EX-10(oo)









Exhibit 10(oo)




AGILYSYS, INC.




2006 STOCK INCENTIVE PLAN




As Amended and Restated Effective May 22, 2009




ARTICLE 1




GENERAL PURPOSE OF PLAN; DEFINITIONS




     1.1 Name and Purposes. The name of this Plan is the Agilysys, Inc. 2006 Stock Incentive
Plan. The purpose of this Plan is to enable Agilysys, Inc. and its Affiliates to: (i) attract and
retain skilled and qualified officers, employees, directors and consultants who are expected to
contribute to the Company’s success by providing long-term incentive compensation opportunities
competitive with those made available by other companies; (ii) motivate Participants to achieve the
long-term success and growth of the Company; (iii) facilitate ownership of shares of the Company;
and (iv) align the interests of the Participants with those of the Company’s Shareholders.



     1.2 Certain Definitions. Unless the context otherwise indicates, the following words used
herein shall have the following meanings whenever used in this instrument:




     (a) “Affiliate” means (i) any entity that would be treated as an “affiliate” of
the Company for purposes of Rule 12b-2 issued under the Exchange Act, and (ii)
any corporation, partnership, joint venture or other entity, directly or
indirectly, through one or more intermediaries, controlling, controlled by, or
under common control with the Company as determined by the Board of Directors
in its discretion. For certain purposes described elsewhere in this Plan (for
example, with respect to ISOs), only entities described in relevant tax or
other law are considered affiliated with the Company.




     (b) “Award” means any grant under this Plan of a Stock Option, Stock
Appreciation Right, Restricted Share, Restricted Share Unit or Performance
Share to any Plan Participant.




     (c) “Award Agreement” means a written agreement entered into between the
Company and a Participant setting forth the terms and conditions of an Award
granted to the Participant.




     (d) “Board of Directors” means the Board of Directors of the Company, as
constituted from time to time.




     (e) “Cause” means a Participant’s termination of employment or directorship, as
applicable, which shall have been the result of:




     (i) his conviction of any of the following offenses, provided
that such offense results in material economic harm to the
Company or any Affiliate or has a materially adverse effect on
the operations, property or business relationships of the
Company or an Affiliate: (A) misappropriation of money or other
property of the Company or any Affiliate or (B) any felony;




     (ii) his failure, during his employment with the Company or any
Affiliate, to devote his full time and undivided attention
during normal business hours to the business and affairs of the
Company or any Affiliate, except for reasonable vacations and
for illness or incapacity; provided, however, that a
Participant may, with the consent of the Company, serve as a
director or member of an advisory committee of any organization
involving no conflict of interest with the interests of the
Company or its Affiliates, engage in charitable and community
activities, and manage his personal affairs, provided that such
activities do not materially interfere with the regular
performance of his duties and responsibilities of employment;



 









 






     (iii) his failure to substantially perform his employment duties with the
Company or an Affiliate;




     (iv) his failure to substantially perform his duties as a Director; or




     (v) conduct that is in material competition with the Company or an Affiliate or
conduct that breaches his duty of loyalty to the Company or an Affiliate or
that is materially injurious to the Company or an Affiliate, monetarily or
otherwise, which conduct may include, but is not limited to, (A) disclosing or
misusing any confidential information pertaining to the Company or an Affiliate
or (B) attempting, directly or indirectly, to induce any employee or agent of
the Company or an Affiliate to be employed or perform services elsewhere.




The determination of whether any conduct, action or failure to act constitutes “Cause” shall be
made by the Committee in its sole discretion.




     (f) “Code” means the Internal Revenue Code of 1986, as amended, and any lawful
regulations or other guidance promulgated thereunder. Whenever reference is made to a
specific Internal Revenue Code section, such reference shall be deemed to be a
reference to any successor Internal Revenue Code section or sections with the same or
similar purpose.




     (g) “Committee” means the entity administering this Plan as provided in Section 2.1.




     (h) “Company” means Agilysys, Inc., a corporation organized under the laws of the
State of Ohio and, except for purposes of determining whether a Change in Control has
occurred, any corporation or entity that is a successor to Agilysys, Inc. or
substantially all of the assets of Agilysys, Inc. and that assumes the obligations of
Agilysys, Inc. under this Plan by operation of law or otherwise.




     (i) “Date of Grant” means the date on which the Committee grants an Award or a future
date that the Committee designates as the effective date of the Award at the time it
grants the Award.




     (j) “Director” means a member of the Board of Directors.




     (k) “Disability” means a Participant’s physical or mental incapacity resulting from
personal injury, disease, illness or other condition, which (i) prevents him from
performing his duties for the Company or an Affiliate, as the same is determined by
the Committee or its designee after reviewing any medical evidence or requiring any
medical examinations which the Committee or its designee considers necessary to its
determination; and (ii) results in his termination of employment or directorship, as
applicable, with the Company or an Affiliate. Notwithstanding the foregoing, the
Committee may, in its sole discretion, substitute a different definition for the term
“Disability” to the extent provided herein or otherwise as appropriate.




     (l) “Early Retirement” means a Participant’s retirement from active employment or
active directorship with the Company or an Affiliate on and after the later of
attainment of age 55 or the completion of seven years of service.




     (m) “Eligible Director” is defined in Article 4.




     (n) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended and
any lawful regulations or other guidance promulgated thereunder. Whenever reference is
made to a specific ERISA section, such reference shall be deemed to be a reference to
any successor ERISA section or sections with the same or similar purpose.



 









 






     (o) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any lawful
regulations or other guidance promulgated thereunder. Whenever reference is made to a specific
Exchange Act section, such reference shall be deemed to be a reference to any successor Exchange
Act section or sections with the same or similar purpose.




     (p) “Exercise Price” means the purchase price of a Share pursuant to a Stock Option.




     (q) “Fair Market Value” means the last closing price of a Share as reported on The Nasdaq Stock
Market, or, if applicable, on another national securities exchange on which the Common Shares
are principally traded, on the date for which the determination of Fair Market Value is made,
or, if there are no sales of Common Shares on such date, then on the most recent immediately
preceding date on which there were any sales of Common Shares. If the Common Shares are not, or
cease to be, traded on The Nasdaq Stock Market or another national securities exchange, the
“Fair Market Value” of Common Shares shall be determined pursuant to a reasonable valuation
method prescribed by the Committee. Notwithstanding the foregoing, as of any date, the “Fair
Market Value” of Common Shares shall be determined in a manner consistent with Section 409A of
the Code and the guidance then-existing thereunder to the extent applicable. In addition, “Fair
Market Value” with respect to ISOs and SARs related to ISOs shall be determined in accordance
with Article 6 and the rules relevant for ISO qualification.




     (r) “Incentive Stock Option” and “ISO” mean a Stock Option that is identified as such and which
is intended to meet the requirements of Section 422 of the Code.




     (s) “Non-Qualified Stock Option” and “NQSO” mean a Stock Option that either (i) is designated as
a Non-Qualified Stock Option or (ii) otherwise is not an ISO.




     (t) “Normal Retirement” means retirement from active employment or active directorship with the
Company or an Affiliate on or after attainment of age 65.




     (u) “Outside Director” means a Director who meets the definitions of the terms “outside
director” set forth in Section 162(m) of the Code, “independent director” set forth in The
Nasdaq Stock Market, Inc. rules, and “non-employee director” set forth in Rule 16b-3, or any
successor definitions adopted for a similar purpose by the Internal Revenue Service, The Nasdaq
Stock Market, Inc. and Securities and Exchange Commission, respectively, and similar
requirements under any other applicable laws and regulations as well as satisfying the Company’s
relevant corporate governance guidelines and any applicable Committee charter provision.




     (v) “Parent” means any corporation which qualifies as a “parent corporation” of the Company
under Section 424(e) of the Code relating to incentive stock options and certain employee stock
purchase plans.




     (w) “Participant” means an officer, employee, consultant or Director who has been granted an
Award.




     (x) “Performance Based Compensation” is defined in Article 9.




     (y) “Performance Period” means the time period specified by the Committee during which any
performance objective must be satisfied.




     (z) “Performance Shares” is defined in Article 9.




     (aa) “Plan” means this Agilysys, Inc. 2006 Stock Incentive Plan, as amended from time to time.



 









 






     (bb) “Restricted Share Units” is defined in Article 8.




     (cc) “Restricted Shares” is defined in Article 8.




     (dd) “Retirement” means Normal Retirement or Early Retirement.




     (ee) “Rule 16b-3” means Rule 16b-3 issued under the Exchange Act, as such rule
may be amended from time to time. Whenever reference is made to Rule 16b-3, such
reference shall be deemed to be a reference to any successor rule with the same
or a similar purpose.




     (ff) “Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended, and
any lawful regulations or other guidance promulgated thereunder. Whenever
reference is made to a specific Sarbanes-Oxley Act section, such reference shall
be deemed to be a reference to any successor Sarbanes-Oxley Act section or
sections with the same or similar purpose.




