Exhibit 10.1


 


ADVANCED LIFE SCIENCES HOLDINGS, INC.


2005 STOCK INCENTIVE PLAN


(As Amended April 8, 2010)


 


ADVANCED LIFE SCIENCES HOLDINGS, INC. 2005 STOCK INCENTIVE PLAN


 


TABLE OF CONTENTS


 


	
  Article 1.

  	
  Establishment,
  Objectives and Duration

  
	
  Article 2.

  	
  Definitions

  
	
  Article 3.

  	
  Administration

  
	
  Article 4.

  	
  Shares
  Subject to the Plan and Maximum Awards

  
	
  Article 5.

  	
  Eligibility
  and Participation

  
	
  Article 6.

  	
  Stock
  Options

  
	
  Article 7.

  	
  Stock
  Appreciation Rights

  
	
  Article 8.

  	
  Restricted
  Stock and Restricted Stock Units

  
	
  Article 9.

  	
  Performance
  Shares

  
	
  Article 10.

  	
  Performance
  Measures

  
	
  Article 11.

  	
  Beneficiary
  Designation

  
	
  Article 12.

  	
  Deferrals

  
	
  Article 13.

  	
  Rights
  of Participants

  
	
  Article 14.

  	
  Change
  in Control

  
	
  Article 15.

  	
  Amendment,
  Modification and Termination

  
	
  Article 16.

  	
  Nontransferability
  of Awards

  
	
  Article 17.

  	
  Withholding

  
	
  Article 18.

  	
  Indemnification

  
	
  Article 19.

  	
  Successors

  
	
  Article 20.

  	
  Breach
  of Restrictive Covenants

  
	
  Article 21.

  	
  Legal
  Construction

  



 


ADVANCED LIFE SCIENCES HOLDINGS, INC. 2005 STOCK INCENTIVE PLAN


 


ARTICLE
1.         ESTABLISHMENT,
OBJECTIVES AND DURATION


 


1.1                ESTABLISHMENT OF THE PLAN.
Advanced Life Sciences Holdings, Inc., a  Delaware corporation, hereby
establishes the Advanced Life Sciences Holdings,  Inc. 2005 Stock Incentive
Plan, as set forth in this document. Capitalized terms  used but not
otherwise defined herein will have the meanings given to them in  Article 2.
The Plan permits the grant of Nonstatutory Stock Options, Incentive  Stock Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock  Units, and
Performance Shares. In addition, the Plan provides the opportunity  for the deferral
of the payment of salary, bonuses and other forms of incentive  compensation.


 


Subject
to the approval of the Company’s stockholders, the Plan, as amended and restated
herein, will become effective upon its approval by the Board of Directors, and
will remain in effect as provided in Section 1.3 hereof.


 


1.2                OBJECTIVES OF THE PLAN. The
objectives of the Plan are to optimize  the profitability and growth
of the Company through long-term incentives that  are consistent with the
Company’s objectives and that link the interests of  Participants to those of the
Company’s stockholders; to provide Participants  with an incentive for
excellence in individual performance; to promote teamwork  among
Participants; and to give the Company a significant advantage in  attracting and
retaining officers, key employees and directors.  


 


The
Plan is further intended to provide flexibility to the Company in its ability
to motivate, attract and retain the services of Participants who make significant
contributions to the Company’s success, and to allow Participants to share in
the success of the Company.


 


1.3                DURATION OF THE PLAN. This
Plan will be effective on the Effective  Date, as described in Article 2,
and will remain in effect, subject to the right  of the Committee to amend or
terminate the Plan at any time pursuant to Article  15, until all Shares subject
to it pursuant to Article 4 have been issued or  transferred according to the
Plan’s provisions. In no event may an Award be


 

















 


granted
under the Plan on or after the tenth annual anniversary of the Effective Date.


 


ARTICLE
2.           DEFINITIONS


 


Whenever
used in the Plan, the following terms have the meanings set forth  below, and when
the meaning is intended, the initial letter of the word is  capitalized:


 


“AFFILIATE”
means (a) for purposes of Incentive Stock Options, any  corporation that
is a Parent or Subsidiary of the Company, and (b) for all other  purposes
hereunder, an entity that (directly or indirectly) controls, is  controlled by or
under common control with the Company.


 


“AWARD”
means, individually or collectively, a grant under this Plan to a  Participant of
Nonstatutory Stock Options, Incentive Stock Options, Stock  Appreciation
Rights, Restricted Stock, Restricted Stock Units, and Performance  Shares.


 


“AWARD
AGREEMENT” means an agreement entered into by the Company and a  Participant
setting forth the terms and provisions applicable to an Award or  Awards granted
to the Participant or the terms and provisions applicable to an  election to
defer compensation under Section 8.2.


 


“BOARD”
or “BOARD OF DIRECTORS” means the Board of Directors of the  Company.


 


“CAUSE”
shall have the meaning set forth in any employment, consulting, or  other written
agreement between a Participant and the Company or an Affiliate.  If there is no
employment, consulting, or other written agreement between the  Participant and
the Company or an Affiliate, or if such agreement does not  define “Cause,”
then “Cause” shall have the meaning specified by the Committee  in connection
with the grant of any Award; provided, that if the Committee does  not so specify, “Cause”
shall mean any of the following, as determined by the  Committee in its
discretion:


 


(a)           conviction of,
or plea of guilty or NOLO CONTENDERE to, any criminal violation involving
dishonesty or fraud;


 


(b)           engagement in
conduct that is injurious to the Company or an Affiliate;


 


(c)           engagement in
any act of dishonesty or misconduct that results in  damage to the Company or an
Affiliate or their business or  reputation or that the
Committee determines to adversely affect the  value, reliability or
performance of the Participant to the Company  or an Affiliate;


 


(d)           refusal or
failure to substantially comply with the human resources  rules, policies,
directions and/or restrictions of the Company or  an Affiliate relating to
harassment and/or discrimination, or with  compliance or risk management
rules, policies, directions and/or  restrictions;


 


(e)           unauthorized use
or disclosure of confidential information or other trade secrets of the Company
or an Affiliate;


 


(f)            loss of any
license or registration that is necessary for the  Participant to perform his or
her duties to the Company or an  Affiliate, or commission of
any act that could result in the legal  disqualification of the
Participant from being employed by the  Company or an Affiliate;


 


(g)           failure to
cooperate with the Company or an Affiliate in any  internal investigation or
administrative, regulatory or judicial  proceeding; or


 


(h)           continuous
failure by the Participant to perform his or her duties  to the Company
or an Affiliate (including any sustained and  unexcused absence of the
Participant from the performance of such  duties, which absence has not
been certified in writing as due to


 


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physical
or mental illness or disability), after a written demand  for performance
has been delivered to the Participant identifying  the manner in which the
Participant has failed to substantially  perform such duties.


 


The
application of any part of the definition of “Cause” set forth in paragraphs  (a) through
(h) above to a Participant shall not preclude or prevent the  reliance by the
Committee on any other part of the definition that also may be  applicable. In
addition, the Participant’s Service shall be deemed to have  terminated for
Cause if, after the Participant’s Service has terminated, facts  and
circumstances are discovered that would have justified a termination for Cause.


