Document:

Exhibit 10.1

 

MORNINGSTAR, INC.

2004 STOCK INCENTIVE PLAN

(AS AMENDED AND RESTATED
EFFECTIVE AS OF JULY 24, 2009)

 

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MORNINGSTAR,
INC. 2004 STOCK INCENTIVE PLAN

(AS AMENDED AND RESTATED EFFECTIVE AS OF JULY 24, 2009)

 

ARTICLE 1.                            ESTABLISHMENT, OBJECTIVES AND DURATION

 

1.1                              ESTABLISHMENT OF THE PLAN. 
Morningstar, Inc., an Illinois corporation, hereby establishes this
Morningstar, Inc. 2004 Stock Incentive Plan (the “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 shareholders, the Plan became effective upon its approval by the
Board of Directors, and will remain in effect as provided in Section 1.3
hereof.

 

1.2                              PURPOSE OF THE PLAN. 
The purpose of the Plan is to promote the success and enhance the value
of the Company by linking the personal interests of Participants to those of
Company shareholders, and by providing Participants with an incentive for
outstanding performance.  The Plan is
further intended to provide flexibility to the Company in its ability to
motivate, attract and retain the services of Participants upon whose judgment,
interest, and special effort the successful conduct of its business is largely
dependent.

 

1.3                              DURATION OF THE PLAN. 
The Plan commenced 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 14, until all Shares
subject to it pursuant to Article 4 have been issued or transferred
according to the Plan’s provisions.  In
no event may an Award be granted under the Plan on or after the tenth annual
anniversary of the Effective Date.

 

1.4                              PLAN MERGER.  The 2001
Morningstar Stock Option Plan, as amended, the Amended and Restated 2000
Morningstar Stock Option Plan, and the Amended and Restated 1993 Morningstar
Stock Option Plan were merged into this Plan as of the Effective Date.  Stock options awarded under the Prior Plans
shall be governed by the terms of this Plan.

 

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:

 

“AFFILIATES” 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 

 

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hereunder,
an entity that is (directly or indirectly) controlled by, or controls, 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 mean the Participant’s:

 

(a)                                 willful neglect of or continued failure to substantially
perform his or her duties with or obligations for the Company or an Affiliate
in any material respect (other than any such failure resulting from his or her
incapacity due to physical or mental illness);

 

(b)                                 commission of a willful or grossly negligent act or the
willful or grossly negligent omission to act that causes or is reasonably
likely to cause material harm to the Company or an Affiliate; or

 

(c)                                 commission or conviction of, or plea of nolo contendere to,
any felony or any crime significantly injurious to the Company or an Affiliate.

 

An act or omission is “willful” for this purpose if
it was knowingly done, or knowingly omitted, by the Participant in bad faith
and without reasonable belief that the act or omission was in the best interest
of the Company or an Affiliate. 
Determination of Cause shall be made by the Committee in its sole
discretion.

 

“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) after the Effective Date becomes a “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of more
than fifty percent (50%) of the Shares (other than Joe Mansueto, his spouse and
descendants, and any trustee or custodian for and on behalf of any of them), (b) the
consummation of a merger, consolidation, statutory share exchange or similar
form of corporate transaction involving the Company (a “Business Combination”),
unless immediately following such Business Combination more than sixty percent
(60%) of the total voting power of (i) the company resulting from such
Business Combination (the “Surviving Company”), or (ii) if applicable, the
ultimate parent company that directly or indirectly has beneficial ownership of
one hundred percent (100%) of the voting securities eligible to elect directors
of the Surviving Company (the “Parent Company”) is represented by Shares 

 

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that were
outstanding immediately prior to such Business Combination (or, if applicable,
is represented by shares into which such Shares were converted pursuant to such
Business Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Shares among the
holders thereof immediately prior to the Business Combination, or (c) the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or a sale of all or substantially all of the Company’s
assets.