     (gg) “Section 16 Person” means a person subject to potential liability under
Section 16(b) of the Exchange Act with respect to transactions involving equity
securities of the Company.




     (hh) “Section 162(m) Person” means, for any taxable year, a person who is a
“covered employee” within the meaning of Section 

162(m)(3) of the Code and whose
compensation, therefore, is subject to the tax deductibility limitations of
Section 162(m) of the Code.




     (ii) “Share” or “Shares” mean one or more of the common shares, without par
value, of the Company.




     (jj) “Shareholder” means an individual or entity that owns one or more Shares.




     (kk) “Stock Appreciation Rights” and “SARs” mean any right pursuant to an Award
granted under Article 7.




     (ll) “Stock Option” means any right to purchase a specified number of Shares at
a specified price which is granted pursuant to Article 5 and may be an Incentive
Stock Option or a Non-Qualified Stock Option.




     (mm) “Stock Power” means a power of attorney executed by a Participant and
delivered to the Company which authorizes the Company to transfer ownership of
Restricted Shares, Performance Shares or Common Shares from the Participant to
the Company or a third party.




     (nn) “Subsidiary” means any corporation which qualifies as a “subsidiary
corporation” of the Company under Section 424(f) of the Code relating to
incentive stock options and certain employee stock purchase plans.




     (oo) “Vested” means, regarding rights under this Plan, with respect to a Common
Share, when the Common Share has been awarded; with respect to a Stock Option,
that the time has been reached when the option to purchase Shares first becomes
exercisable; with respect to a Stock Appreciation Right, when the Stock
Appreciation Right first becomes exercisable for payment; with respect to
Restricted Shares, when the Shares are no longer subject to forfeiture and
restrictions on transferability; with respect to Restricted Share Units and
Performance Shares, when the units or Shares are no longer subject to forfeiture
and are convertible to Shares. The words “Vest” and “Vesting” have meanings
correlative to the foregoing. The fact that an Award is Vested does not mean
that it is free of restrictions which may be imposed by law, nor even that the
Award may not be forfeited in certain circumstances under the Plan (for example,
due to a termination of employment or directorship for Cause).



 









 





ARTICLE 2




ADMINISTRATION





     2.1 Authority and Duties of the Committee.




          (a) The Plan shall be administered by a Committee of at least three Directors who are appointed by
the Board of Directors. Unless otherwise determined by the Board of Directors, the Compensation
Committee shall serve as the Committee, and all of the members of the Committee shall be Outside
Directors. Notwithstanding the requirement that the Committee consist exclusively of Outside
Directors, no action or determination by the Committee or an individual then considered to be an
Outside Director shall be deemed void because a member of the Committee or such individual fails to
satisfy the requirements for being an Outside Director, except to the extent required by applicable
law.




          (b) The Committee has the sole and exclusive power and authority to grant Awards pursuant to the
terms of this Plan to officers, employees and Eligible Directors and consultants.




          (c) The Committee has the sole and exclusive power and authority, subject to any limitations
specifically set forth in this Plan, to:




     (i) select the officers, employees and Eligible Directors and consultants to whom
Awards are granted;




     (ii) determine the types of Awards granted and the timing of such Awards;




     (iii) determine the number of Shares to be covered by each Award granted hereunder;




     (iv) determine whether an Award is, or is intended to be, Performance Based
Compensation within the meaning of Section 162(m) of the Code;




     (v) determine the other terms and conditions, not inconsistent with the terms of this
Plan and any operative employment or other agreement, of any Award granted hereunder;
such terms and conditions include, but are not limited to, the Exercise Price, the
time or times when Options or Stock Appreciation Rights may be exercised (which may
be based on performance objectives), any Vesting, acceleration or waiver of
forfeiture restrictions, any performance criteria (including any performance criteria
as described in Section 162(m)(4)(C) of the Code) applicable to an Award, and any
restriction or limitation regarding any Option or Stock Appreciation Right or the
Common Shares relating thereto, based in each case on such factors as the Committee,
in its sole discretion, shall determine;




     (vi) determine whether any conditions or objectives related to Awards have been met,
including any such determination required for compliance with Section 162(m) of the
Code;




     (vii) subsequently modify or waive any terms and conditions of Awards, not
inconsistent with the terms of this Plan and any operative employment or other
agreement;




     (viii) adopt, alter and repeal such administrative rules, guidelines and practices
governing this Plan as it deems advisable from time to time;




     (ix) promulgate such Award Agreements and other administrative forms as the Committee
from time to time deems necessary or appropriate for administration of the Plan;




     (x) construe, interpret, administer and implement the terms and provisions
of this Plan, any Award Agreements or other documents;



 









 






     (xi) make factual determinations with respect to the Plan and any Awards;




     (xii) correct any defect, supply any omission and reconcile any
inconsistency in or between the Plan, any Award Agreements or other
documents;




     (xiii) prescribe any legends to be affixed to certificates representing
Shares or other interests granted or issued under the Plan; and




     (xiv) otherwise supervise the administration of this Plan.




          (d) All decisions made by the Committee pursuant to the provisions of this Plan are final
and binding on all persons, including the Company, its Shareholders and Participants, but
may be made by their terms subject to ratification or approval by, the Board of Directors,
another committee of the Board of Directors or Shareholders.



     2.2 Delegation of Duties and Retention of Advisers. The Committee may delegate ministerial
duties to any other person or persons, and it may employ attorneys, consultants, accountants or
other professional advisers for purposes of Plan administration at the expense of the Company.



     2.3 Limitation of Liability. Members of the Board of Directors, members of the Committee
and officers and employees of the Company or any Affiliate who are their designees acting under
this Plan shall be fully protected in relying in good faith upon the advice of counsel and shall
incur no liability except for gross or willful misconduct in the performance of their duties
hereunder.



ARTICLE 3




STOCK SUBJECT TO PLAN




     3.1 Total Shares Limitation. Subject to the provisions of this Article, the maximum number
of Shares that may be issued pursuant to Awards granted under this Plan is 3,200,000, which may be
treasury or authorized but unissued Shares.



     3.2 Other Limitations.



          (a) Option Limitation. The maximum number of Shares available with respect to
all Stock Options (whether Incentive Stock Options or Non-Qualified Stock
Options) granted under this Plan is 3,200,00 Shares. Therefore, Stock Options
on up to 3,200,000 Shares may be granted as Incentive Stock Options.



          (b) Full Value Share Limitation. The maximum number of Shares available with
respect to all Restricted Share, Restricted Share Unit and Performance Share
Awards granted under this Plan is 1,600,000 Shares.



          (c) Per Participant Biannual Limitation. The aggregate number of Shares
underlying Awards granted under this Plan to any Participant in any two
consecutive fiscal year period of the Company, regardless of whether such
Awards are thereafter cancelled, terminated or forfeited, shall not exceed
1,600,000 Shares. The foregoing annual limitation is intended to include the
grant of all Awards, including but not limited to, Awards representing
Performance Based Compensation as described in Section 162(m)(4)(C) of the
Code.



          (d) Overall Biannual Limitation. The aggregate number of Shares underlying
Awards granted under this Plan in any two consecutive fiscal year period of the
Company, shall not exceed the sum of (i) 1,600,000 Shares (disregarding any
Shares underlying Awards cancelled, terminated or forfeited during the period)
plus (ii) the aggregate number of Shares underlying Awards previously
cancelled, terminated or forfeited.



 









 





     3.3 Awards Not Exercised and Other Special Share Counting Rules.



          (a) Awards Not Exercised. If any outstanding Award, or portion thereof,
expires, or is terminated, cancelled or forfeited, the Shares that would
otherwise be issuable with respect to the unexercised portion of such expired,
terminated, cancelled or forfeited Award shall be available for subsequent
Awards under this Plan.



          (b) Shares Tendered in Payment. If the Exercise Price of an Award is paid in
Shares, the Shares received by the Company in connection therewith shall not be
added to the maximum aggregate number of Shares which may be issued under
Section 3.1 nor in any other manner become eligible for issuance under this
Plan.



          (c) Shares Reserved for SARs. If an Award of SARs is made, the number of Shares
deemed subject to the Award shall equal the number of SARs awarded and each SAR
exercised shall be counted as using one Share for purposes of Sections 3.1 and
3.2 of this Plan even though fewer Shares actually are issued to the
Participant upon exercise.



          (d) Taxes. Shares sold or withheld to satisfy a Participant’s withholding tax
obligations upon the lapse of restrictions on Restricted Shares or the exercise
of Options or SARs granted under the Plan or upon any other payment or issuance
of Shares under the Plan shall not thereafter become available for issuance
under the Plan.