 


“CHANGE
IN CONTROL” means the occurrence of any one or more of the following:


 


(a)           Any “person” (as
such term is defined in Section 3(a)(9) of the  Exchange Act and
as used in Sections 13(d)(3) and 14(d)(2) of the  Exchange Act),
including a “group” (as defined in Section 13(d)(3)  of the Exchange
Act), other than (i) the Company, (ii) any  wholly-owned subsidiary of
the Company, (iii) any employee benefit  plan (or related trust)
sponsored or maintained by the Company or  any Affiliate or (iv) a
Permitted Holder, becomes a “beneficial  owner” (as defined in Rule 13d-3
under the Exchange Act), directly  or indirectly, of securities
of the Company having fifty percent  (50%) or more of the combined
voting power of the then-outstanding  securities of the Company
that may be cast for the election of  directors of the Company
(other than as a result of an issuance of  securities initiated by the
Company in the ordinary course of  business) (the “Company
Voting Securities”); provided, however,  that the event described in
this paragraph (a) shall not be deemed  to be a Change in Control by
virtue of any underwriter temporarily  holding securities pursuant
to an offering of such securities;


 


(b)           During any
period of two consecutive years, individuals who at the  beginning of any
such period constitute the Board (the “Incumbent  Directors”) cease for any
reason to constitute at least a majority  of the Board, unless the
election, or the nomination for election  by the stockholders of the
Company, of each new director of the  Company during such period
was approved by a vote of at least  two-thirds of the Incumbent
Directors then still in office;


 


(c)           As the result
of, or in connection with, any cash tender or  exchange offer, merger or
other business combination, sale of all  or substantially all of the
assets or contested election, or any  combination of the foregoing
transactions, less than a majority of  the combined voting power of
the then-outstanding securities of the  Company or any successor
corporation or entity entitled to vote  generally in the election of
the directors of the Company or such  other corporation or entity
after such transaction is held in the  aggregate by the holders of
the securities of the Company entitled  to vote generally in the
election of directors of the Company  immediately prior to such
transaction; or


 


(d)           The stockholders
of the Company approve a plan of complete  liquidation of the Company.


 


Notwithstanding
the foregoing, a Change in Control shall not be deemed to  occur solely
because any person acquires beneficial ownership of more than fifty  percent (50%) of
the Company Voting Securities as a result of the acquisition of  Company Voting
Securities by the Company which reduces the number of Company  Voting
Securities outstanding; provided, however, that if after such acquisition  by the Company
such person becomes the beneficial owner of additional Company  Voting
Securities that increases the percentage of outstanding Company Voting  Securities
beneficially owned by such person, a Change in Control transaction  shall then
occur.


 


Further
notwithstanding the foregoing, unless a majority of the Incumbent  Directors
determines otherwise, no Change in Control shall be deemed to have  occurred with
respect to a particular Participant if the Change in Control  results from
actions or events in which such Participant is a participant in a  capacity other
than solely as an officer, employee or director of the Company or


 


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an
Affiliate.


 


“CODE”
means the Internal Revenue Code of 1986, as amended from time to time.


 


“COMMITTEE”
shall mean the Compensation Committee of the Board of  Directors;
provided, however, that the Committee shall at all times consist of  at least two
directors who are “outside directors” within the meaning of Code  Section 162(m),
“independent directors” within the meaning of the NASDAQ  marketplace
rules, and “nonemployee directors” within the meaning of Exchange  Act Rule 16b-3.


 


“COMPANY”
means Advanced Life Sciences Holdings, Inc., a Delaware  corporation, and
any successor thereto as provided in Article 19.


 


“CONSULTANT”
means any person, including an advisor, engaged by the Company  or an Affiliate
to render services to such entity and who is not a Director or  an Employee.


 


“DIRECTOR”
means any individual who is a member of the Board of Directors  or the board of
directors of an Affiliate.


 


“DISABILITY”
shall have the meaning set forth in any employment,  consulting, or other written
agreement between the Participant and the Company  or an Affiliate. If there is
no employment, consulting, or other written  agreement between the
Participant and the Company or an Affiliate, or if such  agreement does
not define “Disability,” then “Disability” shall mean (a)  long-term
disability as defined under the long-term disability plan of the  Company or an
Affiliate that covers the Participant, (b) if the Participant is  not covered by
such a long-term disability plan, disability as defined for  purposes of
eligibility for a disability award under the Social Security Act, or  (c) if the
Participant is not covered by a long-term disability plan or the U.S.  Social Security
Act, the Committee shall determine whether the Participant has  incurred a
Disability, in its sole discretion. Notwithstanding the foregoing,  for purposes of
determining the period of time after termination of Service  during which a
Participant may exercise an Incentive Stock Option, “Disability”  will have the
meaning set forth in Code Section 22(e)(3), which is, generally,  that the
Participant is unable to engage in any substantial gainful activity by  reason of a
medically determinable physical or mental impairment that can be  expected to
result in death or that has lasted or can be expected to last for a  continuous
period of at least twelve months.


 


“EFFECTIVE
DATE” means the date of the Plan’s adoption by the Board,  subject to the
approval of the Plan by the Company’s stockholders.


 


“EMPLOYEE”
means any person employed by the Company or an Affiliate in a  common law
employee-employer relationship. A Service Provider shall not cease to  be an Employee
for purposes of this Plan in the case of (a) any leave of absence  approved by the
Company or (b) transfers between locations of the Company or  among the
Company, any Affiliate, 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 a leave of absence approved by the Company is  not so
guaranteed, on the one hundred and eighty-first (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 or
an Affiliate shall be sufficient to constitute “employment” by  the Company or
an Affiliate.


 


“EXCHANGE
ACT” means the Securities Exchange Act of 1934, as amended from time to time,
or any successor act thereto.


 


“EXERCISE
PRICE” means the price at which a Share may be purchased by a Participant
pursuant to an Option.


 


“FAIR
MARKET VALUE” means:


 


(a)           the average of
the high and low trading prices of the Shares on the  New York Stock Exchange or,
if the Shares are not traded on the New  York Stock Exchange, on any
other national securities exchange on


 


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which
the Shares are traded, or, if the Shares are not traded on  any other
exchange and are regularly quoted on the NASDAQ National  Market System,
on the NASDAQ National Market System if the Shares  are admitted for quotation
thereon; or


 


(b)           if the Shares
are not traded on any exchange or regularly quoted on  the NASDAQ
National Market System, the mean between the closing bid  and asked prices
of the Shares in the over-the-counter market; or


 


(c)           if those bid and
asked prices are not available, then the fair  market value as reported by
any nationally recognized quotation  service selected by the
Committee or as determined by the  Committee.


 


“FREESTANDING
SAR” means a SAR that is granted independently of any  Options, as
described in Article 7.


 


“INCENTIVE
STOCK OPTION” or “ISO” means an option to purchase Shares  granted under Article 6
that is designated as an Incentive Stock Option and that  is intended to
meet the requirements of Code Section 422.


