Document:

2004 Long-Term Incentive Plan, as amended

 Exhibit 10.7 
 PEGASYSTEMS INC. 
 2004 LONG-TERM INCENTIVE PLAN 
 1. Purposes of the Plan. The purposes of this 2004 Long-Term Incentive Plan (the “Plan”) are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants, and to promote the success of the Company’s business. Options, Stock Purchase Rights and other stock-based awards
may be granted under the Plan. 
 2. Definitions. As used herein, the following definitions shall apply: 
 (a) “Administrator” means the Board or the Committee administering the Plan in accordance with Section 5 hereof. 
 (b) “Applicable Laws” means the requirements relating to the administration of stock options plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Awards are granted under the Plan. 
 (c) “Award” means any Option, Stock Purchase Right or other stock-based award granted pursuant to the Plan. 
 (d) “Board” means the Board of Directors of the Company, as constituted from time to time. 
 (e) “Code” means the Internal Revenue Code of 1986, as amended, or any successor statute or statutes thereto. Reference to any
particular Code section shall include any successor section. 
 (f) “Committee” means a committee of Directors appointed by
the Board in accordance with Section 5(b) hereof. 
 (g) “Common Stock” means the Common Stock, $0.01 par value per share,
of the Company. 
 (h) “Company” means Pegasystems Inc., a Massachusetts corporation. 
 (i) “Consultant” means any consultant or adviser if: (i) the consultant or adviser renders bona fide services to a Related Company; (ii)
the services rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for a Related Company’s securities;
and (iii) the consultant or adviser is a natural person who has contracted directly with a Related Company to render such services. 
 (j)
“Director” means a member of the Board. 
 (k) “Disability” means total and permanent disability as defined
in Section 22(e)(3) of the Code. 

 (l) “Employee” means any person, including Officers and Directors, employed by a Related
Company who is subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. An Employee shall not cease to be an Employee in the case of (i) any leave of absence approved
by a Related Company or (ii) transfers between locations of a Related Company or between the Related Companies, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration
of such leave is guaranteed by statute or contract. If reemployment upon expiration of leave of absence approved by the Related Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by the Participant shall
cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute
“employment” by the Company. 
 (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto. Reference to any particular Exchange Act section shall include any successor section. 
 (n)
“Exercise Price” or “Purchase Price” means the per Share price to be paid by a Participant or Purchaser to exercise an Option or Stock Purchase Right. 
 (o) “Fair Market Value”1
 means, as of any date, the value of a share of Common Stock determined as follows: 
 (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or the Nasdaq SmallCap Market of the Nasdaq Stock Market, (a) for purposes of
determining the number of Shares to be retained by the Company in payment of the exercise price of an Option or the withholding of tax for any Award, Fair Market Value shall be the execution price for the trade of Common Stock (excluding “after
hours” trading) occurring, in the case of an Option, immediately before the receipt by the Company or its agent of the notice of exercise, or, in the case of a restricted stock unit, immediately before the date of vesting, and (b) for all other
purposes Fair Market Value shall be the closing price (excluding “after hours” trading) for a share of such stock on that day (or, if the Common Stock is not traded on that day, on the last trading day preceding such date).; 
 (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, (a) for purposes of
determining the exercise price of an Option, Fair Market Value shall be the mean between the highest bid and lowest asked prices (excluding “after hours” trading) for a share of the Common Stock on that day (or, if there are no quotes for
that day, on the last day preceding such date for which quotes were available), and (b) for all other purposes, Fair Market Value shall be the mean between the highest bid and lowest asked prices (excluding “after hours” trading) for a
share of the Common Stock on the last day preceding such date; or 
 (iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. 
 (p) “Incentive Stock
Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and which is designated as an Incentive Stock Option by the Administrator. 
  

	 1
	 This section 1(o) has been restated to reflect amendments to the Plan adopted by the Company’s Board of Directors
on November 24, 2008. 