     3.4 Dilution and Other Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other securities or other
property), recapitalization, stock split, reverse stock split, reorganization, redesignation,
reclassification, merger, consolidation, liquidation, split-up, reverse split, spin-off,
combination, repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company or other similar
corporate transaction or event affects the Shares such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under this Plan, then the Committee may, in such
manner as it deems equitable, adjust any or all of (i) the number and type of Shares (or other
securities or other property) which thereafter may be made the subject of Awards, (ii) the number
and type of Shares (or other securities or other property) subject to outstanding Awards, (iii) the
limitations set forth above and (iv) the purchase or Exercise Price or any performance objective
with respect to any Award; provided, however, that the number of Shares or other securities covered
by any Award or to which such Award relates is always a whole number. Notwithstanding the
foregoing, the foregoing adjustments shall be made in compliance with: (i) Sections 422 and 424 of
the Code with respect to ISOs and SARs related to ISOs; (ii) Treasury Department Regulation Section
1.424-1 (and any successor) with respect to NQSOs and SARs related to NQSOs, applied as if the
NQSOs were ISOs; (iii) Section 409A of the Code, to the extent necessary to avoid its application
or avoid adverse tax consequences thereunder; and (iv) Section 162(m) of the Code with respect to
Awards granted to Section 162(m) Persons that are intended to be Performance Based Compensation,
unless specifically determined otherwise by the Committee.



ARTICLE 4




PARTICIPANTS




     4.1 Eligibility. Officers, all other active common law employees of the Company or any of
its Affiliates, Directors (each an “Eligible Director”) and consultants who are selected by the
Committee in its sole discretion are eligible to participate in this Plan. (See Article 13 and
Article 17 with respect to the Shareholder approval requirement.) For purposes of determining
eligibility, officers and employees of Affiliates who are not also officers or employees of the
Company must hold such status with an Affiliate that has the necessary relationship for the Award
to be granted (for example, the Affiliate must be a Parent or Subsidiary if an ISO is to be
granted). Furthermore, if an Award is to be made to an officer, the officer must have the status
necessary to receive such Award (for example, the officer must be an employee if an ISO is to be
granted).



 









 





     4.2 Award Agreements. Awards are contingent upon the Participant’s execution of a written
Award Agreement in a form prescribed by the Committee. Execution of an Award Agreement shall
constitute the Participant’s irrevocable agreement (for himself and for anyone claiming through him
such as an heir) to, and acceptance of, the terms and conditions of the Award set forth in such
agreement and of the terms and conditions of the Plan applicable to such Award, including, without
limitation, any withholding tax requirement pursuant to Article 15. Award Agreements may differ
from time to time and from Participant to Participant.



ARTICLE 5




STOCK OPTION AWARDS




     5.1 Option Grant. Each Stock Option granted under this Plan will be evidenced by minutes
of a meeting, or by a unanimous written consent without a meeting, of the Committee and by a
written Award Agreement dated as of the Date of Grant and executed by the Company and by the
appropriate Participant.



     5.2 Terms and Conditions of Grants. Stock Options granted under this Plan are subject to
the following terms and conditions and may contain such additional terms, conditions, restrictions
and contingencies with respect to exercisability and/or with respect to the Shares acquired upon
exercise as may be provided in the relevant Award Agreements evidencing the Stock Options, so long
as such terms and conditions are not inconsistent with the terms of this Plan and any operative
employment or other agreement, as the Committee deems desirable:




          (a) Exercise Price. Subject to Section 3.4, the Exercise Price will never be
less than 100% of the Fair Market Value of the Shares on the Date of Grant. If
a variable Exercise Price is specified at the time of grant, the Exercise Price
may vary pursuant to a formula or other method established by the Committee;
provided, however, that such formula or method will provide for a minimum
Exercise Price equal to the Fair Market Value of the Shares on the Date of
Grant. Except as otherwise provided in Section 3.4, no subsequent amendment of
an outstanding Stock Option may reduce the Exercise Price to less than 100% of
the Fair Market Value of the Shares on the Date of Grant. Nothing in this
Section 5.2(a) shall be construed as limiting the Committee’s authority to
grant premium price Stock Options which do not become exercisable until the
Fair Market Value of the underlying Shares exceeds a specified percentage (for
example, 110% of Fair Market Value on the Date of Grant for ISOs granted to a
10% or greater owner of the Company) of the Exercise Price; provided,
however,that such percentage will never be less than 100%.



 









 






          (b) Option Term. Any unexercised portion of a Stock Option granted hereunder
shall expire at the end of the stated term of the Stock Option. The Committee
shall determine the term of each Stock Option at the time of grant, which term
shall not exceed 10 years from the Date of Grant. The Committee may extend the
term of a Stock Option, in its discretion, but not beyond the date immediately
prior to the tenth anniversary of the original Date of Grant. If a definite
term is not specified by the Committee at the time of grant, then the term is
deemed to be 10 years. Nothing in this Section 5.2(b) shall be construed as
limiting the Committee’s authority to grant Stock Options with a term shorter
than 10 years.




          (c) Vesting. Stock Options, or portions thereof, shall be exercisable at such
time or times as determined by the Committee in its discretion at or after
grant. If the Committee provides that any Stock Option becomes Vested over a
period of time, in full or in installments, the Committee may waive or
accelerate such Vesting provisions at any time. (Also, see the Change in
Control provisions in Article 11.)




          (d) Method of Exercise. Vested portions of any Stock Option may be exercised in
whole or in part at any time during the option term by giving written notice of
exercise to the Company specifying the number of Shares to be purchased. The
notice must be given by or on behalf of a person entitled to exercise the Stock
Option, accompanied by payment in full of the Exercise Price, along with any
withholding tax pursuant to Article 15. The Exercise Price may be paid:




     (i) in cash in any manner satisfactory to the Committee;




     (ii) by tendering (by either actual delivery of Shares or by
attestation) unrestricted Shares that are owned on the date of
exercise by the person entitled to exercise the Stock Option
having an aggregate Fair Market Value on the date of exercise
equal to the Exercise Price applicable to such Stock Option
exercise, and, with respect to the exercise of NQSOs, including
Restricted Shares;




     (iii) by a combination of cash and unrestricted Shares that are
owned on the date of exercise by the person entitled to
exercise the Stock Option;




     (iv) by the Participant authorizing a broker to sell, on his
behalf, the appropriate number of Shares otherwise issuable to
the Participant upon the exercise of a Stock Option with the
proceeds of sale applied to pay the Exercise Price and
withholding tax; or




     (v) by another method permitted by law and affirmatively
approved by the Committee which assures full and immediate
payment or satisfaction of the Exercise Price.




          The Committee may suspend the use of any method of payment for any reason, in its sole
discretion, including but not limited to concerns that the proposed method of payment will result
in adverse financial accounting treatment for the Company, adverse tax treatment for the Company or
a Participant or a violation of the Sarbanes-Oxley Act.




          If the Exercise Price of an NQSO is paid by tendering Restricted Shares, then the Shares
received upon the exercise will contain identical restrictions as the Restricted Shares so
tendered.




          Except as otherwise permitted by law and in the Committee’s sole discretion, withholding tax
may be paid only by cash or through a same day sale transaction.




          (e) Issuance of Shares. The Company will issue or cause to be issued Shares as
soon as practicable upon exercise of the Option. No Shares will be issued until
full payment has been made. Until the issuance




          (as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer



 









 







agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
Shareholder will exist with respect to the Shares, notwithstanding the exercise
of the Option.




          (f) Type of Option. In general, a Stock Option Award Agreement will indicate
whether the Stock Option is intended to be an ISO or a NQSO. Unless a Stock
Option is designated as an ISO at the time of its grant, it shall be deemed to
be an NQSO. ISOs are subject to the additional terms and conditions in Article
6.




          (g) Section 409A of the Code. Unless the Committee provides otherwise, Stock
Options awarded under this Plan are intended to meet the requirements for
exclusion from coverage under Section 409A of the Code dealing with
nonqualified deferred compensation and all Stock Option Awards shall be
construed and administered accordingly.



     5.3 Termination of Grants Prior to Expiration. Unless otherwise provided in the Award
Agreement, or otherwise provided in an employment or other agreement entered into between the
Participant and the Company and approved by the Committee, either before or after the Date of
Grant, and subject to Article 6 with respect to ISOs, the following early termination provisions
apply to all Stock Options:




          (a) Termination by Death. If a Participant’s employment or directorship with
the Company or its Affiliates terminates by reason of his death, all Stock
Options held by such Participant will immediately become Vested, but thereafter
may only be exercised (by the legal representative of the Participant’s estate,
or by the legatee or heir of the Participant pursuant to a will or the laws of
descent and distribution) for a period of one year (or such other period as the
Committee may specify at or after the time of grant) from the date of such
death, or until the expiration of the original term of the Stock Option,
whichever period is shorter.




          (b) Termination by Reason of Disability. If a Participant’s employment or
directorship with the Company or its Affiliates terminates by reason of his
Disability, all Stock Options held by such Participant will immediately become
Vested, but thereafter may only be exercised for a period of one year (or such
other period as the Committee may specify at or after the time of grant) from
the date of such termination, or until the expiration of the original term of
the Stock Option, whichever period is shorter. If the Participant dies within
such one year period (or such other period as applicable), any unexercised
Stock Option held by such Participant will thereafter be exercisable by the
legal representative of the Participant’s estate, or by the legatee or heir of
the Participant pursuant to a will or the laws of descent and distribution, for
the greater of the remainder of the one year period (or other period as
applicable) or for a period of 12 months from the date of such death, but in no
event shall any portion of the Stock Option be exercisable after its original
stated expiration date.




