EXHIBIT
4.6

 

2005
LONG TERM INCENTIVE PLAN

 

CAPITAL
GROWTH SYSTEMS, INC., a Florida corporation (the "Company"), sets forth herein
the terms of the Capital Growth Systems, Inc. 2005 Long-Term Incentive Plan (the
"Plan") as follows effective March 15, 2005: 

 

1.    Purpose.

 

The
purpose of the Plan is to aid the Company and its subsidiaries in recruiting and
retaining employees and to motivate such employees and other plan participants
to exert their best efforts on behalf of the Company and its subsidiaries by
providing incentives through the granting of stock-based incentive awards. The
Company expects that it will benefit from the stock ownership opportunities
provided to such participants to encourage alignment of their interest in the
Company's success with that of other stakeholders. The Plan shall allow eligible
participants to acquire shares of the Company's Common Stock, $0.0001 par value
("Shares") either directly through the grant of shares which are restricted and
subject to risk of forfeiture ("Restricted Shares") or through the grant of
options to purchase Shares ("Options"). Options granted under the Plan may be
nonqualified stock options or may be "incentive stock options" ("ISOs") within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended from
time to time (the "Code"), or the corresponding provision of any subsequently
enacted tax statute. The Plan shall also allow the granting of other stock-based
awards ("Other Stock-Based Awards" - together with awards of Restricted Shares
or Options, hereinafter at times collectively referred to as "Awards" and
individually referred to as an "Award"; the grantee of an Award is hereinafter
referred to as a "Participant"). Eligibility for Awards may be based on such
criteria as the Committee deems appropriate, which may be tied to performance
standards and vesting standards requiring continued performance of services to
the Company over time.

 

2.    Administration.

 

2.1    Committee.

 

The Plan
shall be administered by the Compensation Committee (the "Committee") of the
Board of Directors of the Company (the "Board"). The Committee shall be
comprised of two or more members of the Board who are "non-employee directors,"
as such term is described in Rule 16b-3 (if and as such Rule is in effect), and
"outside directors" within the meaning of Section 162(m) of the
Code.

 

2.2    Action
by Committee.

 

The
Committee shall have such powers and authorities related to the administration
of the Plan as are consistent with the Certificate of Incorporation and Bylaws
of the Company and applicable law. The Committee shall have the full power and
authority to take all actions and to make all determinations required or
permitted under the Plan with respect to any Award granted hereunder. The
Committee shall have the full power and authority to take all other actions and
determination not inconsistent with the specific terms and provisions of the
Plan that the Committee deems to be necessary or appropriate to the
administration of the Plan. The Committee's powers shall include, but not be
limited to, the power to interpret the Plan and to amend, waive, or extend any
provision or limitation of any Option or the terms and conditions of any grant
of Restricted Shares or Other Stock-Based Awards, and to approve the forms of
agreement for use under the Plan. The interpretation and construction by the
Committee of any provision of the Plan, any Option granted hereunder or the
terms and conditions of any grant of Restricted Shares or Other Stock-Based
Awards shall be final and conclusive. 

 




















2.3    No
Liability.

 

No member
of the Board or of the Committee shall be liable for any action or determination
made, or any failure to take or make an action or determination, in good faith
with respect to the Plan. 

 

2.4    Applicability
of Rule 16b-3.

 

Those
provisions of the Plan that make express reference to Rule 16b-3 shall apply
only to persons who are required to file reports under Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). 

 

2.5    Tax
Withholding.

 

The
Company may withhold or require payment from the Participant of any amount it
may determine to be necessary to withhold for federal, state, local, non-U.S.
income, payroll or other taxes as a result of the exercise, grant or vesting of
an Award. Unless the Committee specifies otherwise, the Participant may elect to
pay a portion or all of such withholding taxes by: (i) delivery in Shares; (ii)
having the Company withhold Shares with a Fair Market Value or cash equal to the
amount of such taxes that would have otherwise been payable by the Participant;
or (iii) paying cash.

