Document:

EX-10.2

 

Exhibit 10.2

Schedule of Director Fees

     Effective commencing with fiscal 2007, members of the Board of Directors will be compensated
as follows:

	1.	 	Each non-employee member of the Company’s Board of Directors will
receive an annual retainer of $11,000, paid in quarterly installments.
	 
	2.	 	In addition to the annual retainer, each non-employee member of the
Company’s Board of Directors will receive the following fees per
meeting attended:

	 	 	 	 	 
	    Meeting Type	 	                  Fee Per Meeting
	Board Meeting

	 	$	1,000	 
	Telephonic Board Meeting

	 	$	500	 
	Committee Meeting

	 	$	500	 

	3.	 	Each board member is entitled to reimbursement for all reasonable
out-of-pocket expenses incurred in connection with his or her
attendance at a board or committee meeting.
	 
	4.	 	Each non-employee member of the Company’s Board of Directors will
receive annually an option to purchase 1,000 shares of the Company’s
common stock, becoming fully vested at and exercisable on the first
anniversary of the date of grant and expiring on the fifth anniversary
of the date of grant.
	 
	5.	 	Upon initial election to the Company’s Board of Directors, each
non-employee director receives an option to purchase 5,000 shares of
the Company’s common stock, becoming vested and exercisable in equal
increments on the first, second and third anniversaries of the date of
grant and expiring on the fifth anniversary of the date of grant.Stanley, Inc. Employee Stock Purchase Plan

    Exhibit
      4.3

     

    
 

    STANLEY,
      INC. EMPLOYEE STOCK PURCHASE PLAN

    (EFFECTIVE
       OCTOBER
      23,
      2006)

     

    ARTICLE
      I

     

    Establishment,
      Duration and Purpose

     

    SECTION
      1.01. Establishment
      and Duration of the Plan.
      The
      Company hereby establishes the Plan to be effective as of October 23, 2006
      (the “Effective Date”), provided that the Plan shall be subject to approval by
      the stockholders of the Company within 12 months after the Plan is adopted.
      Such stockholder approval shall be obtained in the manner and to the degree
      required under applicable laws. The Plan shall remain in effect until the
      earlier of: (a) the date that no additional Shares are available for
      issuance under the Plan, (b) the date that the Plan has been terminated in
      accordance with Article XVII or (c) the date that is the 10th
      anniversary of the Effective Date.

     

    SECTION
      1.02. Purpose
      of the Plan.
      The
      purpose of the Plan is to provide employees of the Company and its Subsidiaries
      with an opportunity to purchase Common Stock. It is the intention of the Company
      to have the Plan qualify as an “employee stock purchase plan” under
      Section 423 of the Code. The provisions of the Plan shall, accordingly, be
      construed so as to extend and limit participation in a manner consistent with
      the requirements of that section of the Code.

     

     

    ARTICLE
      II

     

    Definitions

     

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

     

    “Administrator”
      means the person or entity designated by the Board to administer the
      Plan.

     

    “Agent”
      means the person or entity designated by the Administrator to serve as the
      custodian and/or recordkeeper for purposes of the Plan.

     

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

     

    “Code”
      means the Internal Revenue Code of 1986, as amended from time to time.
      References to the Code shall include the valid and binding governmental
      regulations, court decisions and other regulatory and judicial authority issued
      or rendered thereunder.

     

    
      
         

         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Common
      Stock” means the common stock, par value $0.01, of the Company.

     

    “Company”
      means Stanley, Inc., a Delaware corporation.

     

    “Compensation”
      means total cash compensation received by an Employee from the Company or a
      Subsidiary, including regular compensation such as salary, wages, overtime,
      shift differentials, bonuses (other than bonuses offered in connection with,
      and
      as an inducement for, the commencement of employment), commissions and incentive
      compensation, but excluding relocation payments or reimbursements, expense
      reimbursements, tuition or other reimbursements, automobile allowances, housing
      allowances, cash payments in lieu of sick or vacation time benefits and income
      realized as a result of participation in any stock option, stock purchase or
      similar plan of the Company or any Subsidiary.

     

    “Continuous
      Status as an Employee” means the absence of any interruption or termination of
      service as an Employee. Continuous Status as an Employee shall not be considered
      interrupted in the case of (a) sick leave, (b) military leave,
      (c) any other leave of absence approved by the Company, provided
      that
      such leave is for a period of not more than 90 days, unless reemployment
      upon the expiration of such leave is guaranteed by contract or statute, or
      (d) transfers between locations of the Company or between the Company and
      its Subsidiaries.

