REDACTED
                –
                AS
                FILED

            	
              Exhibit
                10.40

            


    

     

    THE
      MARKED PORTIONS OF THIS STOCK OPTION AGREEMENT HAVE

    BEEN
      OMITTED AND FILED SEPARATELY WITH THE COMMISSION

    PURSUANT
      TO A REQUEST FOR CONFIDENTIAL TREATMENT

     

    STOCK
      OPTION AGREEMENT

     

    This
      STOCK
      OPTION AGREEMENT
      (this
“Agreement”),
      dated
      as of August __, 2007 (the “Grant
      Date”),
      is
      between Wayne I. Danson (the “Optionee”)
      and
      Advanced Communications Technologies, Inc., a Florida corporation (the
“Company”).

     

    WHEREAS,
      the
      Optionee is an employee of the Company; and

     

    WHEREAS,
      the
      Company desires to create an incentive for the Optionee to use his best efforts
      in the performance of his duties to and for the benefit of the Company and
      its
      subsidiaries by granting him an option to purchase shares of the Company’s
      Common Stock.

     

    NOW,
      THEREFORE,
      the
      Optionee and the Company hereby agree as follows:

     

    1. Definitions.
      For all
      purposes of this Agreement, the following terms shall have the meanings set
      forth below:

     

    “Base EBITDA Targets”
means
      the Base EBITDA targets for the Company’s 2008, 2009 and 2010 fiscal years set
      forth on Schedule 1
      hereto;
      provided, that if the Company or any of its subsidiaries in any fiscal year
      enters into any extraordinary transaction, such as a business acquisition or
      disposition, the Board in the exercise of its sole discretion may, at any time
      during such fiscal year, adjust upward or downward any such target to take
      into
      account such extraordinary transaction.

     

    “Board”
means
      the Board of Directors of the Company.

     

    “Cause”
has
      the
      meaning specified in the Employment Agreement.

     

    “Code”
means
      the Internal Revenue Code of 1986, as amended.

     

    “Common
      Stock”
means
      the common stock of the Company, no par value.

     

    “Company”
has
      the
      meaning specified in the preamble hereto.

     

    “Consolidated Net Income”
means,
      for any period, the net income (or loss) of the Company and its subsidiaries
      for
      such period on a consolidated basis, after deducting all operating expenses,
      provisions for all taxes and reserves (including reserves for deferred income
      taxes) and all other proper deductions, all determined in accordance with
      generally accepted accounting principles consistently applied, after eliminating
      all intercompany items, but excluding from the definition of Consolidated Net
      Income any extraordinary gains and/or losses and any gains and/or losses from
      the sale or other disposition of assets other than in the ordinary course of
      business, all determined in accordance with generally accepted accounting
      principles consistently applied.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “EBITDA”
means,
      with respect to any fiscal year, the sum of the Consolidated Net Income (as
      defined in the Employment Agreement) (or loss) of the Company and its
      subsidiaries for such fiscal year, calculated in accordance with generally
      accepted accounting principles consistently applied but excluding any
      extraordinary items of income, plus
      all
      amounts deducted in the computation thereof on account of (a) interest expense
      (net of any interest income), (b) income taxes, (c) depreciation and
      amortization, (d) charges for stock-based compensation, (e) implementation
      expenses for Sarbanes-Oxley compliance not to exceed $150,000, (f) expenses
      incurred to file a Demand Registration Statement on behalf of Investor
      Stockholders, as defined in that certain Registration Rights Agreement dated
      August __, 2007; and (h) H.I.G. Capital L.L.C. management fees accrued or paid
      during such fiscal year.

     

    “Employment Agreement”
means
      the Employment Agreement, dated as of the date hereof, between the Grantee
      and
      the Company.

     

    “Exercise Price”
has
      the
      meaning specified in Section 2 hereof.

     

    “Family Trust”:
      means,
      with respect to any individual, any trust created for the benefit of one or
      more
      of such individual’s Related Persons and controlled by such individual or one or
      more Related Persons.

     

    “Grant
      Date”
has
      the
      meaning specified in the preamble hereto.