 


“NONSTATUTORY
STOCK OPTION” or “NQSO” means an option to purchase Shares  granted under Article 6
that is not intended to meet the requirements of Code  Section 422.


 


“OPTION”
means an Incentive Stock Option or a Nonstatutory Stock Option, as  described in Article 6.


 


“PARENT”
means a “parent corporation,” whether now or hereafter existing,  as defined in
Code Section 424(e).


 


“PARTICIPANT”
means an Employee, Consultant or Director who the Committee  has selected to
participate in the Plan pursuant to Section 5.2 and who has an  Award
outstanding under the Plan.


 


“PERFORMANCE-BASED
EXCEPTION” means the performance-based exception from  the tax
deductibility limitations of Code Section 162(m) and any regulations  promulgated
thereunder.


 


“PERFORMANCE
PERIOD” means the time period during which performance  objectives must
be met in order for a Participant to earn Performance Shares  granted under Article 9.


 


“PERFORMANCE
SHARE” means an Award of Shares with an initial value equal to  the Fair Market
Value of a Share on the date of grant which is based on the  Participant’s
attainment of certain performance objectives specified in the  Award Agreement,
as described in Article 9.


 


“PERMITTED
HOLDERS” means (a) Michael T. Flavin (the “Principal”), (b) the  spouse or any
immediate family member of the Principal and any child or spouse  of any spouse or
immediate family member of the Principal, (c) a trust,  corporation,
partnership or other entity, the beneficiaries, stockholders,  partners, owners
or persons beneficially holding, directly or indirectly, a  controlling
interest of which consists of the Principal and/or such other  persons referred
to in the immediately preceding clause (b), or (c) the trustees  of any trust
referred to in clause (d).


 


“PLAN”
means the Advanced Life Sciences Holdings, Inc. 2005 Stock Incentive  Plan, as set
forth in this document, and as amended from time to time.


 


“1999
PLAN” means the Advanced Life Sciences, Inc. Stock Incentive Plan, as  heretofore amended.


 


“RESTRICTION
PERIOD” means the period during which the transfer of Shares  of Restricted
Stock is limited in some way (based on the passage of time, the  achievement of
performance objectives, or the occurrence of other events as  determined by
the Committee, in its sole discretion) or the Restricted Stock is  not vested.


 


“RESTRICTED
STOCK” means a contingent grant of Shares awarded to a  Participant
pursuant to Article 8. The Shares awarded to the Participant will


 


5
















 


vest
over the Restricted Period and according to the time-based or  performance-based
criteria, specified in the Award Agreement.


 


“RESTRICTED
STOCK UNIT” or “RSU” means a notional account established  pursuant to an
Award granted to a Participant, as described in Article 8, that  is (a) valued
solely by reference to Shares, (b) subject to restrictions  specified in the
Award Agreement, and (c) payable only in Shares. The RSUs  awarded to the
Participant will vest according to the time-based or  performance-based criteria
specified in the Award Agreement.


 


“SERVICE”
means the provision of services to the Company or its Affiliates in the
capacity of (i) an Employee, (ii) a Director, or (iii) a
Consultant.


 


“SERVICE
PROVIDER” means an Employee, Director or Consultant.


 


“SHARES”
means the shares of common stock, $0.01 par value, of the Company.


 


“STOCK
APPRECIATION RIGHT” or “SAR” means an Award of the contingent right  to receive
Shares or cash, as specified in the Award Agreement, in the future,  based on the
value, or the appreciation in the value, of Shares, pursuant to the  terms of Article 7.
SARs may be granted alone or in connection with a related  Option.


 


“SUBSIDIARY”
means a “subsidiary corporation”, whether now or hereafter  existing, as
defined in Code Section 424(f).


 


“TANDEM
SAR” means a SAR that is granted in connection with a related  Option pursuant
to Article 7, the exercise of which requires forfeiture of the  right to
purchase a Share under the related Option (and when a Share is  purchased under
the Option, the Tandem SAR will similarly be canceled).


 


ARTICLE
3.         ADMINISTRATION


 


3.1           THE COMMITTEE. The Plan will
be administered by the Committee, or  by any other committee
appointed by the Board, which committee (unless otherwise  determined by
the Board) will satisfy the “nonemployee director” requirements of  Rule 16b-3
under the Exchange Act and the regulations of Rule 16b-3 under the  Exchange Act,
the “independent director” requirements of the NASDAQ marketplace  rules, and the “outside
director” provisions of Code Section 162(m), or any  successor
regulations or provisions.


 


3.2           AUTHORITY OF THE COMMITTEE.
Except as limited by law and subject to  the provisions of this Plan,
the Committee will have full power to: select  Service Providers to
participate in the Plan; determine the sizes and types of  Awards;
determine the terms and conditions of Awards in a manner consistent with  the Plan;
construe and interpret the Plan and any agreement or instrument  entered into
under the Plan; establish, amend or waive rules and regulations for  the Plan’s
administration; and (subject to the provisions of Article 15) amend  the terms and
conditions of any outstanding Award to the extent they are within  the discretion
of the Committee as provided in the Plan. Further, the Committee  will make all
other determinations that may be necessary or advisable to  administer the
Plan. As permitted by law and consistent with Section 3.1, the  Committee may
delegate some or all of its authority under the Plan, including to  an officer of
the Company to designate the Employees (other than such officer  himself or
herself) to receive Awards and to determine the number of Shares  subject to the
Awards such Employees will receive.


 


3.3           DECISIONS BINDING. All
determinations and decisions made by the  Committee pursuant to the
provisions of the Plan will be final, conclusive and  binding on all persons,
including, without limitation, the Company, its Board of  Directors, its
stockholders, all Affiliates, Service Providers, Participants and  their estates
and beneficiaries.


 


ARTICLE
4.         Shares SUBJECT
to the Plan and Maximum Awards


 


4.1           NUMBER OF SHARES AVAILABLE
FOR AWARDS. Subject to adjustment as  provided below and in
Sections 4.2 and 4.3, the maximum number of Shares that  may be subject
to Awards under the Plan will be 5,972,455, reduced by any  Shares that are
subject to awards under the 1999 Plan on or after the  Effective Date,
and increased by any Shares that are or that become available  for grants of
Awards under the Plan and/or awards under the 1999 Plan on or


 


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after
the Effective Date as a result of lapsed Awards or awards (as described  in Section 4.2).


 


Notwithstanding
the foregoing, the maximum number of Shares that may be  issued or
transferred to Participants as Incentive Stock Options is 200,000,  and the maximum
number of Shares that may be issued or transferred to  Participants as
Restricted Stock is 200,000. The maximum number of Shares  and Share
equivalent units that may be granted during any calendar year to any  one Participant
under all types of Awards available under the Plan is 100,000  (on an aggregate
basis); the foregoing limit will apply whether the Awards are  paid in Shares
or in cash. All limits described in this Section 4.1 are subject  to adjustment as
provided in Section 4.3.