     

    “Contributions”
      means all amounts credited to the account of a participant pursuant to the
      Plan.

     

    “Employee”
      means any person, including an officer, who is customarily employed for at
      least
      20 hours per week and more than five months in a calendar year by the
      Company or one of its Subsidiaries.

     

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

     

    “Fair
      Market Value” of a Share means, as of any date, (a) the mean between the high
      and low sales prices of the Shares (i) as reported by the NYSE for such
      date or (ii) if the Shares are listed on any other national stock exchange,
      as reported on the stock exchange composite tape for securities traded on such
      stock exchange for such date or, with respect to each of clauses (i) and
      (ii), if there were no sales on such date, on the closest preceding date on
      which there were sales of Shares or (b) in the event there shall be no
      public market for the Shares on such date, the fair market value of the Shares
      as determined in good faith by the Board.

     

    “Offering
      Date” means the first business day of each Offering Period of the
      Plan.

     

    “Offering
      Period” has the meaning set forth in Section 6.01.

     

    
      
         

        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Plan”
      means this employee stock purchase plan set forth herein known as the “Stanley,
      Inc. Employee Stock Purchase Plan”, as the same may be amended from time to
      time.

     

    “Purchase
      Date” means the last business day of each Purchase Period of the
      Plan.

     

    “Purchase
      Period” has the meaning set forth in Section 6.02.

     

    “Purchase
      Price” means, with respect to a Purchase Period, an amount equal to 95% of the
      Fair Market Value of a Share on the Purchase Date.

     

    “Share”
      means a share of Common Stock, as adjusted in accordance with Article XVI,
      or any other security of the Company into which such a share shall be changed
      pursuant to Article XVI.

     

    “Subsidiary”
      means any corporation (or other form of business association that is treated
      as
      a corporation for tax purposes) that is designated by the Administrator from
      time to time from a group consisting of the Company and its subsidiary
      corporations, for the purposes of participation in the Plan, of which voting
      stock or voting ownership interest, as applicable, having more than 50% of
      the
      voting power are owned or controlled, directly or indirectly, by the Company,
      whether or not such corporation now exists or is hereafter organized by the
      Company or a Subsidiary. The participating Subsidiaries are set forth in
      Appendix A hereto, and are subject to change by the Administrator.

     

     

    ARTICLE
      III

     

    Administration

     

    SECTION
      3.01. Administration.
      The Plan
      shall be administered by the Administrator. Except as limited by law, or by
      the
      Articles of Incorporation or By-laws of the Company, and subject to the
      provisions herein, the Administrator shall have full and exclusive discretionary
      power to construe, interpret and apply the terms of the Plan and any agreement
      or instrument entered into under the Plan, to determine eligibility, to
      adjudicate all disputed claims under the Plan, and to establish, amend or waive
      rules and regulations for the Plan’s administration. Further, the Administrator
      shall make all other determinations which may be necessary or advisable for
      the
      administration of the Plan. Every finding, decision and determination made
      by
      the Administrator shall, to the fullest extent permitted by law, be final and
      binding upon all parties. Without stockholder approval and without regard to
      whether any participant rights may be considered to have been adversely
      affected, the Administrator shall be entitled to limit the frequency and/or
      number of changes in the amount withheld during an Offering Period, permit
      payroll withholding in excess of the amount designated by a participant in
      order
      to adjust for delays or mistakes in the Company’s processing of properly
      completed withholding elections, establish reasonable waiting and adjustment
      periods and/or accounting and crediting
      procedures to ensure that amounts applied toward the purchase of Common Stock
      for each participant properly correspond with amounts withheld from the
      participant’s Compensation, and establish such other limitations or procedures
      as the Administrator determines in its sole discretion are advisable and
      consistent with the Plan and with the requirements of the
      Code.