     

    “Good
      Reason”
has
      the
      meaning specified in the Employment Agreement.

     

    “Option”
has
      the
      meaning specified in Section 2 hereof.

     

    “Optionee”
has
      the
      meaning specified in the preamble hereto.

     

    “Optioned
      Shares”
has
      the
      meaning specified in Section 2 hereof.

     

    “Plan”
means
      the Company’s 2007 Amended and Restated Stock Plan attached hereto as
Exhibit
      A.

     

    “Related Persons”:
      means,
      with respect to any individual, such individual’s parents, spouse, children and
      grandchildren.

     

    “Termination
      Date”
has
      the
      meaning specified in Section 4(a) hereof.

     

    “Vested Optioned Shares”
has
      the
      meaning specified in Section 5 below.

     

    2. Grant
      of Option.
      

     

    (a) Subject
      to the terms and conditions set forth herein and pursuant to the Plan, the
      Company grants to the Optionee an option (the “Option”)
      to
      purchase from the Company all or any part of (i) 2,497,877,348 shares of Common
      Stock hereof the “Tenured
      Optioned Shares”),
      at a
      price of $.00075 per Tenured Optioned Share (the “Exercise
      Price”)
      and
      (ii) 1,498,726,409 shares of Common Stock (the “Performance
      Optioned Shares”,
      and
      together with the Tenured Option Shares, the “Optioned
      Shares”)
      at a
      price per Performance Optioned Share equal to the Exercise Price.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) Anything
      in this Agreement to the contrary notwithstanding, the Option is subject to
      and
      entirely contingent upon an amendment to the Articles of Incorporation of the
      Company (the “Charter
      Amendment”)
      to
      increase the authorized number of shares of Common Stock to an amount sufficient
      for the grant of restricted stock and options in the maximum number contemplated
      by the Plan, which Charter Amendment is subject to the approval of the
      stockholders of the Company.

     

    3. Character
      of Option.
      This
      Option is not intended to qualify as an incentive option under Section 422
      of
      the Code.

     

    4. Duration
      of Option.
      The
      Option shall terminate in its entirety on the earliest of (i) the tenth (10th)
      anniversary of the Grant Date or (ii) such earlier time as the Option may
      terminate in accordance with the Plan.

     

    5. Exercise
      of Option.

     

    (a) At
      any
      time after the
      approval of the Charter Amendment and the effective filing thereof with the
      Florida Department of State, and
      prior to
      the termination of the Option pursuant to Section 4 above, the Optionee shall
      have the right to exercise the Option for all or a portion of the Optioned
      Shares which have become “Vested Optioned Shares”
as
      of
      the date of exercise determined in accordance with this paragraph
      (a):

     

    (i) Initially,
      999,150,939 of the Tenured Optioned Shares shall be considered Vested Optioned
      Shares. One twelfth (1/12th) of the remaining 1,498,726,409 Tenured Optioned
      Shares shall become “Vested Optioned Shares” upon the expiration of each three
      (3) month period after the Grant Date, such that all of the Tenured Optioned
      Shares shall be Vested Optioned Shares as of and after the third anniversary
      of
      the Grant Date, if the Option has not terminated prior to such
      date.

     

    (ii) Initially,
      none of the Performance Optioned Shares shall be considered Vested Optioned
      Shares. In the event that a Base EBITDA Target is met or exceeded for a given
      fiscal year, one
      third
      (1/3rd) of the original number of Performance Optioned Shares
      shall
      become “Vested Optioned Shares” upon the completion of the Company’s audited
      financial statements for such year demonstrating that such Base EBITDA Target
      has been met or exceeded for such year. In the event that a Base EBITDA Target
      is not met for either the 2008 or the 2009 fiscal year, such one third (1/3rd)
      of the original number of Performance Optioned Shares shall not become Vested
      Optioned Shares unless and until the Company meets the Base EBITDA Target for
      the following fiscal year. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iii) Upon
      the
      occurrence of any Change of Control (as defined in the Plan) or any termination
      by the Company of the Optionee’s employment with the Company without Cause (as
      defined in the Plan) or by the Executive for Good Reason, all
      of
      the Tenured Optioned Shares that are not then vested shall become Vested
      Optioned Shares.