 

“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, the composition of which
shall at all times satisfy the provisions of Section 162(m) of the
Code and shall consist of at least two directors who are “independent directors”
within the meaning of the listing rules of each national securities
exchange on which the Shares are listed, and “nonemployee directors” within the
meaning of Exchange Act Rule 16b-3.

 

“COMPANY” means Morningstar, Inc.,
an Illinois corporation, and any successor thereto as provided in Article 18.

 

“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.

 

“DISABILITY” shall mean

 

(a)                                 A physical or mental condition that would qualify a
Participant for a disability benefit under the long-term disability plan of the
Company applicable to him or her;

 

(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;

 

(c)                                 When used in connection with the exercise of an Incentive
Stock Option following termination of employment, disability within the meaning
of Code Section 22(e)(3); or

 

(d)                                 Such other condition as may be determined by the Committee
in its sole discretion to constitute Disability.

 

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

 

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“EMPLOYEE” means any person
employed by the Company or an Affiliate in a common law employee-employer
relationship.  A Participant shall not
cease to be an Employee for purposes of this Plan in the case of (i) any
leave of absence approved by the Company or (ii) transfers between
locations of the Company or among the Company, its Parent, any Subsidiary, 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 shall be sufficient to constitute “employment”
by the Company.

 

“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” of a Share on
a given date means:

 

(a)                                 the closing trading price of a Share on the primary national
securities exchange on which the Shares are listed on the last trading day
prior to the date as of which such value is being determined; or

 

(b)                                 if the Shares are not traded on any national securities
exchange, the mean between the closing bid and asked prices of a Share in the
over-the-counter market on the last trading day prior to the date as of which
such value is being determined; or

 

(c)                                 if those bid and asked prices are not available, then the
Fair Market Value as of any given date shall be determined in good faith 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.

 

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“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 a
notional Share that is earned based on the Participant’s attainment of certain
performance objectives specified in the Award Agreement, as described in Article 9.

 

“PERSONAL LEAVE” means a leave of
absence as described in Section 5.3

 

“PLAN” means the Morningstar, Inc.
2004 Stock Incentive Plan, as set forth in this document, and as amended from
time to time.

 

“PRIOR PLANS” means the 2001
Morningstar Stock Option Plan, as amended, the Amended and Restated 2000
Morningstar Stock Option Plan, and the Amended and Restated 1993 Morningstar
Stock Option Plan.  The Prior Plans were
merged into this Plan as of the Effective Date and stock options awarded under
the Prior Plans shall be governed by the terms of this Plan.

 

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

 

“RESTRICTED STOCK” means a
contingent grant of Shares awarded to a Participant pursuant to Article 8.  The Shares awarded to the Participant will
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 in cash or in Shares as specified in the Award
Agreement.  The RSUs awarded to the
Participant will vest according to the time-based or performance-based criteria
specified in the Award Agreement.

 

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“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.  For purposes of this Plan, the transfer of an
Employee from the Company to an Affiliate, from an Affiliate to the Company or
from an Affiliate to another Affiliate shall not be a termination of
Service.  However, if the Affiliate for
which an Employee, Director or Consultant is providing services ceases to be an
Affiliate of the Company due to a sale, transfer or other reason, and the
Employee, Director or Consultant ceases to perform services for the Company or
any Affiliate, the Employee, Director or Consultant shall incur a termination
of Service.

 

“SHARES” means the shares of
common stock, no 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).

 

“VESTED”
means, with respect to an Option, that such Option has become fully or partly
exercisable; provided, however, that notwithstanding its status as a Vested
Option, an Option shall cease to be exercisable pursuant to (and while
exercisable shall be subject to) such terms as are set forth herein and in the
relevant Award Agreement.  Similarly,
terms such as “Vest,” “Vesting,” and “Unvested” shall be interpreted
accordingly.

 

ARTICLE 3.       ADMINISTRATION

 

3.1        THE
COMMITTEE.  The Plan will be administered
by the Committee, or by any other committee appointed by the Board whose
composition satisfies 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 listing rules of
each national securities exchange on which the Shares are listed, 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 Employees, Directors and Consultants 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 

 

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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
Options and to determine the number of Shares subject to the Options 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 shareholders, all Affiliates,
Employees, Participants and their estates and beneficiaries.