     

    
      
         

         

        
        

      

      
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    ARTICLE
      IV

     

    Shares
      Subject to the Plan

     

    SECTION
      4.01. Shares
      Available.
      Subject
      to adjustment as provided in Article XVI, the maximum number of Shares
      which shall be made available for sale under the Plan shall be
      400,000 Shares. If the Administrator determines that, on a given Purchase
      Date, the number of Shares with respect to which options are to be exercised
      may
      exceed (a) the number of Shares that were available for sale under the Plan
      on the Offering Date of the applicable Offering Period or (b) the number of
      Shares available for sale under the Plan on such Purchase Date, the
      Administrator may in its sole discretion provide that the Company shall
      make a pro rata allocation of the Shares available for purchase on such Offering
      Date or Purchase Date, as applicable, in as uniform a manner as shall be
      practicable and as it shall determine in its sole discretion to be equitable
      among all participants exercising options to purchase Shares on such Purchase
      Date, and (i) continue all Offering Periods then in effect or
      (ii) terminate any or all Offering Periods then in effect pursuant to
      Article XVII. The Company may make a pro rata allocation of the Shares
      available on the Offering Date of any applicable Offering Period pursuant to
      the
      preceding sentence, notwithstanding any authorization of additional Shares
      for
      issuance under the Plan by the Company’s stockholders subsequent to such
      Offering Date.

     

    SECTION
      4.02. Voting
      and Dividend Rights.
      A
      participant shall have no interest, right to receive dividends or voting right
      in Shares covered by any option until such option has been
      exercised.

     

    SECTION
      4.03. Registration
      of Shares.
      Shares
      to be delivered to a participant under the Plan will be registered in the name
      of the participant or, if directed by the participant in writing, in the name
      of
      the participant and his or her spouse.

     

     

    ARTICLE
      V

     

    Eligibility

     

    SECTION
      5.01. General.
      Any
      person who is an Employee as of the Offering Date of a given Offering Period
      shall be eligible to participate in such Offering Period under the Plan, subject
      to the requirements of Section 7.01; provided that the Administrator may
      determine from time to time that certain categories of Employees permitted
      pursuant to Section 423(b)(4) of the Code to be excluded from participation
      in
      an “employee stock purchase plan” under Section 423 of the Code shall not be
      eligible to participate in an Offering Period; provided further that individual
      Employees may not be excluded other than on a category-by-category
      basis.

     

    
      
         

         

        
        

      

      
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    SECTION
      5.02. Limitations
      on Option Grants.
      Any
      provisions of the Plan to the contrary notwithstanding, no Employee shall be
      granted an option under the Plan (a) if, immediately after the grant (the
      time of which shall be determined under Section 423 of the Code), such Employee
      (or any other person whose stock would be attributed to such Employee pursuant
      to Section 424(d) of the Code) would own capital stock of the Company
      and/or hold outstanding options to purchase stock possessing 5% or more of
      the
      total combined voting power or value of all classes of stock of the Company
      or
      of a Subsidiary, or (b) if such option would permit such Employee’s rights
      to purchase stock under all employee stock purchase plans of the Company and
      its
      Subsidiaries that are intended to qualify as “employee stock purchase plans”
under Section 423 of the Code to accrue at a rate that exceeds $25,000 of
      the Fair Market Value of such stock (determined at the time such option is
      granted for purposes of Section 423 of the Code) for each calendar year in
      which
      such option is outstanding at any time.

     

     

    ARTICLE
      VI

     

    Offering
      Periods and Purchase Periods

     

    SECTION
      6.01. Offering
      Periods.
      The Plan
      shall be implemented by a series of offering periods (“Offering Periods”) of a
      duration and frequency specified by the Administrator from time to time and
      communicated to Employees. Notwithstanding the foregoing, no Offering Period
      shall exceed five years in duration.

     

    SECTION
      6.02. Purchase
      Periods.
      Each
      Offering Period shall consist of one or more purchase periods (“Purchase
      Periods”) of a duration and frequency specified by the Administrator from time
      to time and communicated to Employees.

     

     

    ARTICLE
      VII

     

    Participation

     

    SECTION
      7.01. Participation.
      An
      eligible Employee may become a participant in the Plan by completing a
      subscription agreement in the manner specified by the Administrator and
      submitting it to the Administrator prior to the applicable Offering Date. The
      subscription agreement shall set forth the percentage of the participant’s
      Compensation (subject to Article VIII) to be paid as Contributions pursuant
      to the Plan. A participant’s subscription agreement shall remain in effect for
      successive Purchase Periods unless modified as provided in Section 8.02 or
      terminated as provided in Article X.