  

 2 

 (q) “Nonstatutory Stock Option” means an Option (or portion thereof) that is not
designated as an Incentive Stock Option by the Administrator, or which is designated as an Incentive Stock Option by the Administrator but fails to qualify as an incentive stock option within the meaning of Section 422 of the Code. 
 (r) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder. 
 (s) “Option” means a stock option granted pursuant to the Plan. 
 (t) “Option Exchange Program” means a program whereby outstanding Options are exchanged for Options with a lower Exercise Price.

 (u) “Optioned Stock” means the Common Stock subject to an Option or a Stock Purchase Right. 
 (v) “Parent” means a “parent corporation,” whether now or hereafter existing, as a defined in Section 424(e) of the Code.

 (w) “Participant” means the holder of an outstanding Award. 
 (x) “Plan” means this 2004 Long-Term Incentive Plan. 
 (y) “Purchased Shares” means the shares of Common Stock purchased by a Participant pursuant to his or her exercise of an Award. 
 (z) “Purchaser” means a Participant exercising an Option or Stock Purchase Right. 
 (aa) “Related Company” means and includes the Company and the Parent and any Subsidiaries of the Company. 
 (bb) “Restricted Shares” means unvested shares of Common Stock acquired pursuant to the exercise of an Award which are subject to a
Right of Repurchase. 
 (cc) “Retirement” means retirement of an Employee or Director from active employment or service with
any Related Company after having attained age 60. 
 (dd) “Right of Repurchase” means the right of the Company to repurchase

 Restricted Shares issued pursuant to any Award. 
 (ee) “Sale of the Company” means (i) a sale of substantially all of the assets of the Company, or (ii) a sale or transfer of voting securities of the Company to an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), in one transaction or a series of related transactions, or (iii) a consolidation or merger of the Company, in each case, as a result of which the beneficial holders of a majority of
the voting power of the Company’s voting securities entitled to vote generally in the election of directors (“Voting Power”) prior to such transaction do not, directly or indirectly, beneficially hold a majority of the Voting Power
(or of the voting power of the surviving or acquiring entity) after such transaction. 
 (ff) “Section 16(b)” means Section
16(b) of the Exchange Act. 
 (gg) “Service” means the Participant’s performance of services for a Related Company in
the capacity of an Employee, Director or Consultant. 
  

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 (hh) “Service Provider” means an Employee, Director or Consultant. 
 (ii) “Share” means a share of the Common Stock, as adjusted in accordance with Section 12 hereof. 
 (jj) “Stock Option Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of an
individual Option grant. A Stock Option Agreement is subject to the terms and conditions of the Plan. 
 (kk) “Stock Purchase
Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a Stock Purchase Right. A Stock Purchase Agreement is subject to the terms and conditions of the Plan. 
 (ll) “Stock Purchase Right” means the right of a Participant to purchase Common Stock pursuant to Section 10 hereof. 
 (mm) “Subsidiary” means “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 (nn) “10% Stockholder” means the owner of stock (as determined under Section 424(d) of the Code) possessing more than ten
percent (10%) of the voting power of all classes of stock of a Related Company. 
 3. Effective Date and Term of Plan. The Plan shall
become effective upon its adoption by the Board. No Awards shall be granted under the Plan after the completion of ten years from the earlier of (i) the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved by the
Company’s stockholders, but Awards previously granted may extend beyond that date. 
 4. Stock Subject to the Plan. 

(a) Number of Shares. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares which may be subject to Awards
and issued under the Plan is 7,000,000 Shares. The Shares may be authorized but unissued shares or treasury shares. If an Award expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of an Award,
shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Restricted Shares are forfeited and repurchased by the Company at not more than their Exercise Price, such Shares shall become
available for future Awards under the Plan. Shares which are delivered by the Participant or withheld by the Company upon the exercise of an Option under the Plan, in payment of the exercise price thereof or tax withholding thereon, may again be
optioned, granted or awarded hereunder, subject to the limitations of this Section 4(a). Notwithstanding the provisions of this Section 4(a), no Shares may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to
fail to qualify as an Incentive Stock Option under Section 422 of the Code. 
 (b) Per-Participant Limit. No Participant will receive,
over the term of the Plan, Awards for more than an aggregate of 30% of the shares of Common Stock with respect to which Awards may be granted under the Plan . The per-Participant limit described in this Section 4(b) shall be construed and applied
consistently with Section 162(m) of the Code. 
 5. Administration of the Plan. 
  

