Document:

Exhibit
10.2

 

ADVANCED LIFE
SCIENCES HOLDINGS, INC.

2005 STOCK INCENTIVE PLAN

(As Amended May 1, 2008)

 

ADVANCED LIFE SCIENCES HOLDINGS, INC. 2005 STOCK INCENTIVE PLAN

 

TABLE OF CONTENTS

 

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 1.

  	
   

  	
  Establishment,
  Objectives and Duration

  	
   

  	
  1

  
	
  Article 2.

  	
   

  	
  Definitions

  	
   

  	
  2

  
	
  Article 3.

  	
   

  	
  Administration

  	
   

  	
  6

  
	
  Article 4.

  	
   

  	
  Shares
  Subject to the Plan and Maximum Awards

  	
   

  	
  6

  
	
  Article 5.

  	
   

  	
  Eligibility
  and Participation

  	
   

  	
  7

  
	
  Article 6.

  	
   

  	
  Stock
  Options

  	
   

  	
  7

  
	
  Article 7.

  	
   

  	
  Stock
  Appreciation Rights

  	
   

  	
  9

  
	
  Article 8.

  	
   

  	
  Restricted
  Stock and Restricted Stock Units

  	
   

  	
  10

  
	
  Article 9.

  	
   

  	
  Performance
  Shares

  	
   

  	
  11

  
	
  Article 10.

  	
   

  	
  Performance
  Measures

  	
   

  	
  12

  
	
  Article 11.

  	
   

  	
  Beneficiary
  Designation

  	
   

  	
  13

  
	
  Article 12.

  	
   

  	
  Deferrals

  	
   

  	
  13

  
	
  Article 13.

  	
   

  	
  Rights
  of Participants

  	
   

  	
  13

  
	
  Article 14.

  	
   

  	
  Change
  in Control

  	
   

  	
  13

  
	
  Article 15.

  	
   

  	
  Amendment,
  Modification and Termination

  	
   

  	
  14

  
	
  Article 16.

  	
   

  	
  Nontransferability
  of Awards

  	
   

  	
  14

  
	
  Article 17.

  	
   

  	
  Withholding

  	
   

  	
  15

  
	
  Article 18.

  	
   

  	
  Indemnification

  	
   

  	
  15

  
	
  Article 19.

  	
   

  	
  Successors

  	
   

  	
  15

  
	
  Article 20.

  	
   

  	
  Breach
  of Restrictive Covenants

  	
   

  	
  16

  
	
  Article 21.

  	
   

  	
  Legal
  Construction

  	
   

  	
  16

  

 

ADVANCED
LIFE SCIENCES HOLDINGS, INC. 2005 STOCK INCENTIVE PLAN

 

ARTICLE
1.           ESTABLISHMENT, OBJECTIVES AND
DURATION

 

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

 

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

 

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

 

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

 

1.3           DURATION OF THE PLAN.
This Plan will be effective on the Effective  Date, as described in Article 2, and will
remain in effect, subject to the right  of the Committee to amend or terminate the
Plan at any time pursuant to Article  15, until all Shares subject to it pursuant to
Article 4 have been issued or

 

1

 

transferred
according to the Plan’s provisions. In no event may an Award be  granted under the Plan on or
after the tenth annual anniversary of the Effective  Date.

 

ARTICLE
2.           DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)                                 continuous
failure by the Participant to perform his or her duties to the Company or an
Affiliate (including any sustained and unexcused absence of the Participant
from the performance of such

 

 

2

 

duties,
which absence has not been certified in writing as due to physical or mental
illness or disability), after a written demand for performance has been
delivered to the Participant identifying the manner in which the Participant
has failed to substantially perform such duties.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Further
notwithstanding the foregoing, unless a majority of the Incumbent  Directors determines otherwise,
no Change in Control shall be deemed to have  occurred with respect to a particular
Participant if the Change in Control  results from actions or events in which such
Participant is a participant in a  

 

3

 

capacity
other than solely as an officer, employee or director of the Company or  an Affiliate.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“EMPLOYEE”
means any person employed by the Company or an Affiliate in a common law
employee-employer relationship. A Service Provider shall not cease to be an
Employee for purposes of this Plan in the case of (a) any leave of absence
approved by the Company or (b) transfers between locations of the Company
or among the Company, any Affiliate, or any successor. For purposes of
Incentive Stock Options, no such leave may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the one hundred and eighty-first (181st) day
of such leave, any Incentive Stock Option held by the Participant shall cease
to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Nonstatutory Stock Option. Neither service as a Director nor
payment of a director’s fee by the Company or an Affiliate shall be sufficient
to constitute “employment” by the Company or an Affiliate.