          (c) Termination by Reason of Retirement. If a Participant’s employment or
directorship with the Company or its Affiliates terminates by reason of his
Retirement, all Stock Options held by such Participant immediately become
Vested but thereafter may only be exercised for a period of two years (or such
other period as the Committee may specify at or after the time of grant) from
the date of such Retirement, or until the expiration of the original term of
the Stock Option, whichever period is shorter. If the Participant dies within
such two year period (or such other period as applicable), any unexercised
Stock Option held by such Participant will thereafter be exercisable by the
legal representative of the Participant’s estate, or by the legatee or heir of
the Participant pursuant to a will or the laws of descent and distribution, for
the greater of the remainder of the two year period (or such other period as
applicable) or for a period of 12 months from the date of such death, but in no
event shall any portion of the Stock Option be exercisable after its original
stated expiration date.



 









 






          (d) Termination for Cause. If a Participant’s employment or directorship with
the Company or its Affiliates is terminated for Cause, all Stock Options (or
portions thereof) which have not been exercised, whether Vested or not, are
automatically forfeited immediately upon termination.




          (e) Other Terminations. If a Participant’s employment or directorship with the
Company or its Affiliates terminates, voluntarily or involuntarily, for any
reason other than death, Disability, Retirement or for Cause, any Vested
portions of Stock Options held by such Participant at the time of termination
may be exercised by the Participant for a period of three months (or such other
period as the Committee may specify at or after the time of grant) from the
date of such termination or until the expiration of the original term of the
Stock Option, whichever period is the shorter. No portion of any Stock Option
which is not Vested at the time of such termination will thereafter become
Vested.




          (f) Certain Committee Determinations. The Committee shall have authority to
determine in each case whether an authorized leave of absence shall be deemed a
termination of employment or directorship for purposes hereof, as well as the
effect of a leave of absence on the vesting and exercisability of a Stock
Option. Unless otherwise provided by the Committee, if an entity ceases to be
an Affiliate of the Company or otherwise ceases to be qualified under the Plan
or if all or substantially all of the assets of an Affiliate of the Company are
conveyed (other than by encumbrance), such cessation or action, as the case may
be, shall be deemed for purposes hereof to be a termination of the employment
or directorship.



     5.4 Repricing Prohibited. Subject to the anti-dilution adjustment provisions contained in
Section 3.4 hereof, without the prior approval of the Company’s Shareholders, evidenced by a
majority of votes cast, neither the Committee nor the Board shall cause the cancellation,
substitution or amendment of a Stock Option that would have the effect of reducing the exercise
price of such a Stock Option previously granted under the Plan, or otherwise approve any
modification to such a Stock Option that would be treated as a “repricing” under the then
applicable rules, regulations or listing requirements adopted by The Nasdaq Stock Market or such
other stock market on which the Company’s Shares are traded.



ARTICLE 6




SPECIAL RULES APPLICABLE TO INCENTIVE STOCK OPTIONS





     6.1 Eligibility. Notwithstanding any other provision of this Plan to the contrary, an ISO
may only be granted to full or part-time employees (including officers and Directors who are also
employees) of the Company or of an Affiliate, provided that the Affiliate is a Parent or
Subsidiary.




     6.2 Special ISO Rules.




          (a) Exercise Price. The Exercise Price fixed at the time of grant will not be
less than 100% of the Fair Market Value of the Shares as of the Date of Grant.
If a variable Exercise Price is specified at the time of grant, the Exercise
Price may vary pursuant to a formula or other method established by the
Committee which provides a floor not less than Fair Market Value as of the Date
of Grant. Except as otherwise provided in Section 3.4 hereof, dealing with the
effects of certain corporate transactions, no subsequent amendment of an
outstanding Stock Option may reduce the Exercise Price to less than 100% of the
Fair Market Value of the Shares as of the Date of Grant.



 









 






     (b) Term. No ISO may be exercisable on or after the tenth anniversary of the
Date of Grant, and no ISO may be granted under this Plan on or after the tenth
anniversary of the effective date of this Plan. (See the Plan effective date
provisions in Article 17.)




     (c) Ten Percent Shareholder. No Participant may receive an ISO under this Plan
if such Participant, at the time the Award is granted, owns (after application
of the rules contained in Section 424(d) of the Code) equity securities
possessing more than 10% of the total combined voting power of all classes of
equity securities of the Company, its Parent or any Subsidiary, unless (i) the
option price for such ISO is at least 110% of the Fair Market Value of the
Shares as of the Date of Grant, and (ii) such ISO is not exercisable on or
after the fifth anniversary of the Date of Grant.




     (d) Limitation on Grants. The aggregate Fair Market Value (determined with
respect to each ISO at the time of grant) of the Shares with respect to which
ISOs are exercisable for the first time by a Participant during any calendar
year (under this Plan or any other plan adopted by the Company or its Parent or
its Subsidiary) shall not exceed $100,000. If such aggregate Fair Market Value
shall exceed $100,000, such number of ISOs as shall have an aggregate Fair
Market Value equal to the amount in excess of $100,000 shall be treated as
NQSOs. This limitation shall be applied by taking Stock Options into account in
the order in which granted.




     (e) Non-Transferability. Notwithstanding any other provision herein to the
contrary, no ISO granted hereunder (and, if applicable, related Stock
Appreciation Right) may be transferred except by will or by the laws of descent
and distribution, nor may such ISO (or related Stock Appreciation Right) be
exercisable during a grantee’s lifetime other than by him (or his guardian or
legal representative to the extent permitted by applicable law).




     (f) Termination of Employment. No ISO may be exercised more than three months
following termination of employment for any reason (including Retirement) other
than death or Disability, nor more than one year following termination of
employment for the reason of death or Disability (as defined in Section 422 of
the Code), or such option will no longer qualify as an ISO and shall thereafter
be, and receive the tax treatment applicable to, an NQSO. For this purpose, a
termination of employment is cessation of employment, under the rules
applicable to ISOs, such that no employment relationship exists between the
Participant and the Company, a Parent or a Subsidiary.




     (g) Fair Market Value. For purposes of any ISO granted hereunder (or, if
applicable, any related Stock Appreciation Right), the Fair Market Value of
Shares shall be determined in the manner required by Section 422 of the Code
applicable to ISOs.



     6.3 Treatment as NQSO. Unless an Award Agreement for a Stock Option which is an ISO
provides otherwise, it is intended that such Stock Option shall be treated as a Nonqualified Stock
Option to the extent that certain requirements applicable to “incentive stock options” under the
Code shall not be satisfied.



     6.4 Disqualifying Dispositions. If Shares acquired by exercise of an Incentive Stock
Option are disposed of within two years following the Date of Grant or one year following the
transfer of such shares to the Participant upon exercise, the Participant shall, promptly following
such disposition, notify the Company in writing of the date and terms of such disposition and
provide such other information regarding the disposition as the Company may reasonably require.



     6.5 Compliance with the Code. The foregoing limitations are designed to comply with the
requirements of Section 422 of the Code dealing with the tax qualification of ISOs and shall be so
interpreted. Furthermore, if Section 422 of the Code is amended or modified, then, to the extent
permitted by law, this Plan shall be deemed automatically amended or modified to comply with
amendments or modifications to such Section 422. Any ISO which fails to comply with Section 422 of
the Code automatically shall be treated as an NQSO appropriately granted under this Plan provided
it otherwise meets the Plan’s requirements for NQSOs.



 









 





ARTICLE 7




STOCK APPRECIATION RIGHTS




     7.1 SAR Grant and Agreement. Stock Appreciation Rights may be granted under this Plan,
either independently or in conjunction with the grant of a Stock Option. Each SAR granted under
this Plan will be evidenced by minutes of a meeting, or by a unanimous written consent without a
meeting, of the Committee and by a written Award Agreement dated as of the Date of Grant and
executed by the Company and by the appropriate Participant.



     7.2 SARs Granted in Conjunction with Option. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under this Plan, either at the same time
or after the grant of the Stock Option, and will be subject to the following terms and conditions:




     (a) Term. Each Stock Appreciation Right, or applicable portion thereof, granted
with respect to a given Stock Option or portion thereof shall terminate and
shall no longer be exercisable upon the termination or exercise of the related
Stock Option, or applicable portion thereof.




     (b) Exercisability. A Stock Appreciation Right shall be exercisable only at
such time or times and to the extent that the Stock Option to which it relates
is Vested and exercisable in accordance with the provisions of Article 5 or
otherwise as the Committee may determine at or after the time of grant.