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 (a) Administration by Board of Directors. The Plan will be administered by the Board. The Board
shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board’s
sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination
relating to or under the Plan made in good faith. 
 (b) Appointment of Committees. To the extent permitted by Applicable Laws, the
Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board. 
 (c) Powers of the
Administrator. Subject to the provisions of the Plan and, in the case of a Committee or executive officer, the specific duties delegated by the Board to such Committee, the Administrator shall have the authority in its discretion: 
 (i) to determine the Fair Market Value; 
 (ii) to select the Service Providers to whom Awards may from time to time be granted hereunder; 
 (iii) to determine the number of
Shares to be covered by each Award granted hereunder; 
 (iv) to approve forms of agreement for use under the Plan; 
 (v) to determine the terms and conditions of any Award granted hereunder. Such terms and conditions include, but are not limited to, the Exercise Price
or Purchase Price, the time or times when an Award may be exercised (which may be based on performance criteria), any vesting, acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares
relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; 
 (vi) to determine
whether and under what circumstances an Option may be settled in cash under Section 13(f) instead of Common Stock; 
 (vii) to reduce the
Exercise Price or Purchase Price of any Award to the then current Fair Value Market if the Fair Market Value of the Common Stock covered by such Award has declined since the date the Award was granted; 
 (viii) to initiate an Option Exchange Program; 
 (ix) to prescribe, amend and rescind rules and regulations relating to the Plan; and 
 (x) to construe and interpret the terms of
the Plan and Awards granted pursuant to the Plan. 
 6. Eligibility. 
  

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 (a) Nonstatutory Stock Options, Stock Purchase Rights and other stock-based awards (other than Incentive
Stock Options) may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 
 (b) Each Option shall be
designated in the Stock Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Related Companies) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(b),
Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. 
 7. Term of Option. The term of each Option shall be stated in the Stock Option Agreement; provided, however, that the term shall be no more than
ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to a 10% Stockholder, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Stock Option
Agreement. 
 8. Option Exercise Price and Consideration. 
 (a) The Exercise Price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator; provided,
however, that in the case of an Incentive Stock Option granted to a 10% Stockholder, the Exercise Price shall be no less than 110% of the Fair Market Value per Share on the date of grant, and provided further that in the case of an Incentive Stock
Option granted to any other Employee, the Exercise Price shall be no less than 100% of the Fair Market Value per Share on the date of grant. 
 (b)2 For Options issued prior to December 13, 2007, The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive
Stock Option, shall be determined at the time of grant and set forth in the Stock Option Agreement). Such consideration may consist of (i) cash or a check payable to the Company, (ii) a promissory note of the Participant, (iii) when the Common Stock
is registered under the Exchange Act other Shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Participant for more than six months on the date of surrender, and (y) have a Fair Market Value on the date
of surrender equal to the aggregate Exercise Price of the Shares as to which such Option shall be exercised, (iv) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (v)
any combination of the foregoing methods of payment. 
 For Options issued on or after December 13, 2007, the consideration to be paid for
the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant and set forth in the Stock Option
Agreement). Such consideration may consist of (i) cash or a check payable to the Company; (ii) a promissory note of the Participant; (iii) consideration received by the Company under a cashless exercise program implemented by the Company in
connection with the Plan; (iv) when the Common Stock is registered under the Exchange Act, consideration received by the Company under a “net exercise” arrangement pursuant to which the number of Shares issued to the Participant in
connection with the Participant’s exercise of the Option is reduced by the Company’s retention of a portion of the Shares otherwise issuable in connection with such exercise having a Fair Market Value (determined as of the date of the
exercise notice) equal to the aggregate exercise price of the Shares as to which such Option is being exercised; or (v) any combination of the foregoing methods of payment. 
  

	 2
	 This section 8(b) has been restated to reflect amendments to the Plan adopted by the Company’s Board of Directors
on December 13, 2007. 