 

2.6    Nontransferability
of Awards/Beneficiaries.

 

No Award
or interest in an Award may be sold, assigned, pledged (as collateral for a loan
or as security for the performance of an obligation or for any other purpose) or
transferred by the Participant or made subject to attachment or similar
proceedings otherwise than by will or by the applicable laws of descent and
distribution, except to the extent a Participant designates one or more
beneficiaries on a Company-approved form who may exercise the Award or receive
payment under the Award after the Participant's death. During a Participant's
lifetime, an Award may be exercised only by the Participant. Notwithstanding the
foregoing and to the extent permitted by Section 422 of the Code or any
successor thereto, the Committee, in its sole discretion, may permit a
Participant to assign or transfer an Award; provided, however, that any Award so
assigned or transferred shall be subject to all the terms and conditions of the
Plan and the agreement evidencing the Award.

 

A
Participant may designate a beneficiary to succeed to the Participant's Awards
under the Plan in the event of the Participant's death by filing a beneficiary
form with the Company and, upon the death of the Participant, such beneficiary
shall succeed to the rights of the Participant to the extent permitted by law
and the terms of this Plan and the applicable agreement. In the absence of a
validly designated beneficiary who is living at the time of the Participant's
death, the Participant's executor or administrator of the Participant's estate
shall succeed to the Awards, which shall be transferable by will or pursuant to
laws of descent and distribution.

 




















3.    Common
Stock Covered by the Plan.

 

The
number of Shares with respect to which Options, Restricted Shares and other
Stock-Based Awards may be granted under the Plan shall not exceed 2,285,000
subject to adjustment as provided in Section
12. The
number of Shares with respect to which ISOs may be granted under the Plan shall
not exceed 2,285,000 subject to adjustment as provided in Section
12. The
number of Shares with respect to which Awards may be granted to a participant
during any calendar year shall not exceed 1,000,000, subject to adjustment as
provided in Section
12. The
Shares to be issued as Restricted Shares or upon exercise of Options may be
authorized, but unissued or reacquired Shares. If any Option expires, terminates
or is terminated for any reason prior to exercise in full, or any Restricted
Shares are forfeited, or any Other Stock-Based Award is terminated or forfeited,
the Shares that were subject to the unexercised portion of such Option or the
Restricted Shares or Other Stock-Based Awards that are forfeited or terminated
(collectively, "Lapsed Shares"), as the case may be, shall be available
immediately for future grants of Awards under the Plan, but will be counted
against that calendar year's limit for a given participant. To the extent an
Award under this Plan of a Lapsed Share reduces the 2,285,000 Shares available
under the Plan, when it becomes a Lapsed Share, this then replenishes by a like
amount the number of Shares available for issuance under the Plan as if the
Lapsed Share had not been previously granted. To the extent any Award is
exercised in whole or part through a cashless exercise pursuant to Section
6.8(c) hereof, that portion of the Award used to fund the cashless exercise
shall not be available for future issuance pursuant to this Plan.

 

4.    Eligibility.

 

Awards
may be granted under the Plan to an employee of the Company or any subsidiary
who is selected by the Committee to participate in the Plan. An Award may also
be granted to any director, consultant, agent, individual, company, advisor or
independent contractor who renders bona fide services to the Company or a
subsidiary that (i) is not in connection with the offer and sale of the
Company's securities in a capital-raising transaction and (ii) does not directly
or indirectly promote or maintain a market for the Company's securities. Except
where the context otherwise requires, references in this Plan to "employment"
and related terms shall apply to services in any such capacity. Individuals who
have been granted Options are referred to as "Optionees." An individual may hold
more than one Option, subject to such restrictions as are provided herein, and
may also hold more than one grant of Restricted Shares of Other Stock-Based
Awards. All references to an "employee" of the Company shall include employees
of any direct or indirect subsidiary of the Company, 50% or more of which is
beneficially owned by the Company.

 

The
Committee may also grant Awards in substitution for options or other equity
interests held by individuals who become employees of the Company or of a
subsidiary as a result of the Company's acquiring or merging with the
individual's employer or acquiring its assets or to persons who were employees
of directors of the previous employer and received an option in that capacity
even if they do not become employees of the Company. In addition, the Committee
may provide for the Plan's assumption of options granted outside the Plan to
persons who would have been eligible under the terms of the Plan to receive a
grant. If necessary to conform the Awards to the interests for which they are
substitutes, the Committee may grant substitute Awards under terms and
conditions that vary from those the Plan otherwise requires. 

