Document:

Exhibit 10.2

 

MUTUAL RELEASE

 

RECITALS

 

A.                                   Keith A. Tucker (“Mr. Tucker”) was
employed by Waddell & Reed Financial, Inc. (“Company”).

 

B.                                     On May 25, 2005, Mr. Tucker’s
employment with Company terminated.

 

C.                                     Mr. Tucker and Company wish to resolve all matters arising out of Mr. Tucker’s
employment with Company and the termination thereof.

 

D.                                    Therefore, Mr. Tucker and Company have reached the following agreements:

 

AGREEMENTS

 

1.                                       In consideration of Company’s agreements as
set forth in paragraph 5 of this Mutual Release, Mr. Tucker forever
releases and waives any and all claims, counts, causes of action and demands of
any kind or nature for money or anything else, whether such claims are known or
unknown (including any right to relief in any lawsuit that may be brought on Mr. Tucker’s
behalf by any government agency or other person based on any claims released
herein), against Company, and its related entities, affiliates, predecessors,
successors and/or its and their directors, officers, employees, attorneys and
agents (collectively the “Released Parties”), that arose prior to Mr. Tucker’s
signing of this Mutual Release or that relate in any way to Mr. Tucker’s
employment or termination of employment with Company.  This release includes, but is not limited to,
any and all claims of race discrimination, sex discrimination, national origin
discrimination, religious discrimination, disability discrimination, age
discrimination and unlawful retaliation, and any and all claims under the
following:

 

a.                                       Title VII of the Civil Rights Act of 1964, as
amended by the Civil Rights Act of 1991, 42 U.S.C. § 2000e et  seq.;

 

b.                                      Civil Rights Act of 1866, 42 U.S.C. § 1981;

 

c.                                       Age Discrimination in Employment Act, 29
U.S.C. § 621 et  seq.;

 

d.                                      Kansas Act Against
Discrimination, Chapter 44, Art. 10, K.S.A.;

 

e.                                       Missouri Human Rights Act, R.S.Mo §213.010 et
seq.;

 

f.                                         The Texas Commission on Human Rights Act,
Tex. Lab. Code Ann. §21.001 et  seq.;

 

g.                                      Employee Retirement Income Security Act of
1974, as amended, 29 U.S.C. § 1001 et  seq.;

 

 

h.                                      Americans with Disabilities Act of 1990, 42
U.S.C. § 12101 et  seq.;

 

i.                                          Rehabilitation Act of 1973, 29 U.S.C. § 706
et  seq.;

 

j.                                          Family and Medical Leave Act, 29 U.S.C. § 2601,
et  seq.;

 

k.                                       Common law, including, but not limited to,
claims for breach of express or implied contract, violation of public policy,
wrongful discharge, defamation, whistle-blowing, fraudulent misrepresentation,
negligent misrepresentation, intentional or negligent infliction of emotional
distress or other tort type claims; and

 

l.                                          All other federal, state and local laws,
statutes, ordinances, regulations, orders and executive orders;

 

provided, however, this release does not apply to
rights or claims that may arise after Mr. Tucker signs this Mutual
Release.

 

5.                                       In exchange for Mr. Tucker’s promises in
this Mutual Release, Company agrees to make the payments described in Sections
3 and 4 of that certain Consulting Agreement dated May 25, 2005, between
the Company and Mr. Tucker, on the terms and conditions described therein.
In consideration of Mr. Tucker’s agreements and covenants in this Mutual
Release, the Released Parties forever release and waive any and all claims,
counts, causes of action and demands of any kind or nature for money or
anything else, whether such claims are known or unknown, against Mr. Tucker,
that arose prior to Mr. Tucker’s signing of this Mutual Release or that
relate in any way to Mr. Tucker’s employment or termination of employment
with Company, except for claims, demands, actions or causes of actions arising
out of Mr. Tucker’s Wrongful Acts. 
For purposes of this Release, Wrongful Acts include (i) breaches of
the duty of loyalty to the Company or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law; or (iii) deriving an improper personal benefit from any
transaction with the Released Parties.