  

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 9. Exercise of Option. 
 (a) Procedure for Exercise. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions
as determined by the Administrator and set forth in the Stock Option Agreement. Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of absence. An Option may not be exercised for
a fraction of a Share. 
 An Option shall be deemed exercised when the Company receives: (i) written notice of exercise (in accordance with
the Stock Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Stock Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her
spouse. 
 Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of
the Plan and sale under the Option, by the number of Shares as to which the Option is exercised. 
 (b) Termination of Service. If a
Participant terminates Service other than by reason of the Participant’s death, Disability or Retirement, such Participant may exercise his or her Option within such period of time as is specified in the Stock Option Agreement to the extent
that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Stock Option Agreement). In the absence of a specified time in the Stock Option Agreement, the Option shall
remain exercisable for three months following the Participant’s termination of Service. If, on the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination of Service, the Participant does not exercise his or her Option within the time specified by the Administrator in the Stock Option Agreement, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan. 
 (c) Disability of Participant. If a Participant terminates Service as a result of the Participant’s
Disability, the Participant may exercise his or her Option within such period of time as is specified in the Stock Option Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term
of such Option as set forth in the Stock Option Agreement). In the absence of a specified time in the Stock Option Agreement, the Option shall remain exercisable for 24 months following the Participant’s termination of Service as the result of
the Participant’s Disability. If, on the date of termination of Service, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination of
Service, the Participant does not exercise his or her Option within the time specified in the Stock Option Agreement, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
 (d) Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised within such period of time as is specified
in the Stock Option Agreement to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Stock Option Agreement) by the Participant’s estate or by a
person who acquires the right to exercise the Option by bequest or inheritance. In the absence of a specified time in the Stock Option Agreement, the Option shall remain exercisable for 12 months following the Participant’s 

  

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termination of Service because of death. If, at the time of death, the Participant is not vested as to the entire Option, the Shares covered by the unvested
portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified in the Stock Option Agreement, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 (e) Retirement of Participant. If a Participant terminates Service as a result of Retirement, the Participant may exercise his or
her Option within such period of time as is specified in the Stock Option Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Stock Option
Agreement). In the absence of a specified time in the Stock Option Agreement, the Option shall remain exercisable for 24 months following the Participant’s termination of Service as the result of the Participant’s Retirement. If, on the
date of termination of Service, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination of Service, the Participant does not exercise his
or her Option within the time specified in the Stock Option Agreement, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
 (f) Unvested Shares. The Administrator shall have the discretion to grant Options which are exercisable for Restricted Shares. Should the Participant terminate Service or fail to satisfy performance objectives
while holding such Restricted Shares, the Company shall have a Right of Repurchase, at the Exercise Price paid per Share or such other price determined by the Administrator and set forth in the Stock Option Agreement, with respect to any or all of
those Restricted Shares. The terms upon which such Right of Repurchase shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased Shares) shall be established by the Administrator and
set forth in the Stock Option Agreement or other document evidencing such repurchase right. 
 (g)3 Automatic Extension of Post-Termination Exercise Periods. For Options issued on or after December 13, 2007, the period of time
during which a Participant may exercise an Option after he or she terminates Service pursuant to this Section 9 or as specified in any Stock Option Agreement (the “Post-Termination Exercise Period”) shall be extended by the amount of time,
if any, during the Post-Termination Exercise Period when the effectiveness of any registration statement covering the issuance of Shares under the Plan is suspended for any reason; provided, however, that in no event shall the Post-Termination
Exercise Period be extended beyond the expiration of the stated term of the Option. 
 10. Stock Purchase Rights. 
 (a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other Awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the Participant in writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer. The offer shall be accepted by execution of a Stock Purchase Agreement in the form
determined by the Administrator. 
 (b) Right of Repurchase. Unless the Administrator determines otherwise, the Stock Purchase
Agreement shall grant the Company a Right of Repurchase exercisable upon the termination of the Purchaser’s Service with the Company for any reason (including death or disability) or upon the failure to satisfy any performance objectives or
other conditions specified in the Stock Purchase Agreement. Shares issued as Restricted Shares may not be sold, assigned, transferred, pledged or otherwise disposed of, except by will or the laws of descent and distribution, or as otherwise
determined 
  

	 3
	 This section 9(g) has been inserted to reflect amendments to the Plan adopted by the Company’s Board of Directors
on December 13, 2007. 