     

    (iv) Notwithstanding
      the foregoing, in no event shall any Optioned Shares which have not already
      become Vested Optioned Shares become Vested Optioned Shares after the
      termination of the Optionee’s employment with the Company for any
      reason.

     

    (b) Subject
      to Section 4 hereof, exercise of the Option may be effected in the manner
      specified in Section 6 of the Plan.

     

    6. Transfer
      of Option.
      During
      the Grantee’s lifetime, the Option may be exercised only by the Grantee. Except
      for a transfer of the Option to the Grantee’s Related Persons or Family Trust by
      will or operation of law after the Grantee’s death, the Option and all rights
      granted hereunder may not be transferred, assigned, pledged, or hypothecated
      (whether by operation of law or otherwise) and shall not be subject to
      execution, attachment, or similar process. Any transfer of the Option in
      violation of this Section 6 shall be void and will result in the immediate
      termination of the Option.

     

    7. Incorporation
      of Plan Terms.
      This
      Option is granted subject to all of the applicable terms and provisions of
      the
      Plan.

     

    8. Limitation
      of Rights in Optioned Shares.
      The
      Optionee shall not be deemed for any purpose to be a stockholder of the Company
      with respect to any of the Optioned Shares except to the extent that the Option
      shall have been exercised with respect thereto and, in addition, a stock
      certificate therefor shall have been delivered to the Optionee.

     

    9. Communication.
      All
      notices, demands and other communications hereunder shall be in writing or
      by
      written telecommunication, and shall be deemed to have been duly given if
      delivered personally or if mailed by certified mail, return receipt requested,
      postage prepaid, or if sent by overnight courier, or sent by written
      telecommunication, as follows:

     

    (a) if
      to an
      Optionee, at such address set forth after Optionee’s name on the signature page
      hereto; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) if
      to the
      Company, at:

     

    Advanced
      Communications Technologies, Inc.

    420
      Lexington Avenue, Suite 2739

    New
      York,
      New York 10170

    Facsimile:
      646.277.1666

    Attention:
      CEO

    


    Any
      such
      notice shall be effective (i) if delivered personally, when received, (ii)
      if
      sent by overnight courier, when receipted for, (iii) if mailed, five (5) days
      after being mailed as described above and (iv) if sent by written
      telecommunication, when dispatched.

     

    10. Governing
      Law.
      This
      Agreement and the obligations of the parties hereunder shall be deemed to be
      a
      contract under seal and shall for all purposes be governed by and construed
      in
      accordance with the internal laws of the State of New York without reference
      to
      principles of conflicts of law.

     

    11. Successors
      and Assigns.
      This
      Agreement shall be binding upon any successor or assign of either the Company
      or
      the Optionee, and upon any executor, administrator, trustee, guardian, or other
      legal representative of the Optionee.

     

    {Remainder
      of Page Intentionally Left Blank.}

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF,
      the
      parties have executed this Stock Option Agreement as of the date and year first
      above written.

     

    
      	
              THE
                COMPANY:

            	
              ADVANCED
                COMMUNICATIONS

              TECHNOLOGIES,
                INC.

            
	 	 	 
	 	
              By:

            	
              /s/
                Randall H. Prouty

            
	 	
              Title:
                

            	
              Director/Chair,
                Compensation Committee

            
	 	 	 
	
              THE
                OPTIONEE:

            	 	 
	 	
              /s/
                Wayne I. Danson

            
	 	
              Name:
                

            	
              Wayne
                I. Danson

            
	 	
              Address:
                

            	 


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Schedule
      1

    


    Base
      EBITDA Targets

     

    
      	
              Fiscal
                Year

            	 	
              EBITDA
                Target

            
	 	 	 
	
              2008

            	 	
              $[REDACTED]

            
	
              2009

            	 	
              $[REDACTED]

            
	
              2010

            	 	
              $[REDACTED]

            


    

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
      A

    Amended
      2007 Stock Plan