 


4.2           LAPSED AWARDS. Any Shares (a) subject
to an Award under the Plan or  to an award under the 1999
Plan that are forfeited, canceled, settled or  otherwise terminated without
a distribution of Shares to a Participant; or (b)  delivered by attestation to,
or withheld by, the Company in connection with the  exercise of an Option awarded
under the Plan or the 1999 Plan, or in payment of  any required income tax
withholding for the exercise of an Option or the vesting  of Restricted
Stock awarded under the Plan or the 1999 Plan, will thereafter be  deemed to be
available for Award under the Plan.


 


4.3           ADJUSTMENTS IN AUTHORIZED
SHARES.


 


(a)           If the Shares,
as currently constituted, are changed into or  exchanged for a different
number or kind of shares of stock or  other securities of the
Company or of another corporation (whether  because of merger,
consolidation, recapitalization,  reclassification, split,
reverse split, combination of shares, or  otherwise) or if the number
of Shares is increased through the  payment of a stock dividend,
then the Committee will substitute for  or add to each Share
previously appropriated, later subject to, or  which may become subject to,
an Award, the number and kind of  shares of stock or other
securities into which each outstanding  Share was changed, for which
each such Share was exchanged, or to  which each such Share is
entitled, as the case may be. The  Committee will also
appropriately amend outstanding Awards as to  price and other terms, to the
extent necessary to reflect the  events described above. If
there is any other change in the number  or kind of the outstanding
Shares, of any stock or other securities  into which the outstanding
Shares have been changed, or for which  they have been exchanged, the
Committee may, in its sole  discretion, appropriately
adjust any Award already granted or which  may be afterward granted.


 


(b)           Fractional
Shares resulting from any adjustment in Awards pursuant  to this section
may be settled in cash or otherwise as the  Committee determines. The
Company will give notice of any  adjustment to each
Participant who holds an Award that has been  adjusted and the adjustment
(whether or not that notice is given)  will be effective and binding
for all Plan purposes.


 


ARTICLE
5.         ELIGIBILITY and
PARTICIPATION


 


5.1           ELIGIBILITY. All Service
Providers are eligible to participate in  this Plan.


 


5.2           ACTUAL PARTICIPATION. Subject
to the provisions of the Plan, the  Committee will, from time to
time, select those Service Providers to whom Awards  will be granted, and will
determine the nature and amount of each Award.


 


ARTICLE
6.         STOCK OPTIONS


 


6.1           GRANT OF OPTIONS. Subject to
the terms and provisions of the Plan,  Options may be granted to
Service Providers in the number, and upon the terms,  and at any time and from time
to time, as determined by the Committee.


 


6.2           AWARD AGREEMENT. Each Option
grant will be evidenced by an Award  Agreement that specifies the
Exercise Price, the duration of the Option, the  number of Shares to which the
Option pertains, the manner, time and rate of  exercise or vesting of the
Option, and such other provisions as the Committee  determines. The Award
Agreement will also specify whether the Option is intended


 


7

















 


to
be an ISO or an NQSO, and whether reload options will be granted.


 


6.3           EXERCISE PRICE. The Exercise
Price for each Share subject to an  Option will be at least one
hundred percent of the Fair Market Value on the date  the Option is granted.


 


6.4           DURATION OF OPTIONS. Each
Option will expire at the time determined  by the Committee at the time
of grant, but no later than the tenth anniversary  of the date of its grant.


 


6.5           DIVIDEND EQUIVALENTS. The
Committee may, but will not be required  to, grant payments in
connection with Options that are equivalent to dividends  declared and
paid on the Shares underlying the Options. Such dividend equivalent  payments may be
made in cash or in Shares, upon such terms as the Committee, in  its sole
discretion, deems appropriate.


 


6.6           EXERCISE OF OPTIONS. Options
will be exercisable at such times and  be subject to such
restrictions and conditions as the Committee in each instance  approves, which
need not be the same for each Award or for each Participant.


 


6.7           PAYMENT. The holder of an Option
may exercise the Option only by  delivering a written notice,
or if permitted by the Committee in its discretion  and in accordance with
procedures adopted by it, a notice by electronic or other  acceptable
means, of exercise to the Company (or its designee) setting forth the  number of Shares
as to which the Option is to be exercised, together with full  payment at the
Exercise Price for the Shares and any withholding tax relating to  the exercise of
the Option.


 


The
Exercise Price and any related withholding taxes will be payable to the  Company in full
either: (a) in cash, or its equivalent, in United States  dollars; (b) if
permitted in the governing Award Agreement, by tendering (i)  Shares acquired
outside of the Plan and owned by the Participant for at least  six months and
duly endorsed for transfer to the Company, (ii) Shares issuable  to the
Participant upon exercise of the Option, or any (iii) combination of  cash, certified
or cashier’s check and Shares described in this clause (b); or  (c) by any
other means the Committee determines to be consistent with the Plan’s  purposes and
applicable law. Cashless exercise must meet the requirements of the  Federal Reserve
Board’s Regulation T and any applicable securities law  restrictions. In
a “cashless” exercise, the Participant notifies the Company or  its designated
administrator it will exercise, and the Company is instructed to  deliver the
Share issuable on exercise to a broker, who sells the Shares and  holds back the
exercise price (and, often, the federal and state withholdings).  No more than the
minimum required withholding may be satisfied by the tender of  Shares.


 


6.8           SPECIAL PROVISIONS FOR ISOS.
Notwithstanding any other provision of  this Article 6, the
following special provisions shall apply to any Award of  Incentive Stock
Options:


 


(a)           The Committee
may award Incentive Stock Options only to Employees.


 


(b)           An Option will
not constitute an Incentive Stock Option under this  Plan to the extent it would
cause the aggregate Fair Market Value  of Shares with respect to
which Incentive Stock Options are  exercisable by the
Participant for the first time during a calendar  year (under all plans of the
Company and its Affiliates) to exceed  $100,000. Such Fair Market
Value shall be determined as of the date  on which each such Incentive
Stock Option is granted.


 


(c)           If the Employee
to whom the Incentive Stock Option is granted is a  Ten Percent Owner of the
Company, then: (i) the Exercise Price for  each Share subject to an
Option will be at least one hundred ten  percent (110%) of the Fair
Market Value of the Shares on the  effective date of the Award;
and (ii) the Option will expire upon  the earlier of (A) the
time specified by the Committee in the Award  Agreement, or (B) the
fifth anniversary of the date of grant.


 


(d)           No Option that
is intended to be an Incentive Stock Option may be  granted under the Plan until
the Company’s stockholders approve the  Plan. If such stockholder
approval is not obtained within 12 months  after the Board’s adoption of
the Plan, then no Stock Options may


 


8

















 


be
granted under the Plan that are intended to be Incentive Stock  Options. No
Option that is intended to be an Incentive Stock Option  may be granted
under the Plan after the tenth anniversary of the  date the Company adopted the
Plan or the Company’s stockholders  approved the Plan, whichever
was earlier.