     

     

    
      
         

         

        
        

      

      
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    SECTION
      7.02. Contributions.
      Payroll
      deductions, if any, shall commence on the first payroll paid following the
      Offering Date and shall end on the last payroll paid on or prior to the last
      Purchase Date of the last Offering Period to which the subscription agreement
      is
      applicable, unless sooner terminated as provided in Article X.

     

     

    ARTICLE
      VIII

     

    Method
      of Payment for Purchase of Shares

     

    SECTION
      8.01. Payroll
      Deduction.
      Subject
      to Section 8.03, a participant shall elect to have payroll deductions made
      on
      each payday during an Offering Period in an amount not less than 1% and not
      more
      than 10% (or such other maximum percentage as the Administrator may establish
      from time to time before an Offering Date) of such participant’s Compensation on
      each payday during the Offering Period. All payroll deductions made by a
      participant shall be credited to his or her account under the Plan. Unless
      otherwise provided by the Administrator, no participant may make any
      Contributions to the Plan other than on a payroll deduction basis.

     

    SECTION
      8.02. Discontinuation
      of Participation; Change in Payroll Deduction Rate.
      A
      participant may discontinue his or her participation in the Plan as provided
      in
      Article X or, on one occasion only during an Offering Period, may change his
      or
      her payroll deduction rate with respect to the Offering Period, by completing
      and submitting to the Administrator a new subscription agreement authorizing
      a
      change in the payroll deduction rate. Any change in the payroll deduction rate
      pursuant to the preceding sentence shall be effective as of the beginning of
      the
      next calendar month following the date the new subscription agreement is
      submitted to the Administrator, provided that such date of submission is at
      least 10 business days prior to the first day of such next calendar month.
      If the new subscription agreement is not submitted to the Administrator at
      least
      10 business days prior to the first day of the next calendar month, then the
      change shall be effective as of the beginning of the next succeeding calendar
      month.

     

    SECTION
      8.03. Required
      Adjustments to Payroll Deductions.
      Notwithstanding the foregoing, to the extent necessary to comply with
      Section 423(b)(8) of the Code and Section 5.02, a participant’s
      payroll deductions may be decreased by the Company to 0% at any time. Subject
      to
      Section 5.02, payroll deductions shall recommence at the rate provided in such
      participant’s subscription agreement at the beginning of the first Purchase
      Period which is scheduled to end in the following calendar year, unless
      terminated by the participant as provided in Article X.

     

    SECTION
      8.04. No
      Interest.
      No
      interest shall accrue on the Contributions of a participant in the
      Plan.

     

    SECTION
      8.05. Tax
      Withholding.
      At the
      time an option is exercised, in whole or in part, by a participant or at the
      time some or all of the Common Stock issued under the Plan is disposed of by
      a
      participant, the participant must make adequate provision
      for the Company’s Federal, state or other tax withholding obligations, if any,
      which arise upon the exercise of the option or the disposition of the Common
      Stock. At any time, the Company may, but shall not be obligated to, withhold
      from a participant’s compensation the amount necessary for the Company to meet
      applicable withholding obligations, including any withholding required to make
      available to the Company any tax deductions or benefits attributable to sale
      or
      early disposition of Common Stock by the participant.
       

       

    

    
      
         

         

        
        

      

      
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    ARTICLE
      IX

     

    Grant
      and Exercise of Options

     

    SECTION
      9.01. Grant
      of Options.
      On the
      Offering Date of each Offering Period, but subject to the conditions in the
      Plan, each eligible Employee participating in such Offering Period shall be
      granted an option to purchase on each Purchase Date within such Offering Period
      a number of Shares determined by dividing (a) such Employee’s Contributions
      for the applicable Purchase Period accumulated prior to such Purchase Date
      and
      retained in the participant’s account as of the Purchase Date by (b) the
      applicable Purchase Price.

     

    SECTION
      9.02. Exercise
      of Options.
      Unless a
      participant withdraws from the Plan as provided in Article X, and subject to
      the
      conditions in the Plan, his or her option for the purchase of Shares will be
      exercised automatically on each Purchase Date, and the maximum number of whole
      Shares subject to the option will be purchased at the applicable Purchase Price
      with the accumulated Contributions in his or her account. No fractional Shares
      shall be issued, and any Contributions accumulated in a participant’s account
      which are not sufficient to purchase a whole Share shall be retained in the
      participant’s account for the subsequent Purchase Period, subject to earlier
      withdrawal by the participant as provided in Article X. Any other excess
      Contributions that may not be used to purchase Shares on a Purchase Date
      (because such purchase would not comply with Section 423 of the Code or would
      otherwise exceed applicable Plan limitations) shall be returned to the
      participant. The Shares purchased upon exercise of an option hereunder shall
      be
      deemed to be issued to the participant on the Purchase Date. During his or
      her
      lifetime, a participant’s option to purchase Shares hereunder is exercisable
      only by him or her.