     (c) Method of Exercise. A Stock Appreciation Right may be exercised by the
surrender of the applicable portion of the related Stock Option. Stock Options
which have been so surrendered, in whole or in part, are no longer exercisable
to the extent the related Stock Appreciation Rights have been exercised and are
deemed to have been exercised for the purpose of the limitation set forth in
Article 3 on the number of Shares to be issued under this Plan, but only to the
extent of the number of Shares actually issued under the Stock Appreciation
Right at the time of exercise. Upon the exercise of a Stock Appreciation Right,
subject to satisfaction of the withholding tax requirements pursuant to Article
15, the holder of the Stock Appreciation Right shall be entitled to receive
Shares equal in value to the excess of the Fair Market Value of a Share on the
exercise date over the Exercise Price per Share specified in the related Stock
Option, multiplied by the number of Shares in respect of which the Stock
Appreciation Right is exercised. At any time the Exercise Price per Share of
the related Stock Option exceeds the Fair Market Value of one Share, the holder
of the Stock Appreciation Right shall not be permitted to exercise such right.



     7.3 Independent SARs. Stock Appreciation Rights may be granted by the Committee without
related Stock Options, and independent Stock Appreciation Rights will be subject to the following
terms and conditions:




     (a) Term. Any unexercised portion of an independent Stock Appreciation Right
granted hereunder shall expire at the end of the stated term of the Stock
Appreciation Right. The Committee shall determine the term of each Stock
Appreciation Right at the time of grant, which term shall not exceed 10 years
from the Date of Grant. The Committee may extend the term of a Stock
Appreciation Right, in its discretion, but not beyond the date immediately
prior to the tenth anniversary of the original Date of Grant. If a definite
term is not specified by the Committee at the time of grant, then the term is
deemed to be ten years.



 









 






     (b) Exercise Price. Subject to Section 3.4, the base or Exercise Price of an
independent Stock Appreciation Right shall never be less than 100% of the Fair
Market Value of the Shares on the Date of Grant.




     (c) Exercisability. A Stock Appreciation Right shall be exercisable, in whole
or in part, at such time or times as determined by the Committee at or after
the time of grant.




     (d) Method of Exercise. A Stock Appreciation Right may be exercised in whole or
in part during the term by giving written notice of exercise to the Company
specifying the number of Shares in respect of which the Stock Appreciation
Right is being exercised. The notice must be given by or on behalf of a person
entitled to exercise the Stock Appreciation Right. Upon the exercise of a Stock
Appreciation Right, subject to satisfaction of the withholding tax requirements
pursuant to Article 15, the holder of the Stock Appreciation Right shall be
entitled to receive Shares equal in value to the excess of the Fair Market
Value of a Share on the exercise date over the Fair Market Value of a Share on
the Date of Grant multiplied by the number of Stock Appreciation Rights being
exercised. At any time the Fair Market Value of a Share on a proposed exercise
date does not exceed the Fair Market Value of a Share on the Date of Grant, the
holder of the Stock Appreciation Right shall not be permitted to exercise such
right.




     (e) Early Termination Prior to Expiration. Unless otherwise provided in an
employment or other agreement entered into between the holder of the Stock
Appreciation Right and the Company and approved by the Committee, either before
or after the Date of Grant, the early termination provisions set forth in
Section 5.3 as applied to Non-Qualified Stock Options will apply to independent
Stock Appreciation Rights.



     7.4 Other Terms and Conditions of SAR Grants. Stock Appreciation Rights are subject to
such other terms and conditions, not inconsistent with the provisions of this Plan and any
operative employment or other agreement, as are determined from time to time by the Committee.



     7.5 Repricing Prohibited. Subject to the anti-dilution adjustment provisions contained in
Section 3.4 hereof, without the prior approval of the Company’s Shareholders, evidenced by a
majority of votes cast, neither the Committee nor the Board shall cause the cancellation,
substitution or amendment of a Stock Appreciation Right that would have the effect of reducing the
base price of such a Stock Appreciation Right previously granted under the Plan, or otherwise
approve any modification to such a Stock Appreciation Right that would be treated as a “repricing”
under the then applicable rules, regulations or listing requirements adopted by The Nasdaq Stock
Market or other stock market on which the Company’s Shares are traded.



     7.6 Section 409A of the Code. Unless an Award Agreement approved by the Committee provides
otherwise, Stock Appreciation Rights awarded under this Plan are intended to meet the requirements
for exclusion from coverage under Section 409A of the Code dealing with nonqualified deferred
compensation and all Stock Appreciation Rights Awards shall be construed and administered
accordingly.




 











 





ARTICLE 8




RESTRICTED SHARE AND RESTRICTED SHARE UNIT AWARDS




     8.1 Restricted Share Grants and Agreements. Restricted Share Awards consist of Shares
which are issued by the Company to a Participant at no cost or at a purchase price determined by
the Committee which may be below their Fair Market Value but which are subject to forfeiture and
restrictions on their sale or other transfer by the Participant. Each Restricted Share Award
granted under this Plan will be evidenced by minutes of a meeting, or by a unanimous written
consent without a meeting, of the Committee and by a written Award Agreement dated as of the Date
of Grant and executed by the Company and by the Participant. The timing of Restricted Share Awards
and the number of Shares to be issued (subject to Section 3.2) are to be determined by the
Committee in its discretion.



     8.2 Terms and Conditions of Restricted Share Grants. Restricted Shares granted under this
Plan are subject to the following terms and conditions, which, except as otherwise provided herein,
need not be the same for each Participant, and may contain such additional terms, conditions,
restrictions and contingencies not inconsistent with the terms of this Plan and any operative
employment or other agreement, as the Committee deems desirable:




     (a) Purchase Price. The Committee shall determine the prices, if any, at which
Restricted Shares are to be issued to a Participant, which may vary from time
to time and from Participant to Participant and which may be below the Fair
Market Value of such Restricted Shares at the Date of Grant, including, without
limitation, a price of zero.




     (b) Restrictions. All Restricted Shares issued under this Plan will be subject
to such restrictions as the Committee may determine, which may include, without
limitation, the following:




     (i) a prohibition against the sale, transfer, pledge or other
encumbrance of the Restricted Shares, such prohibition to lapse
at such time or times as the Committee determines (whether in
installments, at the time of the death, Disability or
Retirement of the holder of such shares, or otherwise, but
subject to the Change in Control provisions in Article 11
unless otherwise provided by the Committee);




     (ii) a requirement that the Participant forfeit such Restricted
Shares in the event of termination of the Participant’s
employment or directorship with the Company or its Affiliates
prior to Vesting;




     (iii) a prohibition against employment or retention of the
Participant by any competitor of the Company or its Affiliates,
or against dissemination by the Participant of any secret or
confidential information belonging to the Company or an
Affiliate or other forfeiture provisions relating to Cause;




     (iv) any applicable requirements arising under the Securities
Act of 1933, as amended, other securities laws, the rules and
regulations of The Nasdaq Stock Market or any other stock
exchange or transaction reporting system upon which such
Restricted Shares are then listed or quoted and any state laws,
rules and regulations, including “blue sky” laws; and




     (v) such additional restrictions as are required to avoid the
application of Section 409A of the Code thereto or to avoid
adverse tax consequences under the Code or other taxing
statutes and rules.


The Committee may at any time waive such restrictions or accelerate the date or dates on which the
restrictions will lapse. However, if the Committee determines that restrictions lapse upon the
attainment of specified performance objectives, then the provisions of Sections 9.2 and 9.3 will
apply (including, but not limited to, the enumerated performance objectives). If the Award
Agreement for a Section 162(m) Person
provides that such Award is intended to qualify as Performance Based Compensation, the provisions
of Section 9.4(d) also will apply.




 









 









     (c) Delivery of Shares. Restricted Shares will be registered in the name of the
Participant and deposited, together with a Stock Power, with the Company or its
agent. Each such certificate will bear a legend in substantially the following
form:




     “The transferability of this certificate and the Common Shares represented by
it are subject to the terms and conditions (including conditions of forfeiture)
contained in the Agilysys, Inc. 2006 Stock Incentive Plan and an Award
Agreement entered into between the registered owner and the Company. A copy of
this Plan and Award Agreement are on file in the office of the Secretary of the
Company.”




     At the end of any time period during which the Restricted Shares are subject to
forfeiture and restrictions on transfer, such Shares remaining after any tax
withholding has occurred pursuant to Article 15, will be delivered free of all
restrictions (except for any pursuant to Section 14.2) to the Participant or
other appropriate person and with the foregoing legend removed.




     (d) Forfeiture of Shares. If a Participant who holds Restricted Shares fails to
satisfy the restrictions, Vesting requirements and other conditions relating to
the Restricted Shares prior to the lapse, satisfaction or waiver of such
restrictions and conditions, except as may otherwise be determined by the
Committee, the Participant shall forfeit the Shares and transfer them back to
the Company in exchange for a refund of any consideration paid by the
Participant or such other amount which may be specifically set forth in the
Award Agreement. A Participant shall execute and deliver to the Company one or
more Stock Powers with respect to Restricted Shares granted to such
Participant.