 




















5.    Effective
Date and Term.

 

5.1    Effective
Date.

 

The Plan
is effective as of March 15, 2005 (the "Effective Date"). 

 

5.2    Term.

 

The Plan
shall terminate on the tenth anniversary of the Effective Date, unless
previously terminated under Section
11. All
Awards granted prior to termination of the Plan shall continue in full force and
effect following the termination of the Plan, subject to the terms and
conditions upon which they were granted.

 

6.    Terms
and Conditions of Stock Options.

 

6.1    Grant
of Options.

 

Subject
to the terms and conditions of the Plan, the Committee may, at any time and from
time to time prior to the termination of the Plan, grant to such eligible
Participants as the Committee may determine, Options to purchase such number of
Shares on such terms and conditions as the Committee may determine, including
any terms or conditions that may be necessary to qualify such Options as ISOs.
The Committee may grant ISOs only to employees of the Company and any
subsidiaries.

 

6.2    Stock
Options under Code Section 422.

 

The date
as of which the Committee approves the grant of an Option shall be considered
the date on which such Option is granted. Neither the Optionee nor any person
entitled to exercise any rights hereunder shall have any of the rights of a
stockholder with respect to the Shares subject to an Option except to the extent
that the certificates for such Shares have been issued upon the exercise of the
Option. 

 

6.3    Limitation
on Incentive Stock Options.

 

An Option
granted to an employee shall constitute an ISO only to the extent that the
aggregate fair market value (determined at the time the Option is granted) of
the Stock with respect to which ISOs are exercisable for the first time by the
Optionee during any calendar year (under the Plan and all other plans of the
Company and any subsidiaries, within the meaning of Code Section 422(d)), does
not exceed one hundred thousand dollars ($100,000). This limitation shall be
applied by taking Options into account in the order in which such Options were
granted. 

 




















6.4    Option
Agreements.

 

All
Options granted to Optionees pursuant to the Plan shall be evidenced by written
agreements in such form or forms as the Committee shall from time to time
determine. Option agreements may be amended by the Committee from time to time
and need not contain uniform provisions. 

 

6.5    Option
Price.

 

The
purchase price of each Share subject to an Option issued under this Section
6 shall be
fixed by the Committee. No Option, once granted hereunder, may be repriced. In
the case of an Option not intended to constitute an ISO, the option price shall
be not less than the par value of the Shares covered by the Option. In the case
of an Option that is intended to be an ISO, the option price of each Share
purchasable pursuant to the Option shall be not less than the greater of the par
value of the Shares or 100% of the Fair Market Value (as defined below) of a
Share covered by the Option on the date the Option is granted; provided,
however, that in the event the employee would otherwise be ineligible to receive
an ISO by reason of the provisions of Code Sections 422(b)(6) and 424(d)
(relating to owners of more than 10% of the Company's common stock), the option
price of each Share purchasable pursuant to an Option that is intended to be an
ISO shall be not less than the greater of par value or one hundred and ten
percent (110%) of the Fair Market Value of a Share covered by the Option at the
time such Option is granted. 

 

"Fair
Market Value" for purposes of this Plan in valuing the Company common stock
shall mean the last closing price of the Company's common stock as quoted on
Nasdaq immediately prior to the date of valuation in question, provided at that
time the Company's common stock is quoted on Nasdaq. If the Company's common
stock is not quoted on Nasdaq, then "Fair Market Value" shall mean, in the event
that the Company's common stock is listed on an established national or regional
stock exchange, or is publicly traded on an established securities market, the
closing price of the stock on such exchange or in such market (the highest such
closing price if there is more than one such exchange or market on the date the
Option is granted), or, if no sale of stock has been made on such day, on the
last preceding day on which any such sale shall have been made. In the event
that the Shares are not listed, quoted or publicly traded or, if their price
cannot be determined despite their being listed, quoted or publicly traded,
"Fair Market Value" shall be determined by the Committee, in its sole
discretion.

