the grantee's other assets (to the extent such
liquidation would not itself cause severe financial hardship).

          (vi) Change in Control Event. The occurrence of a Change in Control
Event (within the meaning of Section 15(c)(i) hereof), including the Company's
acceleration of vesting of such grant upon a Change in Control Event or
termination of the Plan or any 409A Award granted hereunder within 12 months of
the Change in Control Event.

     (b) No Acceleration. A 409A Award may not be accelerated or exercised prior
to the time specified in Section 15(a) hereof, except in the case of one of the
following events:

          (i) Domestic Relations Order. The 409A Award may permit the
acceleration of the exercise or distribution time or schedule to an individual
other than the grantee as may be necessary to comply with the terms of a
domestic relations order (as defined in Section 414(p)(1)(B) of the Code).

          (ii) Conflicts of Interest. The 409A Award may permit the acceleration
of the exercise or distribution time or schedule as may be necessary to comply
with the terms of a certificate of divestiture (as defined in Section 1043(b)(2)
of the Code).

          (iii) Change in Control Event. The Committee may exercise the
discretionary right to accelerate the vesting of such 409A Award upon a Change
in Control Event or to terminate the Plan or any 409A Award granted thereunder
within 12 months of the Change in Control Event and cancel the 409A Award for
compensation.

     (c) Definitions. Solely for purposes of this Section 15 and not for other
purposes of the Plan, the following terms shall be defined as set forth below:

          (i) "Change in Control Event" means the occurrence of a change in the
ownership of the Company, a change in effective control of the Company, or a
change in the ownership of a substantial portion of the assets of the Company
(as defined in Section 1.409A-3(g) of the proposed regulations promulgated under
Section 409A by the Department of the Treasury on September 29, 2005 or any
subsequent guidance).

                                       17

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          (ii) "Disabled" means a grantee who (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (ii) is, by reason
of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering employees of
the Company or its Subsidiaries.

          (iii) "Unforeseeable Emergency" means a severe financial hardship to
the grantee resulting from an illness or accident of the grantee, the grantee's
spouse, or a dependent (as defined in Section 152(a) of the Code) of the
grantee, loss of the grantee's property due to casualty, or similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the grantee.

SECTION 16. TRANSFER, LEAVE OF ABSENCE, ETC.

     Except as required by law or set forth in an Award Agreement, Awards
granted under the Plan shall not be affected by any change of an Award holder's
status within or among the Company and its Subsidiaries so long as the Award
holder continues to be an employee, director or consultant of the Company or any
Subsidiary. Accordingly, 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 17. 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 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. Except as provided in Section 3(b) or 3(c), in no event may the
Committee exercise its discretion to reduce the exercise price of outstanding
Stock Options or Stock Appreciation Rights or effect repricing through
cancellation and re-grants. Any material Plan amendments (other than amendments
that curtail the scope of the Plan), including any Plan amendments that (i)
increase the number of shares reserved for issuance under the Plan, (ii) expand
the type of Awards available under, materially expand the eligibility to
participate in, or materially extend the term of, the Plan, or (iii) materially
change the method of determining Fair Market Value, shall be subject to approval
by the Company stockholders entitled to vote at a meeting of stockholders. In
addition, to the extent determined by the Committee to be required by the Code
to ensure that Incentive Stock Options granted under the Plan are qualified
under Section 422 of the Code or to ensure that compensation earned under Awards
qualifies as performance-based compensation under Section 162(m) of the Code,

                                       18

<Page>

Plan amendments shall be subject to approval by the Company stockholders
entitled to vote at a meeting of stockholders. Nothing in this Section 17 shall
limit the Committee's authority to take any action permitted pursuant to Section
3(c).

SECTION 18. STATUS OF PLAN

     With respect to the portion of any Award that has not been exercised and
any payments in cash, Stock or other consideration not received by a grantee, a
grantee 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
foregoing sentence.

SECTION 19. GENERAL PROVISIONS

     (a) No Distribution. The Committee may require each person acquiring Stock
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.

     (b) Delivery of Stock Certificates. Stock certificates to grantees under
this Plan shall be deemed delivered for all purposes when the Company or a stock
transfer agent of the Company shall have mailed such certificates in the United
States mail, addressed to the grantee, at the grantee's last known address on
file with the Company. Uncertificated Stock shall be deemed delivered for all
purposes when the Company or a Stock transfer agent of the Company shall have
given to the grantee by electronic mail (with proof of receipt) or by United
States mail, addressed to the grantee, at the grantee's last known address on
file with the Company, notice of issuance and recorded the issuance in its
records (which may include electronic "book entry" records). Notwithstanding
anything herein to the contrary, the Company shall not be required to issue or
deliver any certificates evidencing shares of Stock pursuant to the exercise of
any Award, unless and until the Board has determined, with advice of counsel (to
the extent the Board deems such advice necessary or advisable), that the
issuance and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authorities and, if applicable, the
requirements of any exchange on which the shares of Stock are listed, quoted or
traded. All Stock certificates delivered pursuant to the Plan shall be subject
to any stop-transfer orders and other restrictions as the Committee deems
necessary or advisable to comply with federal, state or foreign jurisdiction,
securities or other laws, rules and quotation system on which the Stock is
listed, quoted or traded. The Committee may place legends on any Stock
certificate to reference restrictions applicable to the Stock. In addition to
the terms and conditions provided herein, the Board may require that an
individual make such reasonable covenants, agreements, and representations as
the Board, in its discretion, deems necessary or advisable in order to comply
with any such laws, regulations, or requirements. The Committee shall have the
right to require any individual to comply with any timing or other restrictions
with respect to the settlement or exercise of any Award, including a
window-period limitation, as may be imposed in the discretion of the Committee.

                                       19

<Page>

     (c) Stockholder Rights. Until Stock is deemed delivered in accordance with
Section 19(b), no right to vote or receive dividends or any other rights of a
stockholder will exist with respect to shares of Stock to be issued in
connection with an Award, notwithstanding the exercise of a Stock Option or any
other action by the grantee with respect to an Award.

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

     (e) Trading Policy Restrictions. Option exercises and other Awards under
the Plan shall be subject to such Company's insider trading policy and
procedures, as in effect from time to time.

     (f) Forfeiture of Awards under Sarbanes-Oxley Act. If the Company is
required to prepare an accounting restatement due to the material noncompliance
of the Company, as a result of misconduct, with any financial reporting
requirement under the securities laws, then any grantee who is one of the
individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002 shall reimburse the Company for the amount of any
Award received by such individual under the Plan during the 12-month period
following the first public issuance or filing with the United States Securities
and Exchange Commission, as the case may be, of the financial document embodying
such financial reporting requirement.

SECTION 20. EFFECTIVE DATE OF PLAN

     This Plan shall become effective upon approval by the holders of a majority
of the votes cast at a meeting of stockholders at which a quorum is present. No
grants of Stock Options and other Awards may be made hereunder after the tenth
anniversary of the Effective Date and no grants of Incentive Stock Options may
be made hereunder after the tenth anniversary of the date the Plan is approved
by the Board.

SECTION 21. GOVERNING LAW

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

DATE APPROVED BY BOARD OF DIRECTORS:

DATE APPROVED BY STOCKHOLDERS:

                                       20

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