     (e) Voting and Other Rights. Except as otherwise required for compliance with
Section 162(m) of the Code, other applicable law and the terms of the
applicable Restricted Share agreement, during any period in which Restricted
Shares are subject to forfeiture and restrictions on transfer, the Participant
holding such Restricted Shares shall have all the rights of a Shareholder with
respect to such Shares, including, without limitation, the right to vote such
Shares and the right to receive any dividends paid with respect to such Shares.




     (f) Section 83(b) Election. If a Participant makes an election pursuant to
Section 83(b) of the Code with respect to a Restricted Share Award, the
Participant shall file, within 30 days following the Date of Grant, a copy of
such election with the Company and with the Internal Revenue Service, in
accordance with the regulations under Section 83(b) of the Code. The Committee
may provide in an Award Agreement that the Restricted Share Award is
conditioned upon the Participant’s making or refraining from making an election
with respect to the Award under Section 83(b) of the Code.



     8.3 Restricted Share Unit Awards and Agreements. Restricted Share Unit Awards consist of
Shares that will be issued to a Participant at a future time or times at no cost or at a purchase
price determined by the Committee which may be below their Fair Market Value if continued
employment, continued directorship and/or other terms and conditions specified by the Committee are
satisfied. Each Restricted Share Unit Award granted under this Plan will be evidenced by minutes of
a meeting, or by a unanimous written consent without a meeting, of the Committee and by a written
Award Agreement dated as of the Date of Grant and executed by the Company and the Plan Participant.
The timing of Restricted Share Unit Awards and the number of Restricted Share Units to be awarded
(subject to Section 3.2) are to be determined by the Committee in its sole discretion.



 









 





     8.4 Terms and Conditions of Restricted Share Unit Awards. Restricted Share Unit Awards are
subject to the following terms and conditions, which, except as otherwise provided herein, need not
be the same for each Participant, and may contain such additional terms, conditions, restrictions
and contingencies not inconsistent with the terms of this Plan and any operative employment or
other agreement, as the Committee deems desirable:



          (a) Purchase Price. The Committee shall determine the prices, if any, at which
Shares are to be issued to a Participant after Vesting of Restricted Share
Units, which may vary from time to time and among Participants and which may be
below the Fair Market Value of Shares at the Date of Grant, including, without
limitation, a price of zero.



          (b) Restrictions. All Restricted Share Units awarded under this Plan will be
subject to such restrictions as the Committee may determine, which may include,
without limitation, the following:




     (i) a prohibition against the sale, transfer, pledge or other
encumbrance of the Restricted Share Unit;




     (ii) a requirement that the Participant forfeit such Restricted
Share Unit in the event of termination of the Participant’s
employment or directorship with the Company or its Affiliates
prior to Vesting;




     (iii) a prohibition against employment of the Participant by,
or provision of services by the Participant to, any competitor
of the Company or its Affiliates, or against dissemination by
the Participant of any secret or confidential information
belonging to the Company or an Affiliate or other forfeiture
provisions relating to Cause;




     (iv) any applicable requirements arising under the Securities
Act of 1933, as amended, other securities laws, the rules and
regulations of The NASDAQ Stock Market or any other stock
exchange or transaction reporting system upon which the Common
Shares are then listed or quoted and any state laws, rules and
interpretations, including “blue sky” laws; and




     (v) such additional restrictions as are required to avoid the
application of Section 409A of the Code thereto or to avoid
adverse tax consequences under the Code or other taxing
statutes or rules.


The Committee may at any time waive such restrictions or accelerate the date or dates on which the
restrictions will lapse.




          (c) Performance Based Restrictions. The Committee may, in its sole discretion,
provide restrictions that lapse upon the attainment of specified performance
objectives. In such case, the provisions of Sections 9.2 and 9.3 will apply
(including, but not limited to, the enumerated performance objectives). If the
written Award Agreement for a Section 162(m) Person provides that such Award is
intended to be Performance Based Compensation, the provisions of Section 9.4(d)
also will apply.



          (d) Voting and Other Rights. A Participant holding Restricted Share Units shall
not be deemed to be a Shareholder solely because of such units. Such
Participant shall have no rights of a Shareholder with respect to such units;
provided, however, that an Award Agreement may provide for payment of an amount
of money (or Shares with a Fair Market Value equivalent to such amount) equal
to the dividends paid from time to time on the number of Common Shares that
would become payable upon vesting of a Restricted Share Unit Award.



 









 





     (e) Lapse of Restrictions. If a Participant who holds Restricted Share Units
satisfies the restrictions and other conditions relating to the Restricted
Share Units prior to the lapse or waiver of such restrictions and conditions,
the Restricted Share Units shall be converted to, or replaced with, Shares
which are free of all restrictions except for any restrictions pursuant to
Section 14.2.



     (f) Forfeiture of Restricted Share Units. If a Participant who holds Restricted
Share Units fails to satisfy the restrictions, Vesting requirements and other
conditions relating to the Restricted Share Units prior to the lapse,
satisfaction or waiver of such restrictions and conditions, except as may
otherwise be determined by the Committee, the Participant shall forfeit the
Restricted Share Units.



     (g) Termination. A Restricted Share Unit Award or unearned portion thereof will
terminate without the issuance of Shares on the termination date specified on
the Date of Grant or upon the termination of employment or directorship of the
Participant during the Performance Period. If a Participant’s employment or
directorship with the Company or its Affiliates terminates by reason of his
death, Disability or Retirement, the Committee in its discretion at or after
the Date of Grant may determine that the Participant (or the heir, legatee or
legal representative of the Participant’s estate) will receive a distribution
of Shares in an amount which is not more than the number of Shares which would
have been earned by the Participant if 100% of the performance objectives for
the current Performance Period had been achieved prorated based on the ratio of
the number of months of active employment in the Performance Period to the
total number of months in the Performance Period. However, with respect to
Awards intended to be Performance Based Compensation (as described in Section
9.4(d)), distribution of the Shares shall not be made prior to attainment of
the relevant performance objectives.



     (h) Section 409A of the Code. Unless an Award Agreement approved by the
Committee provides otherwise, Restricted Share Units awarded under this Plan
are intended to meet the requirements for exclusion from coverage under Section
409A of the Code or to otherwise avoid adverse tax consequences thereunder and
all Restricted Share Unit Awards shall be construed and administered
accordingly. The Committee reserves the right to substitute a definition of the
term “Disability” which is derived from a statute or regulations (e.g., Section
409A(a)(2)(C) of the Code) for the definition of such term set forth in this
Plan, as it deems necessary or appropriate in its sole discretion with respect
to Restricted Share Unit Awards.



     8.5 Time Vesting of Restricted Share and Restricted Share Unit Awards. Restricted Shares
or Restricted Share Units, or portions thereof, are exercisable at such time or times as determined
by the Committee in its discretion at or after grant, subject to the restrictions on time Vesting
set forth in this Section. If the Committee provides that any Restricted Shares or Restricted Share
Unit Awards become Vested over time (with or without a performance component), the Committee may
waive or accelerate such Vesting provisions at any time, subject to the restrictions on time
Vesting set forth in this Section.



ARTICLE 9




PERFORMANCE SHARE AWARDS




     9.1 Performance Share Awards and Agreements. A Performance Share Award is a right to
receive Shares in the future conditioned upon the attainment of specified performance objectives
and such other conditions, restrictions and contingencies as the Committee may determine. Each
Performance Share Award granted under this Plan will be evidenced by minutes of a meeting, or by a
unanimous written consent without a meeting, of the Committee and by a written Award Agreement
dated as of the Date of Grant and executed by the Company and by the Plan Participant. The timing
of Performance Share Awards and the number of Shares covered by each Award (subject to Section 3.2)
are to be determined by the Committee in its discretion.



     9.2 Performance Objectives. At the time of grant of a Performance Share Award, the
Committee will specify the performance objectives which, depending on the extent to which they are
met, will determine



 









 




the number of Shares that will be distributed to the Participant. The Committee will also specify
the Performance Period. With respect to awards to Section 162(m) Persons intended to be Performance
Based Compensation, the Committee may use performance objectives based on one or more of the
following (or substantially similar) criteria: cash generation, profit, revenue, market share,
profit or return ratios, Shareholder returns and/or specific, objective and measurable non
financial objectives, stock price, sales, earnings per share, return on equity, costs, earnings,
capital adjusted pre-tax earnings (economic profit), net income, operating income (including but
not limited to EBIT or EBITDA), performance profit (operating income minus an allocated charge
approximating the Company’s cost of capital, before or after tax), gross margin, revenue, working
capital, total assets, net assets, Shareholders’ equity and cash flow. Performance objectives may
include or exclude extraordinary charges, losses from discontinued operations, restatements and
accounting changes and other unplanned special charges such as restructuring expenses,
acquisitions, acquisition expenses, including expenses related to goodwill and other intangible
assets, stock offerings, stock repurchases and loan loss provisions, provided that in the case of
an Award intended to qualify for the exemption from the limitation on deductibility imposed by
Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code, such inclusion or
exclusion shall be made in compliance with Section 162(m) of the Code. The Committee may designate
a single objective or objectives for performance measurement purposes. Performance measurement may
be based on absolute Company, business unit or divisional performance and/or on performance as
compared with that of other publicly-traded companies. The performance objectives and periods need
not be the same for each Participant nor for each Award.