     

    SECTION
      9.03. Custody
      of Shares.
      The
      Administrator shall hold (or shall cause the Agent to hold) Shares purchased
      by
      a participant under the Plan unless (a) such participant makes a written
      request for delivery of the stock certificates for such Shares or (b) the
      Administrator decides, in its sole discretion, to deliver (or cause to be
      delivered) stock certificates for such Shares to such participant. For so long
      as Shares are held by the Administrator or the Agent on behalf of a participant,
      any cash dividends received with respect to such Shares will be used to purchase
      additional Shares for such participant (without any discount). Any dividend
      or
      Shares issued pursuant to a stock split
      with respect to Shares held on behalf of a participant shall be credited to
      the
      participant on a proportionate basis.

     

    
      
         

         

        
        

      

      
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    SECTION
      9.04. Participants’
      Rights in the Stock.
      After
      the issuance of stock certificates for Shares to a participant, the participant
      shall have all rights in respect of such certificates and such Shares, and
      neither the Agent nor the Company shall have any responsibility with respect
      to
      such certificates or such Shares.

     

    SECTION
      9.05. Voting;
      Communications.
      For so
      long as Shares are held by the Administrator or the Agent on behalf of a
      participant, the Administrator shall (or shall cause the Agent to) forward
      to
      such participant any proxy form received in respect of such Shares. In the
      absence of voting directions from a participant, none of the Company, the
      Administrator, the Agent and any of their designees shall vote Shares held
      on
      behalf of such participant. To the extent required by applicable law, for so
      long as Shares are held by the Administrator or the Agent on behalf of a
      participant, the Administrator shall (or shall cause the Agent to) forward
      to
      such participant all other communications from the Company to its stockholders
      generally.

     

     

    ARTICLE
      X

     

    Withdrawal

     

    SECTION
      10.01. Voluntary
      Withdrawal.
      A
      participant may withdraw all but not less than all the Contributions credited
      to
      his or her account under the Plan at any time by giving written notice to the
      Company, in the form and manner as directed by the Company, at least
      10 business days prior to a Purchase Date. All of the participant’s
      Contributions credited to his or her account will be paid to him or her promptly
      after receipt of his or her notice of withdrawal and his or her option for
      the
      current Purchase Period will automatically terminate upon such receipt, and
      no
      further Contributions by such participant for the purchase of Shares will be
      permitted during the Offering Period.

     

    SECTION
      10.02. Termination
      of Employment.
      Upon
      termination of a participant’s employment during an Offering Period for any
      reason, including retirement or death, the Contributions credited to his or
      her
      account will be returned to him or her or, in the case of his or her death,
      to
      the person or persons entitled thereto under Article XI, and his or her
      option will automatically terminate. For purposes of the Plan, a transfer of
      a
      participant’s employment between the Company and a Subsidiary, or between
      Subsidiaries, shall not be deemed to be a termination of
      employment.

     

    SECTION
      10.03. Change
      in Status.
      In the
      event an Employee fails to remain in Continuous Status as an Employee of the
      Company for at least 20 hours per week during the Offering Period in which
      the Employee is a participant, he or she will be deemed to have elected to
      withdraw from the Plan and the Contributions credited to his or her account
      will
      be returned to him or her and his or her option will automatically
      terminate.

     

     

    
      
         

         

        
        

      

      
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    SECTION
      10.04. Future
      Participation.
      A
      participant’s withdrawal from an Offering Period will not have any effect upon
      his or her eligibility to participate in a succeeding Offering Period or in
      any
      similar plan which may hereafter be adopted by the Company.