  

 8 

 
by the Administrator in the Stock Purchase Agreement, for such period as the Administrator shall determine. The purchase price for Restricted Shares
repurchased pursuant to the Right of Repurchase shall be the purchase price paid by the Purchaser or such other price determined by the Administrator and set forth in the Stock Purchase Agreement, and may be paid by cancellation of any indebtedness
of the Purchaser to the Company. The Right of Repurchase shall lapse upon such conditions or at such rate as the Administrator may determine and set forth in the Stock Purchase Agreement. 
 Each certificate for Restricted Shares shall bear an appropriate legend referring to the Right of Repurchase and other restrictions and shall be
deposited by the stockholder with the Company together with a stock power endorsed in blank. Any attempt to dispose of Restricted Shares in contravention of the Right of Repurchase and other restrictions shall be null and void and without effect. If
Restricted Shares shall be repurchased by the Company pursuant to the Right of Repurchase, the stockholder shall forthwith deliver to the Company the certificates for the Restricted Shares, accompanied by such instrument of transfer, if any, as may
reasonably be required by the Company. If the Company does not exercise its Right of Repurchase, such Right of Repurchase shall terminate and be of no further force and effect. 
 The Administrator may in its discretion waive the surrender and cancellation of one or more Restricted Shares (or other assets attributable thereto)
which would otherwise occur upon the non-completion of the vesting schedule or other conditions applicable to those Restricted Shares. Such waiver shall result in the immediate vesting of the Purchaser’s interest in the Restricted Shares as to
which the waiver applies. Such waiver may be effected at any time, whether before or after the Purchaser’s termination of Service or the attainment or non-attainment of the applicable conditions. 
 (c) Other Provisions. The Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may
be determined by the Administrator in its sole discretion. 
 11. Other Stock-Based Awards. The Administrator shall have the right to
grant other Awards based upon the Common Stock having such terms and conditions as the Administrator may determine, including the grant of Shares based upon certain conditions, the grant of securities convertible into Common Stock and the grant of
stock appreciation rights. 
 12. Adjustments Upon Changes in Capitalization or Dissolution or Sale of the Company. 
 (a)4 Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any
distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under the Plan, (ii) the per-Participant limit set forth in Section 4(b), (iii) the number and class of securities and
exercise price per share subject to each outstanding Award, (iv) the price per share at which outstanding Restricted Shares may be repurchased pursuant to a Right of Repurchase and (v) the terms of each other outstanding Award shall automatically be
proportionately adjusted on a pro rata basis. 
 (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for a Participant to have the right to
exercise his or her Award until 15 days prior to such transaction as to all of the Shares covered thereby, including Shares as to which the Award would not otherwise be exercisable. In addition, the Administrator may provide that any Right of
Repurchase applicable to any Restricted 
  

	 4
	 This section 12(a) has been restated to reflect amendments to the Plan adopted by the Company’s Board of Directors
on December 13, 2007. 

  