 

6.6    Term.

 

Each
Option granted to an Optionee under the Plan shall terminate and all rights to
purchase Shares thereunder shall cease upon the expiration of five (5) years
from the date such Option is granted, or on such prior date or later date (but
in no event later than ten (10) years from the date such Option is granted) as
may be fixed by the Committee and stated in the option agreement relating to
such Option; provided, however, that in the event the employee would otherwise
be ineligible to receive an ISO by reason of the provisions of Code Sections
422(b)(6) and 424(d) (relating to owners of more than 10% of the Company's
common stock), an Option granted to such employee that is intended to be an ISO
shall in no event be exercisable after the expiration of five (5) years from the
date it is granted. 

 




















6.7    Option
Period and Limitations on Exercise.

 

Each
Option granted under the Plan to an Optionee shall be exercisable in whole or in
part at any time and from time to time over a period commencing on or after the
date of grant of the Option and ending upon expiration or termination of the
Option, as the Committee shall determine and set forth in the option agreement.
Without limiting the foregoing, the Committee, subject to the terms and
conditions of the Plan, may in its sole discretion provide that the Option
granted to an Optionee may not be exercised in whole or in part for any period
or periods of time during which such Option is outstanding as the Committee
shall determine and set forth in the option agreement. Any such limitation on
the exercise of an Option may be rescinded, modified or waived by the Committee,
in its sole discretion, at any time and from time to time after the date of
grant of such Option. 

 

6.8    Exercise.

 

(a) Only the
Optionee receiving an Option (or, in the event of the Optionee's legal
incapacity or incompetency, the participant's guardian or legal representative,
and in the case of the Optionee's death, the participant's estate) may exercise
the Option. 

 

(b) An Option
that is exercisable hereunder may be exercised by delivery to the Company on any
business day, at its principal office addressed to the attention of the
Corporate Secretary, of written notice of exercise. Such notice shall specify
the number of Shares for which the Option is being exercised and shall be
accompanied by payment in full of the option price of the Shares for which the
Option is being exercised, unless otherwise determined by the Committee, in its
sole discretion. 

 

(c) Payment
of the option price for the Shares purchased pursuant to the exercise of an
Option shall be made, as determined by the Committee and set forth in the option
agreement, as follows: 

 

(i) in cash
or by certified check payable to the order of the Company;

 

(ii) in Shares
having a Fair Market Value equal to the aggregate exercise price for the Shares
being purchased pursuant to the Option and satisfying such other requirements as
may be imposed by the Committee; provided, that such Shares were purchased on
the open market or have been held by the participant for no less than six months
(or such other period as established from time to time by the Committee in order
to avoid adverse accounting treatment under generally accepted accounting
principles);

 

(iii) partly in
cash and partly in such Shares;

 

(iv) if there
is a public market for the Shares at such time, through the delivery of
irrevocable instructions to a broker to sell Shares obtained upon the exercise
of the Option and to deliver promptly to the Company an amount out of the
proceeds of such sale equal to the aggregate exercise price for the Shares being
purchased pursuant to the Option; or

 




















(v) such
other method as determined by the Committee, in its sole discretion.


 

(d) Notwithstanding
the foregoing, the Committee may, in its discretion, impose and set forth in the
option agreement such limitations or prohibitions on the methods of exercise as
the Committee deems appropriate. Promptly after the exercise of an Option and
the payment in full of the option price of the Shares covered thereby, the
individual exercising the Option shall be entitled to the issuance of a stock
certificate or certificates evidencing such individual's ownership of such
Shares. An individual holding or exercising an Option shall have none of the
rights of a stockholder until the Shares covered thereby are fully paid and
issued to such individual and, except as provided in Section
12, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date of such issuance. 

 

(e) If the
Optionee is not vested as to his or her entire Option at the time of termination
of employment of the Optionee pursuant to the terms of the relevant option
agreement, then the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified in the relevant option agreement, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.

 

7.    Restricted
Shares.

 

7.1    Grant
of Restricted Shares.

 

Subject
to the terms and conditions of the Plan, the Committee may, at any time and from
time to time prior to the termination of the Plan, grant Restricted Shares to
such eligible Participants as the Committee may determine subject to such
conditions under which they may be forfeited and such other terms and conditions
it deems appropriate.