 

3.4        CHANGE
IN CONTROL.  In the event of a Change in
Control, the Committee shall have the discretion to accelerate  the vesting of Awards, eliminate any
restrictions applicable to Awards, deem the performance measures to be
satisfied, or take such other action as it deems appropriate, in its sole
discretion.

 

ARTICLE 4.       SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

 

4.1        NUMBER
OF SHARES AVAILABLE FOR AWARDS.

 

(a)        Subject to adjustment as
provided below and in Sections 4.2 and 4.3, the maximum number of Shares that
may be issued or transferred to Participants under the Plan will be
5,628,843.  The maximum number of Shares
that may be issued or transferred to Participants as Incentive Stock Options is
1,000,000.  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 1,000,000
(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(a) are subject to adjustment as
provided in Section 4.3.

 

(b)        The Prior Plans shall be
merged into and continued in the form of this Plan as of the Effective
Date.  Awards made and Shares awarded
under the Prior Plans prior to the Effective Date, which remain outstanding on
the Effective Date, shall be governed by the terms of this Plan, but shall not
count against the number of Shares authorized under 4.1(a) above.  No additional awards will be made under any
Prior Plan on or after the Effective Date.

 

4.2        LAPSED
AWARDS.  Any Shares (a) subject to
an Award under the 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 in payment of any required income tax
withholding for the exercise of an Option or the vesting of 

 

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Restricted Stock awarded under the Plan will thereafter be
deemed to be available for Award.  Any
Shares (a) subject to an Award under a Prior 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 a Prior Plan
or in payment of any required income tax withholding for the exercise of an
Option awarded under a Prior Plan will not be available for Award under this
Plan or the Prior Plan.

 

4.3        ADJUSTMENTS
IN AUTHORIZED SHARES.

 

(a)        In the event of any
merger, reorganization, consolidation, recapitalization, separation,
liquidation, split-up, share combination, or other such change in the corporate
structure of the Company affecting the Shares, such adjustment shall be made in
the number and class of Shares which may be delivered under the Plan, and in
the number and class of and/or price of Shares subject to outstanding Awards
granted under the Plan, as may be determined to be appropriate and equitable by
the Committee, in its sole discretion, to prevent dilution or enlargement of
rights and provided that the number of Shares subject to any Award shall always
be a whole number.

 

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

 

ARTICLE 5.       ELIGIBILITY AND PARTICIPATION

 

5.1        ELIGIBILITY.  An Employee shall be deemed eligible for
participation upon such Employee’s first day of employment.  Additionally, non-Employee Directors and
Consultants and/or their representatives who are chosen from time to time at
the sole discretion of the Company to receive one or more Awards are also
eligible to participate in the Plan.

 

5.2        ACTUAL
PARTICIPATION.  Subject to the provisions
of the Plan, the Committee will, from time to time, select those Employees,
non-Employee Directors and Consultants to whom Awards will be granted, and will
determine the nature and amount of each Award.

 

5.3        PERSONAL
LEAVE STATUS.

 

(a)        Notwithstanding anything
in the Plan to the contrary, the Committee, in its sole discretion, reserves
the right to designate a Participant’s leave of absence as “Personal Leave.”  No Options shall be granted to a Participant
during Personal Leave.  A Participant’s
Unvested Options shall remain Unvested during such Personal Leave and the time
spent on such 

 

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Personal
Leave shall not count towards the Vesting of such Options.  A Participant’s Vested Options that may be
exercised pursuant to Section 6.6 hereof shall remain exercisable upon
commencement of Personal Leave until the earlier of (i) a period of one
year from the date of commencement of such Personal Leave; or (ii) the
remaining exercise period of such Options. 
Notwithstanding the foregoing, if a Participant returns to the Company
from a Personal Leave of less than one year and the Participant’s Options have
not lapsed, the Options shall remain exercisable for the remaining exercise
period as provided at the time of grant and subject to the conditions contained
herein.