 

6.                                       The purpose of this Mutual Release and
provision to Mr. Tucker of valuable consideration is to provide for an
amicable separation from employment, to avoid economic hardship for Mr.Tucker,
and to resolve all claims. Company believes this Mutual Release and the related
agreements are fair and reasonable, but because it is important for Mr. Tucker
to fully understand this Mutual Release and voluntarily decide
to execute it, this Mutual Release includes the following information:

 

a.                                       Mr. Tucker is advised and encouraged to
consult with an attorney of his choice before signing this Mutual Release which
includes a release of all claims including claims for age discrimination under
the Age Discrimination in Employment Act.

 

b.                                      Mr. Tucker has up to twenty-one (21)
days within which to consider this Mutual Release.

 

c.                                       If Mr. Tucker signs this Mutual Release,
Mr. Tucker then will have seven (7) calendar days after the date he
signs it, to revoke his acceptance of its terms.  To be

 

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effective, any revocation must be in writing and
received by Company within seven (7) days after Mr. Tucker signs this
Mutual Release.

 

7.                                       This Mutual Release may not be amended except
upon the written agreement signed by Mr. Tucker and Company.

 

8.                                       Nothing in this Mutual Release is an
admission by either Mr. Tucker or Company of any wrongdoing, either in
violation of applicable law or otherwise, and nothing in this Mutual Release is
to be construed as such by anyone.

 

9.                                       Mr. Tucker agrees that provision to him
of the consideration set forth in this Mutual Release is valuable consideration
to which Mr. Tucker would not otherwise be entitled.

 

10.                                 The parties have not relied on any
representations, promises or agreements of any kind made to them in connection
with this Mutual Release, except for those set forth in writing in this Mutual
Release.

 

11.                                 All disputes which arise out of the
interpretation and enforcement of this Mutual Release shall be governed by the
laws of the State of Kansas without giving effect to its choice of law
provisions.

 

12.                                 This Mutual Release does not become effective
or enforceable against either party until eight days after Mr. Tucker
signs and has not revoked this Mutual Release.

 

13.                                 This Mutual Release is not intended to and
does not release any claims, counts, causes of action and demands of any kind
or nature for money or anything else, whether such claims are known or unknown,
(i) relating to sums payable to Mr. Tucker pursuant to Company
benefit or retirement plans, (ii) relating to that certain Consulting
Agreement dated May 25, 2005, between the Company and Mr. Tucker, (iii) relating
to claims for indemnification pursuant to the Company’s bylaws and certificate
of incorporation, or (iv) relating to Mr. Tucker’s stock option and
restricted stock agreements.

 

3

 

KNOWING AND VOLUNTARY AGREEMENT

 

I
fully understand the terms of this Mutual Release.  I knowingly and voluntarily agree to sign
this Mutual Release and to release all my claims under this Mutual Release,
including statutory claims under the Age Discrimination in Employment Act.  I also acknowledge that I have been given
twenty-one (21) days within which to consider this Mutual Release.  I have been advised and encouraged to consult
with counsel.  I have been fully apprised
of my rights.  I understand my rights,
and I have determined to execute this Mutual Release at this time and on the
date reflected.  I understand that I may
revoke this Mutual Release within seven (7) days after signing it by
providing written notice to:  Waddell &
Reed Financial, Inc., Attention: Daniel C. Schulte, General Counsel.

 

 

	
   

  	
   

  	
   

  
	
  Keith
  A. Tucker

  	
   

  
	
   

  	
   

  
	
  /s/
  Keith A. Tucker

  	
   

  	
  May 25,
  2005

  	
   

  
	
  Signature

  	
  Date

  
	
   

  	
   

  
	
   

  	
   

  
	
  Waddell &
  Reed Financial, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Henry J. Herrmann

  	
   

  	
  May 25,
  2005

  	
   

  
	
  By:  Henry J. Herrmann

  	
  Date

  
	
  Title:  President

  	
   

  
					

 

4Exhibit 10.1

 

AXS-One Inc.