 9 

 
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed dissolution or liquidation of the Company. 
 (c) Sale of the Company. Except as otherwise provided in any Stock Option Agreement or Stock Purchase Agreement or other document evidencing such
rights, in the event of a Sale of the Company when any unexercised Award or any Restricted Shares remains outstanding, the Administrator may in its discretion apply one or more or any combination of the following provisions: 
 (i) the Administrator may provide that outstanding Awards or Restricted Shares shall be assumed or an equivalent option or right or restricted stock
substituted by the successor entity or a Parent or Subsidiary thereof; or 
 (ii) the Administrator may, subject to the provisions of
clauses (iv) and (v) below, after the effective date of the Sale of the Company, permit a holder of an Award immediately prior to such effective date, upon exercise of the Award, to receive in lieu of Shares of Common Stock, shares of stock or other
securities or consideration as the holders of Common Stock received pursuant to the terms of the Sale of the Company; or 
 (iii) the
Administrator may waive any discretionary limitations imposed with respect to an Award so that some or all Options or Stock Purchase Rights, from and after a date prior to the effective date of the Sale of the Company as specified by the
Administrator, are exercisable in full and any Restricted Shares shall cease to be subject to restrictions in whole or in part; or 
 (iv)
the Administrator may cause any outstanding Awards to be canceled as of the effective date of the Sale of the Company, provided that notice of cancellation is given to each holder of an Award, and each holder of an Award has the right to exercise
the Award in full prior to or contemporaneous with the effective date of such Sale of the Company; or 
 (v) the Administrator may cause any
outstanding Awards to be canceled as of the effective date of the Sale of the Company, provided that notice of such cancellation is given to each holder of an Award, and each holder of an Award has the right to exercise the Award, to the extent
exercisable in accordance with any limitations imposed thereon, prior to or contemporaneous with the effective date of such Sale of the Company 
 13. General Provisions Applicable to Awards. Every Award and all Shares issued pursuant to the Plan shall be subject to the following provisions: 
 (a) Time of Granting Awards. The date of grant of an Award shall, for all purposes, be the date on which the Administrator makes the determination granting such Award, or such other date as is determined by the
Administrator. The Administrator will give notice of the determination to each Service Provider to whom an Award is so granted within a reasonable time after the date of such grant. 
 (b) No Rights to Employment or Other Status. Neither the Plan nor any Award shall confer upon any Participant any rights with respect to
continuing in Service with any Related Company, nor shall the Plan or any Award interfere in any way with the Participant’s right or the Related Company’s right to terminate the Participant’s Service at any time, with or without
cause. 
 (c) Rights as a Stockholder. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of an Award. The Company shall issue (or cause to
be issued) the 

  

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Shares promptly after an Award is duly exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 12 hereof. 
 (d) Acceleration. The Administrator may at any time provide that any
Awards shall become immediately exercisable in full or in part or that any Restricted Shares shall be free of restrictions or conditions in full or in part or otherwise realizable in full or in part, as the case may be. 
 (e) Buyout Provisions. The Administrator may at any time and from time to time offer to buy out for a payment in cash or Shares any Award
previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the holder of such Award at the time such offer is made. 
 (f) Conditions on Delivery of Shares. The Company shall not be obligated to deliver any Shares pursuant to the Plan or to remove any restrictions from Shares previously delivered under the Plan, until (i) all
conditions of the Award have been met or removed to the satisfaction of the Administrator, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such Shares have been satisfied in
accordance with Applicable Laws; and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of Applicable Laws. 
 (g) Amendment of Award. The Administrator may amend, modify or terminate any outstanding Award, including but not limited to, substituting
therefor another Award of the same or different type, changing the expiration date or Exercise Price or Purchase Price or converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant’s consent to such
action shall be required unless the Administrator determines that the action would not materially and adversely affect the Participant. 
 (h) Withholding Taxes. Each Participant shall pay to the Company, or make provisions satisfactory to the Administrator for payment of, any taxes required by Applicable Laws to be withheld in connection with any Awards to the
Participant no later than the date of the event creating the tax liability. Except as the Administrator may otherwise provide in an Award, when the Common Stock is registered under the Exchange Act, Participants may satisfy such tax obligations in
whole or in part by delivery of Shares, including Shares retained from the Award creating the tax obligation, valued at their Fair Market Value. The Company may, to the extent permitted by Applicable Laws, deduct any such tax obligations from any
payment of any kind otherwise due to a Participant. 
 (i) Cancellation and Forfeiture for Misconduct. Notwithstanding the terms of
any Award or other provision of the Plan, in the event of any Misconduct by the Participant or Purchaser (whether before or after the termination of Service), (i) all Awards granted to the Participant shall be terminated and the holder thereof shall
have no further rights thereunder and (ii) all Shares then held by the Participant or Purchaser (or any successor) which were acquired by the Participant or Purchaser (or any successor) pursuant to an Award under the Plan shall thereupon be (or
revert to being) Restricted Shares and shall be subject to a Right of Repurchase exercisable by the Company at any time within 180 days after the occurrence of such Misconduct or, if later, 180 days after the Company has knowledge of such
Misconduct. The purchase price for Shares repurchased by the Company pursuant to the Right of Repurchase pursuant to this Section 13(i) shall be equal to the purchase price originally paid by the Participant or Purchaser for such Shares. The
following shall constitute “Misconduct” by an Participant or Purchaser: (i) the unauthorized use or disclosure of the confidential information or trade secrets of any Related Company which use or disclosure causes material harm to the
Related Company; (ii) conviction of a crime involving moral turpitude, deceit, dishonesty or fraud; (iii) gross negligence or willful misconduct of the Participant or Purchaser with respect to any Related Company or (iv) the breach by the
Participant or Purchaser of any material term of an agreement with a Related Company including covenants not to compete and provisions relating to confidential information and intellectual property rights. 
  