 

(b)        The Committee, in its
sole discretion, may waive or alter the provisions of this Section 5.3
with respect to any Participant.  The
waiver or alteration of such provisions with respect to any Participant shall
have no effect on any other Participant.

 

ARTICLE 6.       OPTIONS

 

6.1        GRANT
OF OPTIONS.  Subject to the terms and
provisions of the Plan, Options may be granted to Employees, non-Employee
Directors and Consultants in the number, and upon the terms, and at any time
and from time to time, as determined by the Committee.

 

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

 

6.3        EXERCISE
PRICE.  The Exercise Price for each Share
subject to an Option will be determined by the Committee; provided, however,
that the Exercise Price of Incentive Stock Options shall in all cases be equal
to or greater than 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.  Subject to compliance with
Code Section 409A, 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.

 

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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, by
delivering an electronic notice, of exercise to the Company 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 Shares owned by the Participant for at least six months and duly
endorsed for transfer to the Company, or Shares issuable to the Participant
upon exercise of the Option; or (c) any combination of (a) and (b);
or (d) by any other means the Committee determines to be consistent with
the Plan’s purposes and applicable law.

 

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 owns stock possessing more than ten (10%) percent of the total combined
voting power of all classes of the Company or any Affiliate, then:  (i) the Exercise Price for each Share
subject to such Option will be at least one hundred ten percent (110%) of the
Fair Market Value of the Share on the date of grant; 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 after the tenth anniversary of the date the
Company adopted the Plan or the Company’s shareholders approved the Plan,
whichever is earlier.

 

(e)           An Incentive Stock Option must be exercised, if at all, by
the earliest of (i) the time specified in the Award Agreement, (ii) three
months after the Participant’s termination of Service for a reason other than
death or 

 

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Disability,
or (iii) twelve months after the Participant’s termination of Service for
death or Disability.

 

6.9        RESTRICTIONS
ON SHARE TRANSFERABILITY.

 

(a)        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.

 

6.10      TERMINATION
OF SERVICE.  Unless the applicable Award
Agreement provides otherwise and subject to Section 6.8(e):

 

(a)        In the event that the
Service of a Participant is terminated by the Company for any reason other than
Cause, Disability or death, Options that are exercisable at the time of such
termination shall remain exercisable until the earlier of (i) the
remaining exercise period or (ii) one year from the date of such Service
termination.  Options that are not
exercisable at the time of such termination of Service shall expire at the
close of business on the date of such termination.

 

(b)        In the event that the
Service of a Participant with the Company terminates on account of the
Disability or death of the Participant, Options that are exercisable at the
time of such termination shall remain exercisable until the expiration of the
term of the Option.  Options that are not
exercisable at the time of such termination shall expire at the close of
business on the date of such termination.

 

(c)        In the event of
termination of a Participant’s Service for Cause, all outstanding Options
granted to such Participant shall expire as of the commencement of business on
the date of such termination.

 

(d)        In the event of a
Participant’s termination of Service for any reason other than those described
in subsections (a), (b) and (c) of this Section 6.10, Options
that are exercisable at the time of such termination shall remain exercisable
until the earlier of (i) the remaining exercise period or (ii) 30
days from the date of such termination. 
Options that are not exercisable at the time of such termination shall
expire at the close of business on the date of such termination.

 

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 

 

56

 

contrary,
no additional Options will Vest after a Participant’s Service ceases or has
terminated for any reason, whether such cessation or termination is lawful or
unlawful.

 

ARTICLE 7.       STOCK APPRECIATION RIGHTS

 

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

 

Within the limits of Article 4,
the Committee will have sole discretion to determine the number of SARs granted
to each Participant and, consistent with the provisions of the Plan, to
determine the terms and conditions pertaining to SARs.

 

The grant price for any SAR shall
be determined by the Committee, but in the case of a Tandem SAR, the grant
price shall not be less than the 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 respect to 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 in 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.