2005 Stock Incentive Plan

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  
	
  ARTICLE I. PURPOSE

  	
   

  
	
   

  	
   

  
	
  ARTICLE II. DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE III. ADMINISTRATION

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV. SHARE AND OTHER
  LIMITATIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE V. ELIGIBILITY

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI. STOCK OPTIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII. STOCK APPRECIATION RIGHTS

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII. RESTRICTED STOCK

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX. NON-EMPLOYEE DIRECTOR
  STOCK OPTIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE X.
  NON-TRANSFERABILITY AND TERMINATION OF EMPLOYMENT/CONSULTANCY PROVISIONS
  APPLICABLE TO STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

  	
   

  
	
   

  	
   

  
	
  ARTICLE XI. CHANGE IN CONTROL
  PROVISIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE XII. TERMINATION OR AMENDMENT
  OF PLAN

  	
   

  
	
   

  	
   

  
	
  ARTICLE XIII. UNFUNDED PLAN

  	
   

  
	
   

  	
   

  
	
  ARTICLE XIV. GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE XV. EFFECTIVE DATE OF PLAN

  	
   

  
	
   

  	
   

  
	
  ARTICLE XVI. TERM OF PLAN

  	
   

  
	
   

  	
   

  
	
  ARTICLE XVII. NAME OF PLAN

  	
   

  

 

 

AXS-One Inc.

2005 Stock Incentive Plan

 

ARTICLE I.

PURPOSE

 

The purpose of
the AXS-One Inc. 2005 Stock Incentive Plan (the “Plan”) is to enhance the
profitability and value of AXS-One Inc. (the “Company”) and its Affiliates for
the benefit of the Company’s stockholders by enabling the Company:  (i) to offer employees and Consultants of the
Company and its Affiliates, stock based incentives and other equity interests
in the Company, thereby creating a means to raise the level of stock ownership
by employees and Consultants in order to attract, retain and reward such
individuals and strengthen the mutuality of interests between such individuals
and the Company’s stockholders, and (ii) to make equity based awards to
Non-Employee Directors of the Company thereby attracting, retaining and
rewarding such Non-Employee Directors and strengthening the mutuality of
interests between such individuals and the Company’s stockholders.

 

ARTICLE II.

DEFINITIONS

 

For purposes of
this Plan, the following terms shall have the following meanings:

 

2.1.                              “Acquisition
Events” shall have the meaning set forth in Section 4.2(d).

 

2.2.                              “Affiliate”
shall mean other than the Company, (i) any Subsidiary; (ii) any corporation in
an unbroken chain of corporations beginning or ending with the Company which
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain; (iii) any
corporation, trade or business (including, without limitation, a partnership or
limited liability company) which is controlled 50% or more (whether by
ownership of stock, assets or an equivalent ownership interest or voting
interest) by the Company or one of its Affiliates; or (iv) any other entity,
approved by the Committee as an Affiliate under the Plan, in which the Company
or any of its Affiliates has a material equity interest.

 

2.3.                              “Award”
shall mean any award under this Plan of any Stock Option, Stock Appreciation
Right or Restricted Stock.  All Awards
shall be confirmed by, and subject to the terms of, a written agreement
executed by the Company and the Participant.

 

2.4.                              “Board”
shall mean the Board of Directors of the Company.

 

2.5.                              “Cause”
shall mean, with respect to a Participant’s Termination of Employment or
Termination of Consultancy:  (i) in the
case where there is no employment agreement, consulting agreement, change in
control agreement or similar agreement in effect between the

 

 

Company or an Affiliate and the Participant at the time of the relevant
grant or Award, or where there is an employment agreement, consulting
agreement, change in control agreement or similar agreement in effect at the
time of the relevant grant or Award but such agreement does not define “cause”
(or words of like import), termination due to a Participant’s dishonesty,
fraud, insubordination, willful misconduct, refusal to perform services (for
any reason other than illness or incapacity) or materially unsatisfactory
performance of his or her duties for the Company or an Affiliate; or (ii) in
the case where there is an employment agreement, consulting agreement, change
in control agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the relevant grant or Award that
defines “cause” (or words of like import); provided, that with regard to any
agreement that conditions “cause” on occurrence of a change in control, such
definition of “cause” shall not apply until a change in control actually takes
place and then only with regard to a termination thereafter.  A Participant shall be deemed to be
terminated for “cause” if the Participant, following his or her Termination of
Employment or Termination of Consultancy, engages in any “competitive activity”
with the Company or its Affiliates, as determined by the Committee, in its sole
discretion. With respect to a Participant’s Termination of Directorship, “cause”
shall mean an act or failure to act that constitutes “cause” for removal of a
director under applicable Delaware law.