 11 

 (j) Limits on Transferability of Awards. An Incentive Stock Option shall be exercisable only by
the Participant during his or her lifetime and shall not be assignable or transferable other than by will or by the laws of descent and distribution following the Participant’s death. A Nonstatutory Stock Option, Stock Purchase Right or Shares
may be assigned in whole or in part during the Participant’s lifetime to one or more members of the Participant’s family or to a trust established exclusively for one or more such family members or to the Participant’s former spouse,
to the extent such assignment is in connection with the Participant’s estate plan or pursuant to a domestic relations order. The assigned portion may only be exercised by the person or persons who acquired a proprietary interest in the
Nonstatutory Stock Option, Stock Purchase Right or Shares pursuant to the assignment. The terms applicable to such assigned portion shall be the same as those in effect for the Nonstatutory Stock Option, Stock Purchase Right or Shares immediately
prior to such assignment and shall be set forth in such documents issued to the assignee as the Administrator may deem appropriate. Notwithstanding the foregoing, the Participant may also designate one or more persons as the beneficiary or
beneficiaries of his or her outstanding Awards under the Plan, and those Awards shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Participant’s death while holding those
Awards. Such beneficiary or beneficiaries shall take the transferred Awards subject to all terms and conditions of the applicable agreement evidencing each such transferred Award, including (without limitation) the limited time period during which
Awards may be exercised following the Participant’s death. 
 (k) Documentation. Each Award shall be evidenced by a written
instrument in such form as the Administrator shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan. 
 (l) Administrator Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the
Administrator need not treat Participants uniformly. 
 14. Amendment and Termination of the Plan. 
 (a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. 
 (b) Stockholder Approval. The Board shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws. 
 (c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall
impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan shall not affect the
Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. 
 15. Reservation of Shares. The Company, during the term of the Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 16. Stockholder Approval. The Plan shall be subject to approval by the stockholders of the Company within 12 months after the date
the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws. 
 17. Governing
Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of The Commonwealth of Massachusetts, without regard to any applicable conflicts of law. 
  

 12Form of Restricted Stock Unit Agreement, as amended

 Exhibit 10.8 
  
 

 
 Pegasystems Inc. 
  

			
	 Notice of Grant of Award and Award Agreement
	    	 Pegasystems Inc.
 ID: 04-2787865
 101 Main Street
 Cambridge, MA 02142

 Effective __, you (the “Optionee”) have been granted an award of restricted stock units. 
 The current total value of the award is      
 The awards will vest 20 on the first anniversary of the date of grant and the balance of will vest in 16 equal quarterly installments between the first and fifth anniversaries of the date of grant. 
 The undersigned Optionee agrees to all of the terms of the Plan and all those set forth on Exhibit A attached hereto and incorporated herein by reference. 
 By your signature and the Company’s signature below, you and the Company agree that this award is granted under and governed by the terms and conditions of the
Company’s Award Plan as amended and the Award Agreement, all of which are attached and made a part of this document. 
  

			
	Pegasystems Inc.
		