 

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

 

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

 

“FAIR
MARKET VALUE” means:

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“PERFORMANCE
SHARE” means an Award of Shares with an initial value equal to

the
Fair Market Value of a Share on the date of grant which is based on the

Participant’s
attainment of certain performance objectives specified in the

Award
Agreement, as described in Article 9.

 

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

 

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

 

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

 

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

 

“RESTRICTED
STOCK” means a contingent grant of Shares awarded to a

 

5

 

 

Participant
pursuant to Article 8. The Shares awarded to the Participant will vest
over the Restricted Period and according to the time-based or performance-based
criteria, specified in the Award Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
3.           ADMINISTRATION

 

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

 

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

 

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

 

ARTICLE
4.           Shares SUBJECT to the Plan
and Maximum Awards

 

4.1           NUMBER OF SHARES AVAILABLE FOR
AWARDS. Subject to adjustment as  provided below and in Sections 4.2 and 4.3,
the maximum number of Shares that  may be subject to Awards under the Plan will
be 3,972,455, reduced by any  Shares that are subject to awards under the 1999 Plan on or after the  Effective Date, and increased
by any Shares that are or that become available

 

 

6

 

 

for
grants of Awards under the Plan and/or awards under the 1999 Plan on or  after the Effective Date as a
result of lapsed Awards or awards (as described  in Section 4.2).

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

 

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

 

4.3           ADJUSTMENTS IN AUTHORIZED SHARES.

 

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

 

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

 

ARTICLE
5.           ELIGIBILITY and PARTICIPATION

 

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

 

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

 

ARTICLE
6.           STOCK OPTIONS

 

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

 

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

 

 

7

 

determines.
The Award Agreement will also specify whether the Option is intended  to be an ISO or an NQSO, and
whether reload options will be granted.

 

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

 

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

 

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

 

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

 

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

 

The
Exercise Price and any related withholding taxes will be payable to the  Company in full either: 

 

(a)           in cash, or its equivalent, in United
States  dollars;

 

(b)                                 if permitted in
the governing Award Agreement, by tendering (i)  Shares acquired outside of the Plan and owned
by the Participant for at least  six months and duly endorsed for transfer to
the Company, (ii) Shares issuable  to the Participant upon exercise of the
Option, or any (iii) combination of  cash, certified or cashier’s check and Shares
described in this clause (b); or

 

(c)                                  by any other
means the Committee determines to be consistent with the Plan’s  purposes and applicable law.
Cashless exercise must meet the requirements of the  Federal Reserve Board’s Regulation T and any
applicable securities law  restrictions. In a “cashless” exercise, the Participant notifies the
Company or  its designated
administrator it will exercise, and the Company is instructed to  deliver the Share issuable on
exercise to a broker, who sells the Shares and  holds back the exercise price (and, often, the
federal and state withholdings).  No more than the minimum required withholding
may be satisfied by the tender of  Shares.

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
7.           STOCK APPRECIATION RIGHTS

 

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

 

                Within the limits of Article 4,
the Committee will have sole discretion to

 

 

 

9

 

determine
the number of SARs granted to each Participant and, consistent with  the provisions of the Plan,
to determine the terms and conditions pertaining to  SARs.

 

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

 

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

 

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

 

7.4           AWARD AGREEMENT. Each SAR grant will
be evidenced by an Award

Agreement
that specifies the grant price, whether settlement of the SAR will be  made in cash or Shares, the
term of the SAR and such other provisions as the  Committee determines.

 

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

 

7.6           PAYMENT OF SAR AMOUNT. Upon exercise
of a SAR with respect to a

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

 

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

 

ARTICLE
8.           RESTRICTED STOCK AND
RESTRICTED STOCK UNITS

 

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

such
amounts as it determines.

 

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

 

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

 

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

 

8.4           OTHER RESTRICTIONS. Subject to Article 10,
the Committee may impose
such other conditions or restrictions on any Restricted Stock or
Restricted  Stock Units as
it deems advisable, including, without limitation, restrictions

 

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
9.   PERFORMANCE SHARE

 

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

 

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

 

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

 

 

11

 

9.4           AWARD AGREEMENT. Each grant of
Performance Shares will be evidenced  by an Award Agreement specifying the material
terms and conditions of the Award  (including the form of payment of earned
Performance Shares), and such other  provisions as the Committee determines.