 

2.6.                              “Code”
shall mean the Internal Revenue Code of 1986, as amended.  Any reference to any section of the Code
shall also be a reference to any successor provision.

 

2.7.                              “Committee”
shall mean a committee or subcommittee of the Board appointed from time to time
by the Board, which committee or subcommittee shall consist of two or more
non-employee directors, each of whom is intended to be, to the extent required
by Rule 16b-3 and Section 162(m) of the Code, a “non-employee director” as
defined in Rule 16b-3 and an “outside director” as defined under Section 162(m)
of the Code and an “independent director” as defined under Amex Rule 121A.  Notwithstanding anything herein to the
contrary, the Board shall act as the Committee under this Plan with respect to
any grants of Non-Qualified Stock Options to Non-Employee Directors (whether
discretionary or automatic).  To the
extent that no Committee exists which has the authority to administer this
Plan, the functions of the Committee shall be exercised by the Board.  If for any reason the appointed Committee
does not meet the requirements of Rule 16b-3, Section 162(m) of the Code
or applicable stock exchange rules), such noncompliance with the requirements
of Rule 16b-3, Section 162(m) of the Code or applicable stock exchange
rules shall not affect the validity of Awards, grants, interpretations or other
actions of the Committee.

 

2.8.                              “Common
Stock” shall mean the common stock, $.01 par value per share, of the Company.

 

2.9.                              “Company”
shall mean AXS-One Inc., a Delaware corporation.

 

2.10.                        “Consultant”
shall mean any adviser or consultant to the Company or its  Affiliates who is eligible pursuant to Section 5.1
to be granted Stock Options and Stock Appreciation Rights under this Plan.

 

2.11.                        “Disability”
shall mean total and permanent disability, as defined in Section 22(e)(3)
of the Code.

 

2

 

2.12.                        “Effective
Date” shall mean the effective date of this Plan as defined in Article XV.

 

2.13.                        “Eligible
Employee” shall mean any employee of the Company or its Affiliates who is
eligible pursuant to Section 5.1 to be granted Stock Options and Stock
Appreciation Rights under this Plan. 
Notwithstanding the foregoing, with respect to the grant of Incentive
Stock Options, Eligible Employee shall mean any employee of the Company or any
Affiliate described in Section 2.2(i) or (ii) who is eligible pursuant to Section 5.2
to be granted Incentive Stock Options under this Plan.

 

2.14.                        “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

2.15.                        “Fair
Market Value” for purposes of this Plan, unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, shall
mean, as of any date, the last sales price reported for the Common Stock on the
applicable date:  (i) as reported on the
principal national securities exchange on which it is then traded or the Nasdaq
Stock Market, Inc. or (ii) if not traded on any such national securities
exchange or the Nasdaq Stock Market, Inc., as quoted on an automated quotation
system sponsored by the National Association of Securities Dealers.  If the Common Stock is not readily tradable
on a national securities exchange, the Nasdaq Stock Market, Inc., or any
automated quotation system sponsored by the National Association of Securities
Dealers, its Fair Market Value shall be set in good faith by the
Committee.  For purposes of the exercise
of any Stock Appreciation Right the applicable date shall be the date a notice
of exercise is received by the Committee or, if not a day on which the
applicable market is open, the next day that it is open.

 

2.16.                        “Incentive
Stock Option” shall mean any Stock Option awarded under this Plan intended to
be and designated as an “incentive stock option” within the meaning of Section 422
of the Code.

 

2.17.                        “Limited
Stock Appreciation Right” shall mean an Award made pursuant to Section 7.5
of this Plan which may be a Tandem Stock Appreciation Right or a Non-Tandem
Stock Appreciation Right.