 

7.2    Transfer
Restrictions.

 

Shares of
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered, except as provided in the Plan or the applicable Award agreement.
Shares of Restricted Stock shall be registered in the name of the Participant
and held by the Company. After the lapse of the restrictions applicable to such
Shares of Restricted Stock, the Company shall deliver such Shares to the
Participant or the Participant's legal representative.

 

7.3    Dividends.

 

Dividends
or dividend equivalents paid on any Shares of Restricted Stock may be paid
directly to the Participant, withheld by the Company subject to vesting of the
Restricted Stock pursuant to the terms of the applicable Award agreement, or may
be reinvested in additional Shares of Restricted Stock, as determined by the
Committee in its sole discretion.

 




















7.4    Rights
of Unvested Restricted Shares.

 

Until
vesting conditions of a Restricted Stock grant agreement are met, the holder
thereof shall have no rights of a shareholder thereof and shall not have the
right to receive dividends thereon or to vote said Restricted Shares, unless
otherwise provided in the Restricted Stock agreement.

 

7.5    Legends.

 

Restricted
Shares issued under the Plan shall be subject to such restrictions on trading,
including appropriate legending of certificates to that effect as the Company,
in its discretion, shall determine necessary to satisfy applicable legal
requirements and obligations.

 

7.6    Representations
of Grantee.

 

Each
recipient of an Award of Restricted Stock under the Plan shall, at the time of
the Award, as a condition to such Award, enter into a Restricted Stock grant
agreement in a form approved by the Committee.

 

8.    Other
Stock-Based Awards.

 

The
Committee, in its sole discretion, may grant Other-Stock Based Awards, including
grants of Shares and awards that are valued in whole or in part by reference to,
or are otherwise based on, Shares or on the Fair Market Value thereof. Such
Other Stock-Based Awards shall be in such form, and dependent on such
conditions, as the Committee shall determine, including, without limitation, the
right to receive, or vest with respect to, one or more Shares (or the equivalent
cash value of such Shares) upon the completion of a specified period of service,
the occurrence of an event and/or the attainment of performance objectives.
Other Stock-Based Awards may be granted alone or in addition to any other Awards
granted under the Plan. Subject to the provisions of the Plan, the Committee
shall determine the number of Shares to be awarded to a Participant under (or
otherwise related to) such Other Stock-Based Awards; whether such Other
Stock-Based Awards shall be settled in cash, Shares or a combination of cash and
Shares; and all other terms and conditions of such Awards (including, without
limitation, the vesting provisions thereof and provisions ensuring that all
Shares so awarded and issued shall be fully paid and non- assessable). Unless
the Other Stock-Based Award agreement specifically states that the Other
Stock-Based Award is subject to the terms and conditions of this Plan, it will
not be considered an Award granted pursuant to this Plan.

 

9.    Use of
Proceeds.

 

The
proceeds received by the Company from the sale of Shares pursuant to Options
shall constitute general funds of the Company. 

 




















10.   Requirements
of Law.

 

10.1    General.

 

The
Corporation shall not be required to sell or issue any Award (or any Shares or
Option underlying the Award) if such sale or issuance would constitute a
violation by the individual exercising the Award or by the Company of any
provision of any law or regulation of any governmental authority, including,
without limitation, any federal or state securities laws or regulations or the
Company's Certificate of Incorporation. If at any time the Company shall
determine, in its discretion, that the listing, inclusion, registration or
qualification of any Award (or any Shares or Option underlying the Award) upon
any securities exchange or under any state or federal law, or the consent of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, such sale or issuance, the Award (or any Shares or Option
underlying the Award) may not be issued or exercised in whole or in part, unless
such listing, registration, inclusion, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Company, and any delay caused thereby shall in no way affect the date of
termination of or the restriction period of such Award (or any Shares or Option
underlying the Award). Specifically in connection with the Securities Act of
1933, as amended (the "Securities Act") with respect to the issuance of Shares,
upon exercise of any Award, unless a registration statement under the Securities
Act is in effect with respect to such Shares, the Company shall not be required
to sell or issue such Shares unless the Company has received evidence
satisfactory to the Company that the Participant may acquire such Shares
pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Committee shall be final and conclusive.
The Corporation may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act. The Corporation shall
not be obligated to take any affirmative action in order to cause the exercise
of an Award (or any Shares or Option underlying the Award) or the issuance of
Shares pursuant thereto to comply with any law or regulation of any governmental
authority. As to any jurisdiction that expressly imposes the requirement that an
Award shall not be exercisable unless and until the Shares covered by such Award
are registered or are subject to an available exemption from registration, the
exercise of such Award (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.