 

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

 

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

 

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

 

ARTICLE
10.         PERFORMANCE MEASURES

 

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

 

(a)           net earnings;

 

(b)           operating earnings or income;

 

(c)           earnings growth;

 

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

 

(e)           net income applicable to Shares;

 

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

 

(g)           revenue backlog;

 

(h)           margins realized on delivered
services;

 

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

 

(j)            earnings per Share;

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

(q)           customer satisfaction;

 

(r)             expense reduction;

 

(s)            ratio of operating expenses to
operating revenues;

 

(t)             product development milestones; and

 

(u)           capital raising objectives.

 

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

 

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

 

ARTICLE
11.         BENEFICIARY DESIGNATION

 

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

 

ARTICLE
12.         DEFERRALS

 

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

 

ARTICLE
13.         RIGHTS OF PARTICIPANTS

 

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

 

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

 

ARTICLE
14.  CHANGE IN CONTROL

 

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

 

13

 

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

 

ARTICLE
15.         AMENDMENT, MODIFICATION AND
TERMINATION

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
16.  NONTRANSFERABILITY OF AWARDS.

 

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

 

16.2         PERMITTED TRANSFERS. Notwithstanding Section 16.1,
with respect to

 

 

14

 

 

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

 

ARTICLE
17.         WITHHOLDING

 

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

 

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

 

ARTICLE
18.         INDEMNIFICATION

 

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

 

ARTICLE
19.         SUCCESSORS

 

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

 

 

 

15

 

ARTICLE
20.         BREACH OF RESTRICTIVE
COVENANTS

 

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

 

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

 

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

 

ARTICLE
21.         LEGAL CONSTRUCTION

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

16Exhibit 10.1

 

ACCO BRANDS CORPORATION

 

AMENDED AND RESTATED

 

2005 LONG-TERM INCENTIVE PLAN

 

PERFORMANCE STOCK UNIT AWARD AGREEMENT

 

 

AMENDMENT
NO. 1 TO PERFORMANCE STOCK UNIT AWARD AGREEMENT

 

(2006-2008 Performance
Period)

 

This
Amendment No. 1 is made and entered into this and effective March 19,
2008 by and between ACCO Brands Corporation, a Delaware corporation
(collectively with all Subsidiaries, the “Company”) and                                               
(“Grantee”)

 

WHEREAS,
the Company and Grantee have previously entered into a Performance Stock Unit
Award Agreement effective December 7, 2005 (the “Award Agreement”)
pursuant to the Company’s Amended and Restated 2005 Incentive Plan (formerly
known as the Company’s 2005 Long-Term Incentive Plan; “Plan”), and

 

WHEREAS,
the Company and Grantee mutually desire to amend the Award Agreement upon the
terms and conditions stated herein.

 

NOW
THEREFORE, subject to the terms and conditions set forth herein:

 

	
  1.

  	
   

  	
  The first sentence of Section 2 of the Award
  Agreement is hereby deleted in its entirety and replaced by the following
  sentence:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “The Company hereby awards to Grantee on the
  Grant Date an Award of
                                
  Performance Stock Units”.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  The words “Schedule I” as referred to in
  Section 3.(a) of the Award Agreement are hereby deleted and
  replaced with the words “Schedule I-A”. Schedule I-A is attached hereto.

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Any capitalized terms used herein that are not
  defined herein shall have the meaning ascribed to them in the Award
  Agreement.

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  This Amendment No. 1 to Performance Stock Unit
  Award Agreement is conditioned on Grantee signing this Amendment and
  returning it to the Company by
                      ,
  2008, and is subject to all terms, conditions and provisions of the Plan and
  the Award Agreement as modified by this Amendment, which Grantee accepts upon
  signing and delivering this agreement to the Company.

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Except as altered and modified herein, the Award
  Agreement shall continue in full force and effect.

  

 

 

IN
WITNESS WHEREOF, the parties have executed this Amendment No. 1 as of the
date and year first above written.

 

	
   

  	
  ACCO BRANDS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  David
  L. Kaput [s]

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David
  L. Kaput

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
  Senior
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Grantee
  Name

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Grantee
  Signature

  

 

2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]