	By:	 	 

		 	Alan Trefler, Chairman and Chief Executive Officer
		
		 	  

		 	First MI Last

 Exhibit A 
 To Notice of Grant of Award and Award Agreement 
 1. Conversion of Restricted Stock Units to Common Stock. Each
restricted stock unit (“RSU”) granted in the Notice of Grant of Award and Award Agreement (of which this Exhibit A is a part) (the “Award Agreement”) represents the right of the person receiving such grant (the
“Recipient”) to receive one share of the common stock (“Common Stock”) of Pegasystems Inc. (the “Company”) subject to the vesting requirements listed in the Award Agreement and to the other terms and conditions of this
Award Agreement. On each vesting date listed in the Award Agreement, the Company will issue such number of shares of Common Stock as are equal to the applicable number of RSUs vesting on such date, less such number of shares of Common Stock as are
required to be withheld to satisfy Recipient’s tax withholding obligations. 
 2. Vesting. RSUs will vest on the dates listed in
the Award Agreement if the Recipient remains in the active employment of the Company in good standing from the date of grant through the applicable vesting date. RSUs will cease to vest immediately upon the cessation of Recipient’s active
employment with the Company, for any reason. 
 3. Recipient’s Agreement. The Recipient agrees to all the terms stated in the Award
Agreement (of which this Exhibit is a part), as well as to the terms of the Plan (which shall control in case of conflict with the Award Agreement), a copy of which is attached and of which the Recipient acknowledges receipt. 
 4. Withholding. The Recipient consents to fulfill all withholding obligations for all applicable payroll and income taxes with respect to the Award
when they are due and arrange for satisfactory payment of all withholding obligations in a manner as set forth in Section 13(h) of the Plan. The Company may satisfy such withholding obligations by withholding such number of shares of Common Stock as
are equal in value to the amount of the required withholding. 
 5. Rights as Shareholders. The Recipient shall have no rights as a
shareholder of the Company with respect to any of the RSUs until the issuance of shares of Common Stock at the time of vesting, and then only with respect to those shares of Common Stock issued. 
 6. Non-Transferability. The Award may not be transferred in any manner other than as permitted in Section 130) of the Plan. The terms of the Award
shall be binding upon the executors, administrators, heirs and successors of the Recipient. 
 7. Compliance with Securities. Tax and
Other Law. No shares of Common Stock may be issued if the issuance of shares would constitute a violation of any applicable federal or state securities law or any other law or valid regulation. As a condition to issuance of Common Stock, the Company
may require the Recipient, or any person acquiring the right to receive the Common Stock, to make any representation or warranty that the Company deems to be necessary under any applicable securities, tax, or other law or regulation. 
 8. Adjustments upon Changes in Capitalization. In the event of any change in the shares subject to the Plan or to any Award granted under the Plan
by reason of a merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination or exchange of shares, or other change in the structure of the Company, the number of RSUs and the number of shares of Common Stock
shall be appropriately adjusted by the Company and such adjustment shall be final, binding and conclusive. 
 9. No Right to Employment.
The granting of the Award does not confer upon the Recipient the right to continue in the service of the Company, or affect in any way the right and power of the Company to terminate the service of the Recipient at any time with or without assigning
a reason therefor, to the same extent as the Company might have done if the Award had not been granted. 
 10. No Guarantee. The Company
offers no guarantee or assurance that the Company’s stock has any value at the time of this grant or will have any value or liquidity at any future time. 

 11. Amendment and Termination of Award. The Company may not, without the consent of the Recipient,
alter or impair any Award granted under the Plan. The Award shall be considered terminated in whole or in part, to the extent that, in accordance with the provisions of the Plan, the Recipient no longer has the right to receive shares of Common
Stock under the Plan. 
 12. Governing Law. The Award Agreement shall be governed by and interpreted in accordance with the laws of The
Commonwealth of Massachusetts, without regard to any applicable conflicts of law provisions thereof. 
 13. Severability. In the event
anyone or more of the provisions of the Award Agreement shall for any reason be held to be invalid, illegal or unenforceable, the remaining provisions of the Award Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision
shall be replaced by a mutually acceptable provision, which being valid, legal and enforceable, comes closest to the intention of the parties underlying the invalid, illegal or unenforceable provision. 
 14. Definitions. All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan.

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