 

2.18.                        “Non-Employee
Director” shall mean any director of the Company who is not an employee of the
Company or any Affiliate and who is eligible pursuant to Section 5.3 to be
granted Stock Options under Article IX.

 

2.19.                        “Non-Qualified
Stock Option” shall mean any Stock Option awarded under this Plan that is not
an Incentive Stock Option.

 

2.20.                        “Non-Tandem
Stock Appreciation Right” shall mean a Stock Appreciation Right entitling the
holder to receive an amount in stock equal to the excess of:  (i) the Fair Market Value of a share of
Common Stock as of the date such right is exercised, over (ii) the aggregate
exercise price of such right, otherwise than on surrender of a Stock Option.

 

2.21.                        “Participant”
shall mean any Eligible Employee, Consultant or Non-Employee Director to whom
an Award has been made under this Plan.

 

3

 

2.22.                        “Performance
Goal” means the performance goals described on Exhibit A, attached hereto.

 

2.23.                        “Reference
Stock Option” shall have the meaning set forth in Section 7.1.

 

2.24.                        “Restricted
Stock” means an award of Common Stock under this Plan that is subject to Article VIII.

 

2.25.                        “Restriction
Period” shall have the meaning set forth in Section 8.1.

 

2.26.                        “Retirement”
with respect to a Participant’s Termination of Employment or Termination of
Consultancy shall mean a Termination of Employment or Termination of
Consultancy without Cause from the Company and an Affiliate by a Participant
who has attained:  (i) at least age 65;
or (ii) such earlier date after age 55 as approved by the Committee, in its
sole discretion, with regard to such Participant.  With respect to a Participant’s Termination
of Directorship, Retirement shall mean the failure to stand for reelection or
the failure to be reelected after a Participant has attained age 65.

 

2.27.                        “Rule
16b-3” shall mean Rule 16b-3 under Section 16(b) of the Exchange Act as
then in effect or any successor provisions.

 

2.28.                        “Section 162(m)
of the Code” shall mean the exception for performance-based compensation under Section 162(m)
of the Code and any Treasury regulations thereunder.

 

2.29.                        “Stock
Appreciation Right” or “SAR” shall mean the right pursuant to an Award granted
under Article VII.

 

2.30.                        “Stock
Option” or “Option” shall mean any Option to purchase shares of Common Stock
granted to Eligible Employees or Consultants pursuant to Article VI or
granted to Non-Employee Directors pursuant to Article VI or IX.

 

2.31.                        “Subsidiary”
shall mean any subsidiary corporation of the Company within the meaning of Section 424(f)
of the Code.

 

2.32.                        “Tandem
Stock Appreciation Right” shall mean a Stock Appreciation Right entitling the
holder to surrender to the Company all (or a portion) of a Stock Option in
exchange for an amount in stock equal to the excess of:  (i) the Fair Market Value, on the date such
Stock Option (or such portion thereof) is surrendered, of the Common Stock
covered by such Stock Option (or such portion thereof), over (ii) the aggregate
exercise price of such Stock Option (or such portion thereof).

 

2.33.                        “Ten
Percent Stockholder” shall mean a person owning stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company or
its Subsidiaries or its parent corporations, as defined in Section 424(e)
of the Code.

 

2.34.                        “Termination
of Consultancy” shall mean, with respect to a Consultant, that the Consultant
is no longer acting as a Consultant to the Company and its Affiliates.  In the event an entity shall cease to be an
Affiliate, there shall be deemed a Termination of Consultancy of any

 

4

 

individual who is not otherwise
a Consultant of the Company or another Affiliate at the time the entity ceases
to be an Affiliate.

 

2.35.                        “Termination
of Directorship” shall mean, with respect to a Non-Employee Director, that the
Non-Employee Director has ceased to be a director of the Company.

 

2.36.                        “Termination
of Employment” shall mean:  (i) a
termination of service of a Participant from the Company and its Affiliates; or
(ii) when an entity, which is employing a Participant, ceases to be an
Affiliate, unless the Participant thereupon becomes employed by the Company or
another Affiliate.