     

     

    ARTICLE
      XI

     

    Beneficiary
      Designation

     

    A
      participant may file a written designation of a beneficiary or beneficiaries
      (who may be named contingently or successively) who are to receive any Shares
      and/or cash, if any, from the participant’s account under the Plan in the event
      of such participant’s death prior to delivery to such participant of such Shares
      and/or cash, if any. Each such designation shall revoke all prior designations
      by the same participant, shall be in a form prescribed by the Company, and
      shall
      be effective only when filed by the participant in writing with the Company
      during the participant’s lifetime. In the absence of any such designation,
      benefits remaining unpaid at the participant’s death shall be paid to the
      participant’s estate.

     

     

    ARTICLE
      XII

     

    Transferability

     

    Neither
      Contributions credited to a participant’s account nor any rights with regard to
      the exercise of an option or to receive Shares under the Plan may be assigned,
      transferred, pledged or otherwise disposed of in any way (other than by will
      or
      the laws of descent and distribution, or as provided in Article XI) by the
      participant. Any such attempt at assignment, transfer, pledge or other
      disposition shall be without effect, except that the Company may treat such
      act
      as an election to withdraw funds in accordance with Article X.

     

     

    ARTICLE
      XIII

     

    Use
      of
      Funds

     

    All
      Contributions received or held by the Company under the Plan may be used by
      the
      Company for any corporate purpose, and the Company shall not be obligated to
      segregate such Contributions.

     

    
      
         

         

        
        

      

      
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    ARTICLE
      XIV

     

    Participant
      Accounts; Reports

     

    Individual
      accounts will be maintained for each participant in the Plan. Statements of
      account will be given to participants at least quarterly, which statements
      will
      set forth the amounts of Contributions, the per Share Purchase Price, the number
      of Shares purchased and the remaining cash balance, if any.

     

     

    ARTICLE
      XV

     

    Rights
      of Participants

     

    SECTION
      15.01. Limitations
      on Rights of Participants.
      The Plan
      does not create, directly or indirectly, any right for the benefit of any
      Employee or class of Employees to purchase any Shares from the Company (other
      than as expressly provided in, and subject to the terms and conditions of,
      the
      Plan). Nothing in the Plan shall interfere with or limit in any way the right
      of
      the Company to terminate any participant’s employment at any time, nor confer
      upon any participant any right to continue in the employ of the
      Company.

     

    SECTION
      15.02. Equal
      Rights and Privileges.
      All
      participants shall have the same rights and privileges within the meaning of
      Section 423(b)(5) of the Code.

     

     

    ARTICLE
      XVI

     

    Adjustments
      upon Changes in Capitalization; Dissolution or Liquidation

     

    SECTION
      16.01. Adjustments.
      Subject
      to any required action by the stockholders of the Company, the number of Shares
      covered by each option under the Plan which has not yet been exercised, the
      type
      of securities, cash and other property receivable by a participant upon exercise
      of such an option, the Purchase Price of the Shares subject to such an option,
      the number of Shares which have been authorized for issuance under the Plan
      but
      have not yet been placed under option and the number of Shares set forth in
      Section 4.01 may be adjusted by the Board to the extent it so determines in
      its sole discretion to be necessary or appropriate, for any increase or decrease
      in the number of issued Shares resulting from a stock split, reverse stock
      split, stock dividend, combination or reclassification of the Common Stock
      (including any such change in the number of Shares effected in connection with
      a
      change in domicile of the Company) or any similar increase or decrease in the
      number of outstanding Shares, or any reorganization, recapitalization, rights
      offering, merger or consolidation, or to reflect any similar corporate
      transaction. Such adjustment shall be made by the Board, whose determination
      in
      that respect shall be final, binding and conclusive. Except as expressly
      provided herein, no issue or acquisition by the Company of shares of stock
      of
      any class, or
      securities convertible into shares of stock of any class, shall affect, and
      no
      adjustment by reason thereof shall be made with respect to, the number of Shares
      subject to an option.

     

     

    
      
         

        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    SECTION
      16.02. Dissolution
      or Liquidation.
      In the
      event of a dissolution or liquidation of the Company, any Purchase Period and
      Offering Period then in progress will terminate immediately prior to the
      consummation of such action, unless otherwise provided by the
      Board.

     

     

    ARTICLE
      XVII

     

    Amendment
      and Termination

     

    SECTION
      17.01. Amendment
      and Termination.
      The
      Administrator or the Board may at any time and from time to time and for any
      reason alter, amend, suspend or terminate the Plan in whole or in part. Without
      limiting the generality of the foregoing, the Administrator or the Board may
      terminate an Offering Period and/or a Purchase Period then in progress by
      setting a new Purchase Date or by returning to participants the Contributions
      credited to participants’ accounts. To the extent necessary to comply with
      Section 423 of the Code, or any other applicable law, regulation or stock
      exchange rule, the Company shall obtain stockholder approval of any amendment
      to
      the Plan in such a manner and to such a degree as so required.