 

10.2    SEC
Rule 16b-3.

 

The Plan
is intended to qualify for the exemption provided by Rule 16b-3 under the
Exchange Act. To the extent any provision of the Plan or action by the Committee
does not comply with the requirements of Rule 16b-3, it shall be deemed
inoperative, to the extent permitted by law and deemed advisable by the
Committee, and shall not affect the validity of the Plan. In the event Rule
16b-3 is revised or replaced, the Board may exercise discretion to modify the
Plan in any respect necessary to satisfy the requirements of the revised
exemption or its replacement. 

 




















11.    Amendment
and Termination.

 

The Board
may, from time to time, amend the Plan or any provision thereof in such respects
as the Board may deem advisable, provided that no amendment to the Plan may be
made without stockholder approval if such amendment would: (i) increase the
number of Shares available for issuance under the Plan, other than as a result
of the application of the anti-dilution adjustments as provided for in
Section
12; (ii)
cause the Plan to fail to comply with Rule 16b-3 under the Securities Exchange
Act of 1934, or any successor rule; or (iii) materially modify the eligibility
requirements for participation in the Plan. Any amendment or termination of the
Plan shall not adversely affect any Award previously granted. The Board may, at
any time, terminate the Plan.

 

12.   Anti-dilution
Adjustments.

 

12.1     Adjustments
to Plan or Number or Class of Shares or Restricted Shares Issuable under the
Plan.

 

Notwithstanding
any other provision of the Plan, the Committee may, at any time, make or provide
for such adjustments to the Plan or to the number and class of Shares issuable
thereunder upon the exercise of Options or as Restricted Shares or as Other
Stock-Based Awards as it shall deem appropriate to prevent dilution or
enlargement of rights, including adjustments in the event of changes in the
outstanding Shares by reason of stock dividends, split-ups, recapitalizations,
mergers, consolidations, combinations or exchanges of shares, separations,
reorganizations, liquidations and similar transactions. Any such determination
by the Committee shall be conclusive. Any fractional shares resulting from such
adjustments shall be eliminated.

 

12.2    Adjustments
to Terms of Awards Previously Granted.

 

If the
number of outstanding Shares is increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of any recapitalization, reclassification, stock split,
combination of shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such shares effected
without receipt of consideration by the Company, occurring after the Effective
Date, a proportionate and appropriate adjustment shall be made by the Company in
the number and kind of Shares for which Awards are outstanding, so that the
proportionate interest of the Participant immediately following such event
shall, to the extent practicable, be the same as immediately prior to such
event. Any such adjustment in outstanding Awards shall not change the aggregate
option price payable with respect to Shares subject to the unexercised portion
of the Award outstanding but shall include a corresponding proportionate
adjustment in the option or exercise price per Share. Similar proportionate
adjustments for events referenced in this Section 12.2 shall be made as
necessary, in the sole discretion of the Committee, with respect to Other
Stock-Based Awards.

 




















13.   Change
in Control.

 