 

57

 

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 Code Section 409A,
the Committee may, at any time and from time to time, allow (or require, as to
bonuses) selected Employees and Directors 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 Restricted Stock Units.  The Committee will establish rules and
procedures for the deferrals, as it deems appropriate.

 

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
no less than the amount of the deferral divided by the Fair Market Value on
that date, rounded to the nearest whole unit.

 

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 11,
the Committee may impose such other conditions or restrictions on any
Restricted Stock or Restricted Stock Units as it deems advisable, including,
without limitation, restrictions based upon the achievement of specific
performance objectives (Company-wide, 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 to the Participant in cash or Shares, as
specified in the Award Agreement, 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.

 

58

 

8.7                              DIVIDENDS AND OTHER DISTRIBUTIONS.  During the Restriction Period, Participants
awarded Shares of Restricted Stock or Restricted Stock Units hereunder will 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
and specifies in the applicable Award Agreement.

 

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, and may reflect, among other things,
distinctions based on the reasons for termination of Service.

 

ARTICLE 9.                            PERFORMANCE SHARES

 

9.1                              GRANT OF PERFORMANCE SHARES. 
Subject to the terms of the Plan, Performance Shares may be granted to
Participants in such amounts and upon such terms, and at any time and from time
to time, as the Committee determines. 
The Award of Performance Shares may be granted 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 shall be a notional Share having a value as of
any given date equal to the Fair Market Value of a Share on such date.  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
earned by 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 

 

59

 

function of the extent to which the corresponding
performance objectives have been achieved.

 

9.4                              AWARD AGREEMENT.  Each
grant of Performance Shares will be evidenced 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 (i) a cash
payment equal to the Fair Market Value of the number of Shares earned,
determined as of the last day of the Performance Period or such other date as
may be specified in the applicable Award Agreement, (ii) in Shares, or (iii) 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. 
Each Award Agreement will set forth the extent to which the Participant
has the right to retain Performance Shares 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 Performance Shares, and may reflect,
among other things, distinctions based on the reasons for termination of
Service.

 

ARTICLE 10.                      PERFORMANCE MEASURES

 

10.1                       Unless and until the Committee proposes and the Company’s
shareholders 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)                                     cash flow, including operating cash flow, free cash flow,
discounted cash flow return on investment, and cash flow in excess of cost of
capital;

(g)                                 earnings per Share;

(h)                                 return on shareholders’ equity (absolute or peer-group
comparative);

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

(j)                                     absolute and/or relative return on common shareholders’
equity;

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

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

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

 

60

 

(n)                                 customer satisfaction;

(o)                                 expense reduction;

(p)                                 ratio of operating expenses to operating revenues;

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

(r)                                    revenue backlog; and

(s)                                 margins realized on delivered services.

 

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.

 

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
shareholder approval, the Committee will have sole discretion to make such
changes without obtaining shareholder approval. 
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 applicable
restrictions set forth in 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, to the extent permitted by Code Section 409A,
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 an Affiliate is able to deduct the 

 

61

 

payment or
delivery under the Code, or until such other time at which payment may be made
in accordance with Code Section 409A.

 

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, Consultant or Director will have the right to receive an Award under
this Plan, or, having received any Award, to receive a future Award.

 

ARTICLE 14.                     AMENDMENT, MODIFICATION AND TERMINATION

 

14.1                       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,
subject to any shareholder approval required by applicable law, rule or
regulation, including Code Section 162(m) and the rules of the
principal national stock exchange on which the Shares are then traded.  The Committee will not 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), without the approval of the shareholders of
the Company in accordance with the rules of the principal national stock
exchange on which the Shares are then traded.

 

Subject to the terms and
conditions of the Plan, the Committee may modify, extend or renew outstanding
Awards under the Plan, or accept the surrender of outstanding Awards (to the
extent not already exercised) and grant new Awards in substitution of them (to
the extent not already exercised).  The
Committee will not, however, modify any outstanding Option or SAR so as to
specify a lower Exercise Price or grant price, without the approval of the
Company’s shareholders.  Notwithstanding
the foregoing, no modification of an Award will materially alter or impair any
rights or obligations under any Award already granted under the Plan, without
the prior written consent of the Participant.