     9.3 Adjustment of Performance Objectives. The Committee may modify, amend or otherwise
adjust the performance objectives specified for outstanding Performance Share Awards if it
determines that an adjustment would be consistent with the objectives of this Plan and taking into
account the interests of the Participants and the public Shareholders of the Company and such
adjustment complies with the requirements of Section 162(m) of the Code for Section 162(m) Persons,
to the extent applicable, unless the Committee indicates a contrary intention. The types of events
which could cause an adjustment in the performance objectives include, without limitation,
accounting changes which substantially affect the determination of performance objectives, changes
in applicable laws or regulations which affect the performance objectives, and divisive corporate
reorganizations, including spin-offs and other distributions of property or stock.



     9.4 Other Terms and Conditions. Performance Share Awards granted under this Plan are
subject to the following terms and conditions and may contain such additional terms, conditions,
restrictions and contingencies not inconsistent with the terms of this Plan and any operative
employment or other agreement as the Committee deems desirable:



     (a) Delivery of Shares. As soon as practicable after the applicable Performance
Period has ended, the Participant will receive a distribution of the number of
Shares earned during the Performance Period, depending upon the extent to which
the applicable performance objectives were achieved. Such Shares will be
registered in the name of the Participant and will be free of all restrictions
except for any restrictions pursuant to Section 14.2.



     (b) Termination. A Performance Share Award or unearned portion thereof will
terminate without the issuance of Shares on the termination date specified at
the time of grant or upon the termination of employment or directorship of the
Participant during the Performance Period. If a Participant’s employment or
directorship with the Company or its Affiliates terminates by reason of his
death, Disability or Retirement (except with respect to Section 162(m)
Persons), the Committee in its discretion at or after the time of grant may
determine, notwithstanding any Vesting requirements under Section 9.4(a), that
the Participant (or the heir, legatee or legal representative of the
Participant’s estate) will receive a distribution of a portion of the
Participant’s then-outstanding Performance Share Awards in an amount which is
not more than the number of Shares which would have been earned by the
Participant if 100% of the performance objectives for the current Performance
Period had been achieved prorated based on the ratio of the number of months of
active employment in the Performance Period to the total number of months in
the Performance Period. However, with respect to Awards intended to be
Performance Based Compensation (as described in Section 9.4(d)), distribution
of the Shares shall not be made prior to attainment of the relevant performance
objective.



 









 





     (c) Voting and Other Rights. Awards of Performance Shares do not provide the
Participant with voting rights or rights to dividends prior to the Participant
becoming the holder of record of Shares issued pursuant to an Award; provided,
however, that an Award Agreement may provide for payment of an amount of money
(or Shares with a Fair Market Value equivalent to such amount) equal to the
dividends paid from time to time on the number of Common Shares that would
become payable upon vesting of a Performance Share Award. Prior to the issuance
of Shares, Performance Share Awards may not be sold, transferred, pledged,
assigned or otherwise encumbered.



     (d) Performance-Based Compensation. The Committee may designate Performance
Share Awards as being “remuneration payable solely on account of the attainment
of one or more performance goals” as described in Section 162(m)(4)(C) of the
Code. Such Awards shall be automatically amended or modified to comply with
amendments to Section 162 of the Code to the extent applicable, unless the
Committee indicates a contrary intention.



     9.5 Time Vesting of Performance Share Awards. Performance Share Awards, or portions
thereof, are exercisable at such time or times as determined by the Committee in its discretion at
or after grant, subject to the restrictions on time Vesting set forth in this Section. If the
Committee provides that any Performance Shares become Vested over time (accelerated by a
performance component), the Committee may waive or accelerate such Vesting provisions at any time,
subject to the restrictions on time Vesting set forth in this Section.



     9.6 Special Limitations on Performance Share Awards. Unless an Award Agreement approved by
the Committee provides otherwise, Performance Shares awarded under this Plan are intended to meet
the requirements for exclusion from coverage under Section 409A of the Code or to otherwise avoid
adverse tax consequences thereunder and all Performance Share Awards shall be construed and
administered accordingly. The Committee reserves the right to substitute a definition of the term
“Disability” which is derived from a statute or regulations (e.g., Section 409A(a)(2)(C) of the
Code) for the definition of such term set forth in this Plan, as it deems necessary or appropriate
in its sole discretion with respect to Performance Share Awards.



ARTICLE 10




TRANSFERS AND LEAVES OF ABSENCE




     10.1 Transfer of Participant. For purposes of this Plan, the transfer of a Participant
among the Company and its Affiliates shall not be deemed to be a termination of employment except
as required by Section 422 of the Code with respect to ISOs or other applicable law including
Section 409A of the Code, if relevant.



     10.2 Effect of Leaves of Absence. For purposes of this Plan, the following leaves of
absence are deemed not to be a termination of employment:



     (a) a leave of absence, approved in writing by the Company, for military
service, sickness or any other purpose approved by the Company, if the period
of such leave does not exceed 90 days;



     (b) a leave of absence in excess of 90 days, approved in writing by the
Company, but only if the employee’s right to reemployment is guaranteed either
by a statute or by contract, and provided that, in the case of any such leave
of absence, the employee returns to work within 30 days after the end of such
leave; and



     (c) any other absence determined by the Committee in its discretion not to
constitute a termination of employment, to the extent such discretion is
permitted by law including the applicable rules with respect to ISOs.



 









 





ARTICLE 11




EFFECT OF CHANGE IN CONTROL




     11.1 Change in Control Defined. “Change in Control” means the occurrence of any of the
following:



     (a) all or substantially all of the assets of the Company are sold or
transferred to another corporation or entity, or the Company is merged,
consolidated or reorganized with or into another corporation or entity, with
the result that upon conclusion of the transaction less than fifty-one percent
(51%) of the outstanding securities entitled to vote generally in the election
of Directors (“Voting Stock”) or other capital interests of the acquiring
corporation or entity are owned, directly or indirectly, by the holders of
Voting Stock of the Company generally prior to the transaction;



     (b) there is a report filed on Scheduled 13D or Scheduled 14D-1 (or any
successor scheduled, form or report), each as promulgated pursuant to the
Exchange Act disclosing that any person (as the term “person” is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act),excluding the
Company, any Affiliate, any employee benefit plan of the Company or an
Affiliate, including the trustee of any such plan has become the beneficial
owner (as the term “beneficial owner” is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) of securities
representing thirty three and one-third percent (33-1/3%) or more of the
combined voting power of the then-outstanding Voting Stock of the Company;



     (c) the Company shall file a report or proxy statement with the Securities and
Exchange Commission pursuant to the Exchange Act disclosing in response to Item
1 of Form 8-K thereunder or Item 6(e) of Schedule 14A thereunder (or any
successor schedule, form or report or item therein) that a change in control of
the Company has or may have occurred or will or may occur in the future
pursuant to any then-existing contract or transaction; or



     (d) the individuals who, at the beginning of any period of two (2) consecutive
calendar years, constituted the Directors of the Company cease for any reason
to constitute at least a majority thereof unless the nomination for election by
the Company’s Shareholders of each new Director of the Company was approved by
a vote of at least two-thirds (2/3) of the Directors of the Company still in
office who were Directors of the Company at the beginning of any such period.



     11.2 Acceleration of Award. Except as otherwise provided in this Plan or an Award
Agreement, immediately upon the occurrence of a Change in Control:



     (a) all outstanding Stock Options automatically become fully exercisable;



     (b) all Restricted Share Awards automatically become fully Vested;



     (c) all Restricted Share Unit Awards automatically become fully Vested (or, if such
Restricted Share Unit Awards are subject to performance-based restrictions, shall become
Vested on a pro-rated basis as described in Section 11.2(d) with respect to Performance
Share Awards) and, to the extent Vested, convertible to Shares at the election of the
holder;



     (d) all Participants holding Performance Share Awards become entitled to receive a
partial payout in an amount which is the number of Shares which would have been earned
by the Participant if 100% of the performance objectives for the current Performance
Period had been achieved pro-rated based on the ratio of the number of months of active
employment in the Performance Period to the total number of months in the Performance
Period; and



     (e) Stock Appreciation Rights automatically become fully Vested and fully exercisable.



 









 





ARTICLE 12




TRANSFERABILITY OF AWARDS




     12.1 Awards Are Non-Transferable. Except as provided in Sections 12.2 and 12.3, Awards are
non-transferable and any attempts to assign, pledge, hypothecate or otherwise alienate or encumber
(whether by operation of law or otherwise) any Award shall be null and void.