 


(e)           An Incentive
Stock Option must be exercised, if at all, within three months after the
Participant’s termination of Service for a reason other than death or
Disability and within twelve months after the Participant’s termination of
Service for death or Disability.


 


(f)            For purposes of
this Section, “Ten Percent Owner” means an individual who, at the time a Stock
Option is granted under this Plan, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Affiliate.


 


6.9           RELOAD OPTIONS. The Committee
may provide for reload options in the  Award Agreement evidencing an
Option. Any reload feature will be subject to the  following requirements:


 


(a)           it must not be
added to an already outstanding Option, but must be  part of the Option as
originally granted;


 


(b)           the reload must
be automatic, not subject to the discretion of the  Committee or anyone else;


 


(c)           it must have an
Exercise Price at least equal to the Fair Market  Value of a Share at the time
of reload;


 


(d)           it may be
granted with respect only to previously-owned Shares used  to pay the
Exercise Price of the original Option, and only if the  Participant has
owned the Shares used to pay the Exercise Price for  at least six months;


 


(e)           the Award
Agreement that contains the reload feature must not  permit multiple reloads
(I.E., no reload Options may be granted on  Shares acquired through
reload Options) and must subject any Option  granted on reload to a
vesting period of at least six months; and


 


(f)            it must limit
the duration of reload Options, by providing that an  Option granted on reload
expires at the same time as the initial  Option would have.


 


6.10         RESTRICTIONS ON SHARE
TRANSFERABILITY. The Committee may impose  such restrictions on any
Shares acquired through exercise of an Option as it  deems necessary or advisable,
including, without limitation, restrictions under  applicable federal securities
laws, under the requirements of any stock exchange  or market upon which the
Shares are then listed or traded, and under any blue  sky or state securities laws
applicable to the Shares.


 


6.11         TERMINATION OF SERVICE. Each
Option Award Agreement will set forth  the extent to which the
Participant has the right to exercise the Option after  his or her
termination of Service. These terms will be determined by the  Committee, in
its sole discretion, need not be uniform among all Options, and  may reflect,
among other things, distinctions based on the reasons for  termination of
Service. However, notwithstanding any other provision herein to  the contrary, no
additional Options will vest after a Participant’s Service  ceases or has
terminated for any reason, whether such cessation or termination  is lawful or
unlawful.


 


ARTICLE
7.         STOCK
APPRECIATION RIGHTS


 


7.1           GRANT OF SARS. Subject to the
terms and conditions of the Plan,  SARs may be granted to
Participants at any time and from time to time, as  determined by the Committee.
The Committee may grant Freestanding SARs, Tandem  SARs or any combination of
the two, as specified in the Award Agreement.


 


Within
the limits of Article 4, the Committee will have sole discretion to  determine the
number of SARs granted to each Participant and, consistent with


 


9

















 


the
provisions of the Plan, to determine the terms and conditions pertaining to SARs.


 


The
grant price of a Freestanding SAR will equal the Fair Market Value on  the date of
grant of the SAR. The grant price of a Tandem SAR will equal the per  Share Exercise
Price of the Option to which it relates.


 


7.2           EXERCISE OF TANDEM SARS.
Tandem SARs may be exercised for all or  part of the Shares subject to
the related Option, upon the surrender of the  right to exercise the
equivalent portion of the related Option. A Tandem SAR  may be exercised
only with respectto the Shares for which its related Option is  then
exercisable.


 


7.3           EXERCISE OF FREESTANDING
SARS. Freestanding SARs may be exercised  upon whatever terms and
conditions the Committee, in its sole discretion,  imposes.


 


7.4           AWARD AGREEMENT. Each SAR
grant will be evidenced by an Award  Agreement that specifies the
grant price, whether settlement of the SAR will be  made in cash or Shares, the
term of the SAR and such other provisions as the  Committee determines.


 


7.5           TERM OF SARS. The term of a
SAR will be determined by the Committee, in its sole discretion, but may not
exceed ten years.


 


7.6           PAYMENT OF SAR AMOUNT. Upon
exercise of a SAR with respect to a  Share, a Participant will be
entitled to receive an amount equal to the excess,  if any, of the Fair Market
Value on the date of exercise of the SAR over the  grant price specified in the
Award Agreement. At the discretion of the  Committee, the payment that
may become due upon SAR exercise may be made in  cash, in Shares or in some
combination of the two.


 


7.7           TERMINATION OF SERVICE. Each
SAR Award Agreement will set forth the  extent to which the
Participant has the right to exercise the SAR after his or  her termination
of Service. These terms will be determined by the Committee, in  its sole
discretion, need not be uniform among all SARs issued under the Plan,  and may reflect,
among other things, distinctions based on the reasons for  termination of
Service.


 


ARTICLE
8.         RESTRICTED STOCK
AND RESTRICTED STOCK UNITS


 


8.1           GRANT OF RESTRICTED STOCK OR
RESTRICTED STOCK UNITS. Subject to the  terms and provisions of the
Plan, the Committee may, at any time and from time  to time, grant Restricted Stock
or Restricted Stock Units to Participants in  such amounts as it
determines.


 


8.2           DEFERRAL OF COMPENSATION INTO
RESTRICTED STOCK UNITS. Subject to  the terms and provisions of
the Plan and the requirements of Code Section 409A,  the Committee
may, at any time and from time to time, allow (or require, as to  bonuses)
selected Service Providers to defer the payment of any portion of their  salary or
bonuses or both pursuant to this section. A Participant’s deferral  under this
section will be credited to the Participant in the form of Shares or  Restricted Stock
Units. The Committee will establish rules and procedures for  such deferrals,
as it deems appropriate.


 


In
consideration for foregoing compensation, the number of Restricted Stock  Units granted to
the Participant may be increased. If a Participant’s  compensation is deferred
under this Section 8.2, he or she will be credited, as  of the date
specified in the Award Agreement, with a number of Restricted Stock  Units equal to
the amount of the deferral (increased as described above) divided  by the Fair
Market Value on that date.


 


8.3           AWARD AGREEMENT. Each grant
of Restricted Stock or Restricted Stock  Units will be evidenced by an
Award Agreement that specifies the Restriction  Periods, the number of Shares
or Share equivalent units granted, and such other  provisions as the Committee
determines.


 


8.4           OTHER RESTRICTIONS. Subject
to Article 10, the Committee may impose  such other conditions or
restrictions on any Restricted Stock or Restricted  Stock Units as it deems
advisable, including, without limitation, restrictions  based upon the
achievement of specific performance objectives (Company-wide,


 


10
















 


business
unit, individual, or any combination of them), time-based restrictions  on vesting, and
restrictions under applicable federal or state securities laws.  The Committee
may provide that restrictions established under this Section 8.4  as to any given Award
will lapse all at once or in installments.


 


The
Company will retain the certificates representing Shares of Restricted  Stock in its
possession until all conditions and restrictions applicable to the  Shares have been
satisfied.


 


8.5           PAYMENT OF AWARDS. Except as
otherwise provided in this Article 8,  Shares covered by each
Restricted Stock grant will become freely transferable by  the Participant
after the last day of the applicable Restriction Period, and  Share equivalent
units covered by a Restricted Unit will be paid out in cash or  Shares to the
Participant following the last day of the applicable Restriction  Period, or on
the date provided in the Award Agreement.