 

14.2                       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
shall, 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 

 

62

 

Performance-Based Exception, the Committee will take care
not to make an adjustment that would disqualify the Award.

 

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

 

14.4                       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 14,
make any adjustments it deems appropriate.

 

ARTICLE 15.                      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 paragraph (a) 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.

 

(a)                                 Notwithstanding the foregoing, with respect to any
Nonstatutory Stock Options, each Participant shall be permitted at all times 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 lifetime or to take effect
upon (or as a consequence of) his or her death, to his or her spouse or
children.  Gifts in trust shall be deemed
gifts to every beneficiary and contingent beneficiary, and so shall not be
permitted under this paragraph (a) 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.

 

63

 

(b)                                 Any Options issued or transferred under this Article 15
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.

 

ARTICLE 16.                      WITHHOLDING

 

16.1                       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.

 

16.2                       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 in accordance with
procedures prescribed by the Company and permitted under the Code or other
applicable tax law) 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 17.                      INDEMNIFICATION

 

Each person who is or has been a
member of the Committee or the Board, and any officer or Employee 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.

 

64

 

ARTICLE 18.                      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.

 

ARTICLE 19.                      BREACH OF RESTRICTIVE COVENANTS

 

An Award Agreement may provide
that, notwithstanding any other provision of this Plan to the contrary, if the
Participant breaches any competition, nonsolicitation or nondisclosure
provisions contained in 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

 

(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 20.                      LEGAL CONSTRUCTION

 

20.1                       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.

 

20.2                       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.

 

20.3                       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.

 

20.4                       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.

 

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 

 

65

 

Option or
SAR will not be exercisable, and the Company will not be required to issue
Shares.  The Company may require a
Participant to make written representations it deems necessary or desirable to
comply with applicable securities laws. 
No person who acquires Shares under the Plan may sell the Shares, unless
he or she makes the offer and sale pursuant to an effective registration
statement under the Exchange Act, which is current and includes the Shares to
be sold, or an exemption from the registration requirements of the Exchange
Act.

 

20.5                       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 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, and (ii) grant Awards to such Participants in accordance with those
rules.

 

20.6                       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.

 

20.7                       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.

 

20.8                       NO LIMITATION ON RIGHTS OF THE COMPANY.  The grant of the Award does not and will not
in any way affect the right or power of the Company to make adjustments,
reclassifications or changes in its capital or business structure, or to merge,
consolidate, dissolve, liquidate, sell or transfer all or any part of its
business or assets.

 

20.9                       PARTICIPANT TO HAVE NO RIGHTS AS A SHAREHOLDER.  Before the date as of which he or she is
recorded on the books of the Company as the holder of any Shares underlying an
Award, a Participant will have no rights as a shareholder with respect to those
Shares.

 

66Exhibit
10.1

 

Strictly private and confidential -

Addressee only

 

Mr
Stephen P. McGill

Chairman and
Chief Executive Officer

Aon Risk
Services Worldwide

200 E.
Randolph Street

Chicago,
Illinois  60601

 

	
  03 August
  2009

  	
   

  	
  ID:
  0515049

  

 

Dear Steve

 

Re:  Variation of your executive
agreement

 

I set out
below the amendments to the terms and conditions of your employment with Aon
Limited (“the Company”) as set out in your offer letter and Executive Agreement
dated 22 April 2005, and as amended by your Overseas Assignment Letter
dated 24 July 2006, the Variation Letter dated 31 December 2007, and
the Pension Letter summarizing your pension arrangements dated 30 January 2008
(together known as your “Employment Terms and Conditions”).

 

1.                                      Overseas
Assignment:  The terms of your overseas
assignment will continue as outlined in your Overseas Assignment Letter other
than as outlined below.