     12.2 Inter-Vivos Exercise of Awards. During a Participant’s lifetime, Awards are
exercisable only by the Participant or, as permitted by applicable law and notwithstanding Section
12.1 to the contrary, the Participant’s guardian or other legal representative.



     12.3 Limited Transferability of Certain Awards. Notwithstanding Section 12.1 to the
contrary, Awards may be transferred by will and by the laws of descent and distribution. Moreover,
the Committee, in its discretion, may allow at or after the time of grant the transferability of
Awards which are Vested, provided that the permitted transfer is made (a) if the Award is an
Incentive Stock Option, the transfer is consistent with Section 422 of the Code; (b) to the Company
(for example in the case of forfeiture of Restricted Shares), an Affiliate or a person acting as
the agent of the foregoing or which is otherwise determined by the Committee to be in the interests
of the Company; or (c) by the Participant for no consideration to Immediate Family Members or to a
bona fide trust, partnership or other entity controlled by and for the benefit of one or more
Immediate Family Members. “Immediate Family Members” means the Participant’s spouse, children,
stepchildren, parents, stepparents, siblings (including half brothers and sisters), in-laws and
other individuals who have a relationship to the Participant arising because of a legal adoption.
No transfer may be made to the extent that transferability would cause Form S-8 or any successor
form thereto not to be available to register Shares related to an Award. The Committee in its
discretion may impose additional terms and conditions upon transferability. Transfers are subject
to prior Committee approval (except as provided in Section 12.3(b)) or they are null and void.



ARTICLE 13




AMENDMENT AND DISCONTINUATION




     13.1 Amendment or Discontinuation of this Plan. The Board of Directors may amend, alter,
or discontinue this Plan at any time, provided that no amendment, alteration, or discontinuance may
be made:




     (a) which would materially and adversely affect the rights of a Participant
under any Award granted prior to the date such action is adopted by the Board
of Directors without the Participant’s written consent thereto; and




     (b) without Shareholder approval, if Shareholder approval is required under
applicable laws, regulations or exchange requirements (including Section 422 of
the Code with respect to ISOs, and for the purpose of qualification as
Performance Based Compensation under Section 162(m) of the Code).


Notwithstanding the foregoing, this Plan may be amended without Participants’ consent to: (i)
comply with any law; (ii) preserve any intended favorable tax effects for the Company, the Plan or
Participants; or (iii) avoid any unintended unfavorable tax effects for the Company, the Plan or
Participants.




     13.2 Amendment of Grants. The Committee may amend, prospectively or retroactively, the
terms of any outstanding Award, provided that no such amendment may be inconsistent with the terms
of this Plan (specifically including the prohibition on granting Stock Options with an Exercise
Price less than 100% of the Fair Market Value of the Common Shares on the Date of Grant) or would
materially and adversely affect the rights of any holder without his written consent.



 









 





ARTICLE 14




SHARE CERTIFICATES




     14.1 Delivery of Share Certificates. The Company is not required to issue or deliver any
certificates for Shares issuable with respect to Awards under this Plan prior to the fulfillment of
all of the following conditions, to the extent applicable:




     (a) payment in full for the Shares and for any withholding tax (See Article 15);




     (b) completion of any registration or other qualification of such Shares under any
Federal or state laws or under the rulings or regulations of the Securities and
Exchange Commission or any other regulating body which the Committee in its
discretion deems necessary or advisable;




     (c) admission of such Shares to listing on The Nasdaq Stock Market or any stock
exchange on which the Shares are listed;




     (d) in the event the Shares are not registered under the Securities Act of 1933,
qualification as a private placement under said Act;




     (e) obtaining of any approval or other clearance from any Federal or state
governmental agency which the Committee in its discretion determines to be
necessary or advisable; and




     (f) the Committee is fully satisfied that the issuance and delivery of Shares
under this Plan is in compliance with applicable Federal, state or local law,
rule, regulation or ordinance or any rule or regulation of any other regulating
body, for which the Committee may seek approval of counsel for the Company.



     14.2 Applicable Restrictions on Shares. Shares issued with respect to Awards may be subject to
such stock transfer orders and other restrictions as the Committee may determine necessary or
advisable under any applicable Federal or state securities law rules, regulations and other
requirements, the rules, regulations and other requirements of The Nasdaq Stock Market or any stock
exchange upon which the Shares are then listed, and any other applicable Federal or state law and
will include any restrictive legends the Committee may deem appropriate to include.



     14.3 Book Entry. In lieu of the issuance of stock certificates evidencing Shares, the Company
may use a “book entry” system in which a computerized or manual entry is made in the records of the
Company to evidence the issuance of such Shares. Such Company records are, absent manifest error,
binding on all parties.



ARTICLE 15




SATISFACTION OF WITHHOLDING TAX LIABILITIES




     15.1 In General. The Committee shall cause the Company to withhold any taxes which it
determines it is required by law or required by the terms of this Plan to withhold in connection
with any payments incident to this Plan, unless the Participant shall make an irrevocable written
election delivered to the General Counsel of the Company, during a trading window period prior to
the date any taxes become due and owing to pay any such taxes in cash and shall have delivered to
the Company a sum equal to the required withholding as specified by the Company on or before the
date such taxes are due and owing. The Participant or other recipient shall provide the Committee
with such Stock Powers and additional information or documentation as may be necessary for the
Committee to discharge its obligations under this Section.



 









 





     15.2 Withholding from Share Distributions. Unless the Participant shall have made an election
to pay taxes in cash and shall have provided the Company with the required payments as set forth in
Section 15.1, with respect to a distribution in Shares pursuant to Restricted Share, Restricted
Share Unit and Performance Share Awards under the Plan, the Committee shall cause the Company to
sell the fewest number of such Shares for the proceeds of such sale to equal (or exceed by not more
than that actual sale price of a single Share) the Participant’s or other recipient’s withholding
tax liability, as set forth in Section 15.1, resulting from such distribution. The Committee shall
withhold the proceeds of such sale for purposes of satisfying such withholding tax liability. In
the event that a distribution in Shares does not result in any withholding tax liability as a
result of the Participant’s election to be taxed at an earlier date or for any other reason, the
Company shall not be required to sell any Shares distributed to the Participant.



     15.3 Delivery of Withholding Proceeds. The Committee shall cause the Company to deliver cash
received from a Participant or the withholding proceeds to the Internal Revenue Service and/or
other taxing authority in satisfaction of a Participant’s or other recipient’s tax liability
arising from a payment.



ARTICLE 16




GENERAL PROVISIONS




     16.1 No Implied Rights to Awards, Employment or Directorship. No one has any claim or right to
be granted an Award under this Plan, and there is no obligation of uniformity of treatment of
Participants under this Plan. Neither this Plan nor any Award thereunder shall be construed as
giving any individual any right to continued employment or continued directorship with the Company
or any Affiliate. The Plan does not constitute a contract of employment or directorship, and the
Company and each Affiliate expressly reserve the right at any time to terminate employees free from
liability, or any claim, under this Plan, except as may be specifically provided in this Plan or in
an Award Agreement.



     16.2 Other Compensation Plans. Nothing contained in this Plan prevents the Board of Directors
from adopting other or additional compensation arrangements, subject to Shareholder approval if
such approval is required, and such arrangements may be either generally applicable or applicable
only in specific cases.



     16.3 Rule 16b-3 Compliance. This Plan is intended to comply with all applicable conditions of
Rule 16b-3. All transactions involving any Participant subject to Section 16(a) shall be subject to
the conditions set forth in Rule 16b-3, regardless of whether such conditions are expressly set
forth in this Plan. Any provision of this Plan that is contrary to Rule 16b-3 does not apply to
such Participants.



     16.4 Code Section 162(m) Compliance. This Plan is intended to comply with all applicable
requirements of Section 162(m) of the Code with respect to Performance Based Compensation for
Participants who are Section 162(m) Persons. Unless the Committee expressly determines otherwise,
any provision of this Plan that is contrary to such requirements does not apply to such
Participants.



     16.5 Successors. All obligations of the Company with respect to Awards granted under this Plan
are binding on any successor to the Company, whether as a result of a direct or indirect purchase,
merger, consolidation or otherwise of all or substantially all of the 16.6 Severability. In the
event any provision of this Plan, or the application thereof to any person or circumstances, is
held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining
parts of this Plan, or other applications, and this Plan is to be construed and enforced as if the
illegal or invalid provision had not been included. business and/or assets of the Company.



     16.7 Governing Law. To the extent not preempted by Federal law, this Plan and all Award
Agreements pursuant thereto are construed in accordance with and governed by the laws of the State
of Ohio. This Plan is not intended to be governed by ERISA and shall be so construed and
administered.



 









 





ARTICLE 17




EFFECTIVE DATE




     17.1 Effective Date. The effective date of this Agilysys, Inc. 2006 Stock Incentive Plan is
the date on which the Shareholders of the Company approve it at a duly held Shareholder’s meeting.