 


8.6           VOTING RIGHTS. During the
Restriction Period, Participants holding  Shares of Restricted Stock
may exercise full voting rights with respect to those  Shares.


 


8.7           DIVIDENDS AND OTHER
DISTRIBUTIONS. During the Restriction Period  and as determined by the
Committee in its discretion, Participants awarded  Shares of Restricted Stock or
Restricted Stock Units hereunder may be credited  with regular cash dividends
or dividend equivalents paid on those Shares or with  respect to those Share
equivalent units. Dividends may be paid currently,  accrued as contingent cash
obligations, or converted into additional Shares of  Restricted Stock or
Restricted Stock Units, upon such terms as the Committee  establishes.


 


The
Committee may apply any restrictions it deems advisable to the  crediting and
payment of dividends and other distributions. Without limiting the  generality of
the preceding sentence, if the grant or vesting of Restricted  Stock is
designed to qualify for the Performance-Based Exception, the Committee  may apply any
restrictions it deems appropriate to the payment of dividends  declared with
respect to the Restricted Stock, so that the dividends and the  Restricted Stock
continue to be eligible for the Performance-Based Exception.


 


8.8           TERMINATION OF SERVICE. Each
Award Agreement will set forth the  extent to which the
Participant has the right to retain unvested Restricted  Stock or
Restricted Stock Units after his or her termination of Service. These  terms will be
determined by the Committee, in its sole discretion, need not be  uniform among
all Awards of Restricted Stock, and may reflect, among other  things,
distinctions based on the reasons for termination of Service.


 


ARTICLE
9.         PERFORMANCE
SHARES


 


9.1           GRANT OF PERFORMANCE SHARES.
Subject to the terms of the Plan,  Performance Shares may be
granted to Participants in such amounts and upon such  terms, and at
any time and from time to time, as the Committee determines. The  Award of
Performance Shares may be based on the Participant’s attainment of  performance
objectives, or the vesting of an Award of Performance Shares may be  based on the
Participant’s attainment of performance objectives, each as  described in
this Article 9.


 


9.2           VALUE OF PERFORMANCE SHARES.
Each Performance Share will have an  initial value equal to the
Fair Market Value on the date of grant. The Committee  will set
performance objectives in its discretion which, depending on the extent  to which they
are met, will determine the number or value (or both) of  Performance
Shares that will be paid out to the Participant. For purposes of  this Article 9,
the time period during which the performance objectives must be  met will be
called a “Performance Period” and will be set by the Committee in  its discretion.


 


9.3           EARNING OF PERFORMANCE
SHARES. Subject to the terms of this Plan,  after the applicable
Performance Period has ended, the holder of Performance  Shares will be
entitled to receive payout on the number and value of Performance  Shares earned by
the Participant over the Performance Period, to be determined  as a function of
the extent to which the corresponding performance objectives  have been achieved.


 


9.4           AWARD AGREEMENT. Each grant
of Performance Shares will be evidenced


 


11

















 


by
an Award Agreement specifying the material terms and conditions of the Award  (including the
form of payment of earned Performance Shares), and such other  provisions as
the Committee determines.


 


9.5           FORM AND TIMING OF
PAYMENT OF PERFORMANCE SHARES. Except as  provided in Article 12,
payment of earned Performance Shares will be made as  soon as practicable after the
close of the applicable Performance Period, in a  manner determined by the
Committee in its sole discretion. The Committee will  pay earned Performance Shares
in the form of cash, in Shares, or in a  combination of cash and
Shares, as specified in the Award Agreement. Performance  Shares may be
paid subject to any restrictions deemed appropriate by the  Committee.


 


9.6           TERMINATION OF SERVICE DUE TO
DEATH OR DISABILITY. Unless  determined otherwise by the
Committee and set forth in the Participant’s Award  Agreement, if a Participant’s
Service is terminated by reason of death or  Disability during a
Performance Period, the Participant will receive a prorated  payout of the
Performance Shares, as specified by the Committee, in its sole  discretion, in
the Award Agreement. Payment of earned Performance Shares will be  made at a time
specified by the Committee in its sole discretion and set forth  in the
Participant’s Award Agreement.


 


9.7           TERMINATION OF SERVICE FOR
OTHER REASONS. If a Participant’s  Service terminates during a
Performance Period for any reason other than death  or Disability, the
Participant will forfeit all Performance Shares to the  Company, unless
the Participant’s Award Agreement provides otherwise.


 


ARTICLE
10.       PERFORMANCE MEASURES


 


Unless
and until the Committee proposes and the Company’s stockholders  approve a change
in the general performance measures set forth in this Article  10, the
performance measure(s) to be used for purposes of Awards designed to  qualify for the
Performance-Based Exception will be chosen from among the  following
alternatives (or in any combination of such alternatives):


 


(a)                                  net earnings;


 


(b)                                 operating
earnings or income;


 


(c)                                  earnings growth;


 


(d)                                 net income
(absolute or competitive growth rates comparative);


 


(e)                                  net income
applicable to Shares;


 


(f)                                    gross revenue or
revenue by pre-defined business segment (absolute  or competitive growth rates
comparative);


 


(g)                                 revenue backlog;


 


(h)                                 margins realized
on delivered services;


 


(i)                                     cash flow,
including operating cash flow, free cash flow,  discounted cash flow return
on investment, and cash flow in excess  of cost of capital;


 


(j)                                     earnings per
Share;


 


(k)                                  return on
stockholders’ equity (absolute or peer-group  comparative);


 


(l)                                     stock price
(absolute or peer-group comparative);


 


(m)                               absolute and/or
relative return on common stockholders’ equity;


 


(n)                                 absolute and/or
relative return on capital;


 


(o)                                 absolute and/or
relative return on assets;


 


(p)                                 economic value
added (income in excess of cost of capital);


 


12

















 


(q)                                 customer
satisfaction;


 


(r)                                    expense
reduction;


 


(s)                                  ratio of
operating expenses to operating revenues;


 


(t)                                    product
development milestones; and


 


(u)                                 capital raising
objectives.


 


Performance
measures may be stated as goals for the Company, an Affiliate,  an individual,
business unit, division, or any combination of the foregoing. If  Code Section 162(m) or
other applicable tax or securities laws change to allow  the Committee
discretion to change the types of performance measures without  obtaining
stockholder approval, the Committee will have sole discretion to make  such changes
without obtaining stockholder approval.


 


The
Committee will have the discretion to adjust targets set for  preestablished
performance objectives; however, Awards designed to qualify for  the
Performance-Based Exception may not be adjusted upward, except to the extent  permitted under
Code Section 162(m), to reflect accounting changes or other  events. In
addition, if the Committee determines it is advisable to grant Awards  that will not
qualify for the Performance-Based Exception, the Committee may  grant Awards
that do not so qualify.