 

2.                                      Duration of
Overseas Assignment:  Your
overseas assignment is expected to last for a fixed term period until 1 January 2013
(the “Fixed Term Period”), subject to the provisions on contract renewal,
termination of assignment and employment termination as set forth in the
applicable Employment Terms and Conditions.

 

3.                                      Salary:  To alleviate the administrative burdens
related to significant shifts in the foreign exchange rates between the U.S.
and the U.K., Paragraph 6 of the Schedule to your Executive Agreement and
paragraph 2 in your Overseas Assignment Letter shall be deleted and replaced
with the following:

 

“6.                                 SALARY:  Effective 1 May 2009, USD 1,100,000 per
annum payable monthly.

 

Should you
repatriate to the U.K. during the Fixed Term Period, the final salary
(excluding bonus and allowances) that you will be receiving during your
assignment will become your salary in the U.K., and your total remuneration
package will be reassessed to ensure that it is in line with local market
remuneration.”

 

4.             Pension:  Your existing pension
arrangements will be discontinued effective 1 July  2009. All clauses in
your Employment Terms and Conditions relevant to your pension, including clause
16.1 and clause 10 in the Schedule to your Executive Agreement, clause 7 in
your Overseas Assignment Letter, clause 4 in your Variation Letter and the
whole of the Pension Letter shall be deleted and replaced with the following:

 

“Beginning 1 January 2010
and on each subsequent anniversary of such date during the Fixed Term Period,
the Company will pay to you a lump sum in USD equivalent to :-

 

 

the prevailing
Aon Limited Scottish Widows GPPP Tier 2 (or equivalent) employer contribution
from time to time (currently 10% of salary excluding bonuses and allowances),
plus an amount representing the sum you would have received as a matching
amount from the Company if you had made the maximum matched contribution level
prevailing from time to time (currently 5% of salary excluding bonuses and
allowances), both figures being subject to the cap on pensionable salary
prevailing from time to time (currently £300,000) giving a current lump sum
payment of the USD equivalent of GBP 45,000 per annum, calculated using the
foreign exchange rate on the date of such payment.  No later than 31 December 2009, the
Company will pay to you a lump sum calculated in accordance with the previous
sentence but reduced by 50% to represent the partial-year allocation due to you
for the period commencing 1 July 2009 and ending 31 December 2009.  The sums shall be subject to such deductions,
including tax, as required by applicable laws. 
The Company shall pay no other sum to you in respect of pension benefit
whether into a pension scheme or otherwise.

 

5.               UK Benefits:
Your eligibility to UK benefits from the Company, other than pension, shall
continue at the current level as long as legally permissible under applicable
laws.  You shall  continue to contribute to the UK National
Insurance Scheme for the duration of your employment.

 

6.               Expatriate Allowance:  Your existing annual expatriate allowance of
USD 300,000 shall continue; provided, however, that all taxes due on such
amount will become payable by you beginning 1 January 2010.  This allowance will cease upon the earlier of
your return to work for the Company in the U.K. or the end of the Fixed Term
Period.

 

7.               Income Taxes:  Effective 1 January 2010, you agree
that your remuneration will not be subject to the Company’s tax equalization
policy. Therefore, effective as of such date Clause 5 of, and Schedule A to,
your Overseas Assignment Letter will cease to apply to your employment, save
the provisions regarding income tax return preparation.  Beginning 1 January 2010, you will be
responsible for any tax liability imposed under U.S. and UK tax laws in
relation to all of your tax liability including in respect of your remuneration
and benefits package from the Company and any other income or benefits received
by you.

 

Please sign
and date this letter and return one copy to me to confirm your understanding of
this letter and acceptance of the changes to your Employment Terms and
Conditions set out above.

 

Yours
sincerely,

 

	
  /s/ Peter
  Harmer

  	
   

  

 

Peter
Harmer

CEO  Aon
Limited

 

2

 

I understand
and accept the amendments to my Employment Terms and Conditions as set out
above.

 

	
  /s/ Stephen
  P. McGill

  	
   

  	
  3rd August
  2009

  
	
  Stephen P.
  McGill

  	
  Date

  

 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}]]