Notwithstanding
anything contained in this Plan to the contrary, unless otherwise provided in
the applicable Award agreement at the time of grant, in the event of a Change in
Control, the following shall occur as of the date of termination of employment
of any employee of the Company "without cause" (as that term is defined in the
agreement governing the Award(s) to such employee) during the one year period
following the effective date of such Change in Control with respect to any and
all Awards outstanding as of the date of termination of employment: (i) any and
all Options granted hereunder which would vest with the passage of time were the
Participant to continue as an employee for the applicable period and the
"Current Year's Percentage" (as hereinafter defined) of any Options which are
tied to performance standards that could possibly be achieved during the
calendar year in which the Participant's employment has been terminated, shall
vest in full and become immediately exercisable, and shall remain exercisable
throughout their entire term; (ii) any restrictions imposed on Restricted Shares
shall lapse with respect to Restricted Shares which would vest with the passage
of time were the Participant to continue as an employee for the applicable
period and with respect to the "Current Year's Percentage" (as hereinafter
defined) of any Options which are tied to performance standards that could
possibly be achieved during the calendar year in which the Participant's
employment has been terminated; and (iii) the maximum payout opportunities
attainable under all Other Stock-Based Awards which would vest with the passage
of time were the Participant to continue as an employee for the applicable
period and the "Current Year's Percentage of any Restricted Shares which are
tied to performance standards that could possibly be achieved during the
calendar year in which the Participant's employment has been terminated, shall
be deemed to have been fully earned for the calendar year in which the
Participant's employment has been terminated. Such Awards shall be paid in cash,
or in the sole discretion of the Committee in Shares to Participants within
thirty (30) days following the effective date of the termination of employment
of the employee without cause during the one year period following a Change in
Control, with any such Shares valued at the Fair Market Value as of the
effective date of the termination of employment without cause. The "Current
Year's Percentage" of a performance based Award for purposes of this Section 13
shall be that percentage of the performance based Award that would have been met
for the calendar year in question based upon the product of (i) the percentage
of calendar quarters completed for the year in which the employee is terminated
without cause, multiplied by (ii) the performance based Award that the employee
would have earned had the entire four calendar quarters of the Company's
performance and the employee's performance for such year equaled the average
quarterly performance for all calendar quarters completed prior to termination
of the employee's employment for the year in question. If termination of
employment occurs before March 31 of a year, then no acceleration of vesting of
a performance based Award would be available for that year in the event of a
Change in Control. The provisions of subsections (i), (ii) and (iii) immediately
above shall not apply if employment of an employee of the Company is not
terminated "without cause" during the one-year period following a Change in
Control.

 

For
purposes of this Section
13, "Change
in Control" means:

 

(a) any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1984, as amended, or any successor thereto) (a
"Person") becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Act) of 50% or more of either (A) the then outstanding
Shares (the "Outstanding Company Common Stock") or (B) the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that, for purposes of this clause (a), the
following acquisitions shall not constitute a Change in Control: (1) any
acquisition directly from the Company and approval by the Board, (2) any
acquisition by the Company or any of its subsidiaries, (3) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries, (4) any acquisition by an underwriter
temporarily holding securities pursuant to an offering of such securities or (5)
any acquisition pursuant to a transaction that complies with clauses (b)(A) and
(B) below; or

 




















(b) consummation
of a reorganization, merger, statutory share exchange or consolidation (or
similar corporate transaction) involving the Company or any of its subsidiaries,
a sale or other disposition of all or substantially all of the assets of the
Company, or the acquisition of assets or stock of another entity (a "Business
Combination"), in each case, unless, immediately following such Business
Combination, (A) substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, 50% or more of,
respectively, the then outstanding Shares and the total voting power of (1) the
corporation resulting from such Business Combination (the "Surviving
Corporation") or (2) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 80% or more of the voting
securities eligible to elect directors of the Surviving Corporation (the "Parent
Corporation"), in substantially the same proportion as their ownership,
immediately prior to the Business Combination, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities, as the case may be and (B)
no Person (other than any employee benefit plan (or related trust) sponsored or
maintained by the Surviving Corporation or the Parent Corporation), is or
becomes the beneficial owner, directly or indirectly, of 50% or more of the
outstanding Shares of common stock and the total voting power of the outstanding
voting securities eligible to elect directors of the Parent Corporation (or, if
there is no Parent Corporation, the Surviving Corporation); or

 

(c) Approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company.

 

Notwithstanding
the foregoing provisions of this definition, a Change in Control shall not be
deemed to occur with respect to the Participant if the acquisition of the 50% or
greater interest referred to in clause (a) is by a group, acting in concert,
that includes the participant or if at least 40% of the then outstanding common
stock or combined voting power of the then outstanding voting securities (or
voting equity interests) of the Surviving Corporation or, if applicable, the
Parent Corporation shall be beneficially owned, directly or indirectly,
immediately after a Business Combination by a group, acting in concert, that
includes the participant.