 


ARTICLE
11.       BENEFICIARY DESIGNATION


 


Each
Participant may, from time to time, name any beneficiary or  beneficiaries
(who may be named contingently or successively) to whom any  benefit under
the Plan is to be paid in case the Participant should die before  receiving any or
all of his or her Plan benefits. Each beneficiary designation  will revoke all
prior designations by the same Participant, must be in a form  prescribed by
the Committee, and must be made during the Participant’s lifetime.  If the
Participant’s designated beneficiary predeceases the Participant or no  beneficiary has
been designated, benefits remaining unpaid at the Participant’s  death will be
paid to the Participant’s estate or other entity described in the Participant’s
Award Agreement.


 


ARTICLE
12.       DEFERRALS


 


Subject
to the requirements of Code Section 409A, the Committee may permit  or require a
Participant to defer receipt of cash or Shares that would otherwise  be due to him or
her by virtue of an Option or SAR exercise, the lapse or waiver  of restrictions
on Restricted Stock, or the satisfaction of any requirements or  objectives with
respect to Performance Shares. If any such deferral election is  permitted or
required, the Committee will, in its sole discretion, establish  rules and
procedures for such deferrals. Notwithstanding the foregoing, the  Committee in its
sole discretion may defer payment of cash or the delivery of  Shares that
would otherwise be due to a Participant under the Plan if payment or  delivery would
result in the Company’s or an Affiliate’s being unable to deduct  compensation
under Code Section 162(m). Deferral of payment or delivery by the  Committee may
continue until the Company or Affiliate is able to deduct the  payment or
delivery under the Code.


 


ARTICLE
13.       RIGHTS OF PARTICIPANTS


 


13.1         EMPLOYMENT AND SERVICE.
Nothing in the Plan will confer upon any  Participant any right to
continue in the employ of the Company or any Affiliate,  or interfere
with or limit in any way the right of the Company or any Affiliate  to terminate any
Participant’s employment or Service at any time.


 


13.2         PARTICIPATION. No Employee,
Director or Consultant will have the  right to receive an Award
under this Plan, or, having received any Award, to  receive a future Award.


 


ARTICLE
14.       CHANGE IN CONTROL


 


In
the event of a Change in Control, the Committee will have the discretion  to provide that
all Awards granted under this Plan will become fully vested and  immediately
exercisable, eliminate any restrictions applicable to Awards, and  deem any
performance measures to be satisfied. The Committee also will have the


 


13

















 


discretion
to provide that any Award that has not been fully exercised before  the date a
Change in Control is consummated will terminate on such date or that  such Awards, in
connection with the Change in Control, will be continued or  assumed or
awards to acquire the stock of the surviving, resulting or acquiring  corporation,
with any adjustments as the Committee determines appropriate, will  be substituted
or to take such other actions as it deems appropriate.


 


ARTICLE
15.       AMENDMENT, MODIFICATION AND
TERMINATION


 


15.1         AMENDMENT, MODIFICATION AND
TERMINATION. The Committee may at any  time and from time to time,
alter, amend, modify or terminate the Plan in whole  or in part. The Committee
will not, however, increase the number of Shares that  may be issued or
transferred to Participants under the Plan, as described in the  first sentence
of Section 4.1(and subject to adjustment as provided in Sections  4.2 and 4.3).


 


Subject
to the terms and conditions of the Plan, the Committee may modify,  extend or renew
outstanding Awards under the Plan, or accept the surrender of  outstanding
Awards (to the extent not already exercised) and grant new Awards in  substitution of
them (to the extent not already exercised). The Committee will  not, however,
modify any outstanding Option so as to specify a lower Exercise  Price, without
the approval of the Company’s stockholders.


 


15.2         ADJUSTMENT OF AWARDS UPON THE
OCCURRENCE OF CERTAIN UNUSUAL OR  NONRECURRING EVENTS. In
recognition of unusual or nonrecurring events  (including, without
limitation, the events described in Section 4.3) affecting  the Company or
its financial statements, or in recognition of changes in  applicable laws,
regulations, or accounting principles, and, whenever the  Committee
determines that adjustments are appropriate in order to prevent  dilution or
enlargement of the benefits or potential benefits intended to be  made available
under the Plan, the Committee may, using reasonable care, make  adjustments in
the terms and conditions of, and the criteria included in,  Awards. In case
of an Award designed to qualify for the Performance-Based  Exception, the
Committee will take care not to make an adjustment that would  disqualify the
Award.


 


15.3         AWARDS PREVIOUSLY GRANTED. No
termination, amendment or  modification of the Plan, and
no modification of an Award, will adversely affect  in any material way any Award
already granted under the Plan, without the  written consent of the
Participant who holds the Award.


 


15.4         COMPLIANCE WITH CODE SECTION 162(m).
Awards will comply with the  requirements of Code Section 162(m),
unless the Committee determines that such  compliance is not desired
with respect to an Award available for grant under the  Plan. In
addition, if changes are made to Code Section 162(m) to permit
greater  flexibility as to any Award available under the Plan, the Committee may,
subject  to this Article 15, make any adjustments it deems appropriate.


 


ARTICLE
16.       NONTRANSFERABILITY OF AWARDS.


 


16.1         NONTRANSFERABILITY OF AWARDS.
Except as otherwise provided in a  Participant’s Award
Agreement, no Option, SAR, Performance Share, Restricted  Stock, or
Restricted Stock Unit granted under the Plan may be sold, transferred,  pledged,
assigned, or otherwise alienated or hypothecated, other than by will or  by the laws of
descent and distribution, or pursuant to a domestic relations  order (as
defined in Code Section 414(p)). All rights with respect to  Performance
Shares, Restricted Stock and Restricted Stock Units will be  available during
the Participant’s lifetime only to the Participant or his or  her guardian or
legal representative. Except as otherwise provided in a  Participant’s
Award Agreement or in Section 16.2 below, all Options and SARs  will be
exercisable during the Participant’s lifetime only by the Participant or  his or her
guardian or legal representative. The Participant’s beneficiary may  exercise the
Participant’s rights to the extent they are exercisable under the  Plan following
the Participant’s death. The Committee may, in its discretion,  require a
Participant’s guardian, legal representative or beneficiary to supply  it with the
evidence the Committee deems necessary to establish the authority of  the guardian,
legal representative or beneficiary to act on behalf of the  Participant.


 


16.2         PERMITTED TRANSFERS.
Notwithstanding Section 16.1, with respect to  any Nonstatutory Stock
Options, each Participant shall be permitted at all times


 


14

















 


to
transfer any or all of the Options, or, in the event the Options have not yet  been issued to
the Participant, the Company shall be permitted to issue any or  all of the
Options, to certain trusts designated by the Participant as long as  such transfer or
issuance is made as a gift (I.E., a transfer for no  consideration, with donative
intent), whether during the Participant’s lifetime  or to take effect upon (or as
a consequence of) the Participant’s death, to the  Participant’s spouse or
children. Gifts in trust shall be deemed gifts to every  beneficiary and
contingent beneficiary, and so shall not be permitted under this  Section 16.2
if the beneficiaries or contingent beneficiaries shall include  anyone other
than such spouse or children. Transfers to a spouse or child for  consideration,
regardless of the amount, shall not be permitted under this  Section. Any
Options issued or transferred under this Section 16.2 shall be  subject to all
terms and conditions contained in the Plan and the applicable  Award Agreement.
If the Committee makes an Option transferable, such Option  shall contain
such additional terms and conditions, as the Committee deems  appropriate.
Options transferred in accordance with this Section 16.2 may be  exercised by the
transferee.