     

     

    ARTICLE
      XVIII

     

    Notices

     

    All
      notices or other communications by a participant to the Company under or in
      connection with the Plan shall be deemed to have been duly given when received
      in the form specified by the Company at the location, or by the person,
      designated by the Company for the receipt thereof.

     

     

    ARTICLE
      XIX

     

    Conditions
      upon Issuance of Shares

     

    SECTION
      19.01. Compliance
      with Laws.
      Shares
      shall not be issued with respect to an option unless the exercise of such option
      and the issuance and delivery of such Shares pursuant thereto shall comply
      with
      all applicable provisions of law, domestic or foreign, including, without
      limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
      and regulations promulgated thereunder, applicable state securities laws and
      the
      requirements of any stock exchange upon which the Shares may then
      be
      listed, and shall be further subject to the approval of counsel for the Company
      with respect to such compliance.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

    SECTION
      19.02. Shares
      for Investment Only.
      As a
      condition to the exercise of an option, the Company may require the person
      exercising such option to represent and warrant at the time of any such exercise
      that the Shares are being purchased only for investment and without any present
      intention to sell or distribute such Shares if, in the opinion of counsel for
      the Company, such a representation is required by any of the aforementioned
      applicable provisions of law.

     

     

    ARTICLE
      XX

     

    Notice
      of Disqualifying Dispositions

     

    By
      electing to participate in the Plan, each participant agrees to notify the
      Company in writing immediately after the participant sells, transfers or
      otherwise disposes of any Shares acquired under the Plan, if such disposition
      occurs prior to the expiration of the two-year period following the applicable
      Purchase Date associated with such Shares. Each participant further agrees
      to
      provide any information about a disposition of Shares as may be requested by
      the
      Company to assist it in complying with any applicable tax laws.

     

     

    ARTICLE
      XXI

     

    Offsets

     

    To
      the
      extent permitted by law, the Company shall have the absolute right to withhold
      any amounts payable to any participant under the terms of the Plan to the extent
      of any amount owed for any reason by any such participant to the Company or
      any
      Subsidiary and to set off and apply the amounts so withheld to payment of any
      such amount owed to the Company or any Subsidiary, whether or not such amount
      shall then be immediately due and payable and in such order or priority as
      among
      such amounts owed as the Administrator shall determine.

     

     

    ARTICLE
      XXII

     

    Indemnification

     

    Provisions
      for the indemnification of officers, directors and employees of the Company
      in
      connection with the administration of the Plan shall be as set forth in the
      Certificate of Incorporation and By-laws of the Company as in effect from time
      to time.

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XXIII

     

    Legal
      Construction

     

    SECTION
      23.01. Gender
      and Number.
      Except
      where otherwise indicated by the context, any plural term used herein also
      shall
      include the singular, and the singular shall include the plural.

     

    SECTION
      23.02. Severability.
      In the
      event any provision of the Plan shall be held illegal or invalid for any reason,
      the illegality or invalidity shall not affect the remaining parts of the Plan,
      and the Plan shall be construed and enforced as if the illegal or invalid
      provision had not been included.

     

    SECTION
      23.03. Captions
      and Section References.
      The
      captions of the sections and paragraphs of this Plan have been inserted solely
      as a matter of convenience and in no way define or limit the scope or intent
      of
      any provisions of the Plan. References to sections herein are to the specified
      sections of this Plan unless another reference is specifically
      stated.

     

    SECTION
      23.04. Requirements
      of Law.
      The
      granting of options and the issuance of Shares under the Plan shall be subject
      to all applicable laws, rules and regulations, and to such approvals by any
      governmental agencies or national securities exchanges as may be
      required.

     

    SECTION
      23.05. Governing
      Law.
      To the
      extent not preempted by Federal law, the Plan, and all agreements hereunder,
      shall be construed in accordance with and governed by the laws of the State
      of
      Delaware.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    Appendix
      A: List of Subsidiaries

    

    

    1. Stanley
      Associates, Inc.

    

    2. Morgan
      Research Corporation

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