 

14.   Further
Adjustment of Awards.

 

Subject
to the above provisions, the Committee shall have the discretion, exercisable at
any time before a sale, merger, consolidation, reorganization, liquidation,
dissolution or Change in Control transaction to take such further action as it
determines to be necessary or advisable with respect to Awards. Such authorized
action may include (but shall not be limited to) establishing, amending or
waiving the type, terms, conditions or duration of, or restrictions on, Awards
so as to provide for earlier, later, extended or additional time for exercise,
lifting of restrictions and other modifications, and the Committee may take such
actions with respect to all Participants, to certain categories of Participants
or only to individual Participants. The Committee may take such action before or
after granting Awards to which the action relates and before or after any public
announcement with respect to such sale, merger, consolidation, reorganization,
liquidation, dissolution or Change in Control that is the reason for such
action. Notwithstanding anything to the contrary contained herein, no action to
be taken pursuant to this Section 14 shall be taken to the extent that it has
the effect of amending this Plan in a manner that would otherwise require
shareholder approval pursuant to applicable Securities and Exchange Commission
laws or regulations, but for the terms of this Section 14.

 




















15.   Disclaimer
of Rights.

 

No
provision in the Plan or any Option, Restricted Shares or Other Stock-Based
Award agreement entered into pursuant to the Plan shall be construed to confer
upon any individual the right to remain in the service of the Company or any
subsidiary, or to interfere in any way with the right and authority of the
Company or any subsidiary either to increase or decrease the compensation of any
individual at any time, or to terminate any employment or other relationship
between any individual and the Company or any subsidiary. The obligation of the
Company to pay any benefits pursuant to the Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
participant or beneficiary under the terms of the Plan.

 

16.   No
Trust or Fund.

 

The Plan
is intended to constitute an "unfunded" plan. Nothing contained herein shall
require the Company to segregate any monies, other property, or Shares, or to
create any trusts, or to make any special deposits for any immediate or deferred
amounts payable to any Participant, and no Participant shall have any rights
that are greater than those of a general unsecured creditor of the
Company.

 

17.   Nonexclusivity.

 

Neither
the adoption of the Plan nor the submission of the Plan to the stockholders of
the Company for approval shall be construed as creating any limitations upon the
right and authority of the Board to adopt such other incentive compensation
arrangements (which arrangements may be applicable either generally to a class
or classes of individuals or specifically to a particular individual or
individuals) as the Board in its discretion determines desirable.

 

18.   Indemnification.

 

To the
extent permitted by applicable law, the Committee and Board shall be indemnified
and held harmless by the Company against and from any and all loss, cost,
liability or expense that may be imposed upon or reasonably incurred by the
Committee or Board in connection with or resulting from any claim, action, suit
or proceeding to which the Committee or Board may be a party or in which the
Committee or Board may be involved by reason of any action taken or failure to
act under the Plan, and against and from any and all amounts paid by the
Committee or Board (with the Company's written approval) in the settlement
thereof, or paid by the Committee or Board in satisfaction of a judgment in any
such action, suit or proceeding except a judgment in favor of the Company;
subject, however, to the conditions that upon the institution of any claim,
action, suit or proceeding against the Committee (or Board, as the case may be),
the Committee or Board shall give the Company an opportunity in writing, at its
own expense, to handle and defend the same before the Committee (or Board, as
the case may be) undertakes to handle and defend it on the Committee's or
Board's own behalf. The foregoing right of indemnification shall not be
exclusive of any other right to which such persons may be entitled as a matter
of law, under the Company's Certificate of Incorporation, By-Laws, or any
indemnification agreement with the Company, or otherwise, or any power the
Company may have to indemnify the Committee or Board or hold the Committee or
Board harmless.

 




















The
Committee, the Board and each officer and participant shall be fully justified
in reasonably relying or acting upon any information furnished in connection
with the administration of the Plan by the Company or any employee. In no event
shall any persons who are or were members of the Committee or Board, or an
officer or employee of the Company, be liable for any determination made or
other action taken or any omission to act in reliance upon any such information,
or for any action (including furnishing of information) taken or any failure to
act, if in good faith.

 

19.   Severability.

 

In the
event that any provision of the Plan shall be held illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.

 

20.   Governing
Law.

 

To the
extent not preempted by federal law, the Plan and all option and restricted
stock agreements hereunder shall be construed in accordance with and governed by
the laws of the State of Illinois applicable to contracts made and to be
performed entirely within the State.