 


ARTICLE
17.       WITHHOLDING


 


17.1         TAX WITHHOLDING. The Company
will have the power and the right to  deduct or withhold, or
require a Participant to remit to the Company, the  minimum amount necessary to
satisfy federal, state, and local taxes, domestic or  foreign, required by law or
regulation to be withheld with respect to any  taxable event arising under
this Plan. No Award Agreement will permit reload  options to be granted in
connection with any Shares used to pay a tax  withholding obligation.


 


17.2         SHARE WITHHOLDING. With
respect to withholding required upon the  exercise of Options or SARs,
upon the lapse of restrictions on Restricted Stock,  or upon any other taxable
event arising as a result of Awards granted hereunder,  the Company may
satisfy the minimum withholding requirement for supplemental  wages, in whole
or in part, by withholding Shares having a Fair Market Value  (determined on
the date the Participant recognizes taxable income on the Award)  equal to the
minimum withholding tax required to be collected on the  transaction. The
Participant may elect, subject to the approval of the  Committee, to
deliver the necessary funds to satisfy the withholding obligation  to the Company,
in which case there will be no reduction in the Shares otherwise  distributable to
the Participant.


 


ARTICLE
18.       INDEMNIFICATION


 


Each
person who is or has been a member of the Committee or the Board, and  any individual or
individuals to whom the Committee has delegated authority  under Section 3.1
or 3.2 of the Plan, will be indemnified and held harmless by  the Company from
and against any loss, cost, liability, or expense that may be  imposed upon or
reasonably incurred by him or her in connection with or as a  result of any
claim, action, suit or proceeding to which he or she may be a  party or in
which he or she may be involved by reason of any action taken, or  failure to act,
under the Plan. Each such person will also be indemnified and  held harmless by
the Company from and against any and all amounts paid by him or  her in a
settlement approved by the Company, or paid by him or her in  satisfaction of
any judgment, of or in a claim, action, suit or proceeding  against him or
her and described in the previous sentence, so long as he or she  gives the
Company an opportunity, at its own expense, to handle and defend the  claim,action,
suit or proceeding before he or she undertakes to handle and defend  it. The
foregoing right of indemnification will not be exclusive of any other  rights of
indemnification to which a person who is or has been a member of the  Committee or the
Board may be entitled under the Company’s Articles of  Incorporation or
By-Laws, as a matter of law, or otherwise, or any power that  the Company may
have to indemnify him or her or hold him or her harmless.


 


ARTICLE
19.       SUCCESSORS


 


All
obligations of the Company under the Plan or any Award Agreement will  be binding on
any successor to the Company, whether the existence of the  successor
results from a direct or indirect purchase of all or substantially all  of the business
or assets of the Company or both, or a merger, consolidation, or  otherwise.


 


15

















 


ARTICLE
20.       BREACH OF RESTRICTIVE
COVENANTS


 


An
Award Agreement may provide that, notwithstanding any other provision of  this Plan to the
contrary, if the Participant breaches the competition,  nonsolicitation
or nondisclosure provisions of the Award Agreement, whether  during or after
termination of Service, the Participant will forfeit:


 


(a)           any and all Awards granted or
transferred to him or her under the  Plan, including Awards that
have become vested and exercisable; and


 


(b)           the profit the Participant
has realized on the exercise of any  Options, which is the
difference between the Exercise Price of the Options and  the applicable
Fair Market Value of the Shares (the Participant may be required  to repay such
difference to the Company).


 


ARTICLE
21.       LEGAL CONSTRUCTION


 


21.1         NUMBER. Except where
otherwise indicated by the context, any plural  term used in this Plan
includes the singular and a singular term includes the  plural.


 


21.2         SEVERABILITY. If any
provision of the Plan is held illegal or  invalid for any reason, the
illegality or invalidity will not affect the  remaining parts of the Plan,
and the Plan will be construed and enforced as if  the illegal or invalid
provision had not been included.


 


21.3         REQUIREMENTS OF LAW. The
granting of Awards and the issuance of  Share or cash payouts under
the Plan will be subject to all applicable laws,  rules, and regulations, and
to any approvals by governmental agencies or  national securities exchanges
as may be required.


 


21.4         SECURITIES LAW COMPLIANCE. As
to any individual who is, on the  relevant date, an officer,
director or ten percent beneficial owner of any class  of the Company’s
equity securities that is registered pursuant to Section 12 of  the Exchange
Act, all as defined under Section 16 of the Exchange Act,  transactions
under this Plan are intended to comply with all applicable  conditions of Rule 16b-3
under the Exchange Act, or any successor rule. To the  extent any
provision of the Plan or action by the Committee fails to so comply,  it will be
deemed null and void, to the extent permitted by law and deemed  advisable by the
Committee. In addition, the Committee may impose trading  restrictions it
deems advisable to comply with Section 16 of the Exchange Act  and may require
a Participant to make written representations the Committee deems necessary or
desirable to comply with applicable securities laws. If at any time  the Committee
determines that exercising an Option or SAR, or issuing Shares  pursuant to an
Award, would violate applicable securities laws, the Option or  SAR will not be
exercisable, and the Company will not be required to issue Shares.


 


21.5         AWARDS TO FOREIGN NATIONALS
AND EMPLOYEES OUTSIDE THE UNITED  STATES. To the extent the
Committee deems it necessary, appropriate or desirable  to comply with
foreign law or practice and to further the purposes of this Plan,  the Committee
may, without amending the Plan, (i) establish, modify, amend or  terminate
subplans or rules applicable to Awards granted to Participants who are  foreign
nationals or are employed outside the United States, or both, including  rules that
differ from those set forth in this Plan, (ii) grant Awards to such  Participants in
accordance with those subplans or rules, and (iii) take any  action it deems
necessary or advisable to obtain, comply with or otherwise  reflect any
applicable governmental regulatory procedures, exemptions or  approvals with
respect to the Plan.


 


21.6         UNFUNDED STATUS OF THE PLAN.
The Plan is intended to constitute an  “unfunded” plan for incentive
and deferred compensation. With respect to any  payments or deliveries of
Shares not yet made to a Participant by the Company,  the Participant’s rights are
no greater than those of a general creditor of the  Company. The Committee may
authorize the establishment of trusts or other  arrangements to meet the
obligations created under the Plan, so long as the  arrangement does not cause
the Plan to lose its legal status as an unfunded  plan.


 


21.7         GOVERNING LAW. To the extent
not preempted by federal law, the Plan  and all agreements hereunder
will be construed in accordance with and governed  by the laws of the State of
Illinois.


 


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