 

2.37.                        “Transfer”
or “Transferred” shall mean anticipate, alienate, attach, sell, assign, pledge,
encumber, charge or otherwise transfer.

 

ARTICLE III.

ADMINISTRATION

 

3.1.                              The
Committee.  This Plan shall be
administered and interpreted by the Committee. 
Notwithstanding anything herein to the contrary, the Board shall act as
the Committee under this Plan into respect to any discretionary grants of
Non-Qualified Stock Options to Non-Employee Directors.

 

3.2.                              Awards.  The Committee or the Board, as applicable,
shall have full authority to grant, pursuant to the terms of this Plan (including
Article V hereof) Stock Options to Participants and Stock Appreciation
Rights and Restricted Stock to Eligible Employees and Consultants and to
otherwise administer this Plan.  In
particular, the Committee or the Board, as applicable, shall have the authority:

 

(a)                                  to select the
Participants to whom Stock Options may from time to time be granted hereunder
and the Eligible Employees and Consultants to whom Stock Appreciation Rights
and Restricted Stock may from time to time be granted hereunder;

 

(b)                                 to determine whether
and to what extent Stock Options are to be granted hereunder to one or more
Participants and Stock Appreciation Rights and Restricted Stock are to be
granted hereunder to one or more Eligible Employees or Consultants;

 

(c)                                  to determine, in
accordance with the terms of this Plan, the number of shares of Common Stock to
be covered by each Award to a Participant hereunder;

 

(d)                                 to determine the terms
and conditions, not inconsistent with the terms of this Plan, of any Award
granted hereunder to a Participant (including, but not limited to, the exercise
or purchase price (if any), any restriction or limitation, any vesting schedule or
acceleration thereof or any forfeiture restrictions or waiver thereof,
regarding any Stock Option, Stock Appreciation Right or Restricted Stock, and
the shares of Common Stock relating thereto, based on such factors, if any, as
the Committee or the Board, as applicable, shall determine, in its sole
discretion);

 

5

 

(e)                                  to determine whether
and under what circumstances a Stock Option may be settled in cash and/or
Common Stock under Section 6.3(d);

 

(f)                                    to the extent
permitted by law, to determine whether, to what extent and under what
circumstances to provide loans (which may be on a recourse basis and shall bear
interest at the rate the Committee shall provide) to Eligible Employees and
Consultants in order to exercise Options under this Plan;

 

(g)                                 to determine whether a
Stock Appreciation Right shall be a Tandem Stock Appreciation Right or
Non-Tandem Stock Appreciation Right;

 

(h)                                 to determine whether
to require a Participant, as a condition of the granting of any Award, to not
sell or otherwise dispose of shares acquired pursuant to the exercise of an
Option or as an Award for a period of time as determined by the Committee or
the Board, as applicable, in its sole discretion, following the date of the
acquisition of such Option or Award;

 

(i)                                     to modify, extend
or renew an Award, subject to Sections 6.3(f) and 12.1 herein, provided,
however, that if an Award is modified, extended or renewed and thereby deemed
to be the issuance of a new Award under the Code or the applicable accounting
rules, the exercise price of an Award may continue to be the original exercise
price even if less than the Fair Market Value of the Common Stock at the time
of such modification, extension or renewal; and

 

(j)                                     to offer to buy
out an Option previously granted, based on such terms and conditions as the
Committee or the Board, as applicable, shall establish and communicate to the
Participant at the time such offer is made.

 

3.3.                              Guidelines.  Subject to Article XII hereof, the
Committee or the Board, as applicable, shall have the authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing this
Plan and perform all acts, including the delegation of its administrative
responsibilities, as it shall, from time to time, deem advisable; to construe
and interpret the terms and provisions of this Plan and any Award issued under
this Plan (and any agreements relating thereto); and to otherwise supervise the
administration of this Plan.  The
Committee or the Board, as applicable, may correct any defect, supply any
omission or reconcile any inconsistency in this Plan or in any agreement
relating thereto in the manner and to the extent it shall deem necessary to
carry this Plan into effect, but only to the extent any such action would be
permitted under the applicable provisions of both Rule 16b-3 and Section 162(m)
of the Code.  The Committee or the Board,
as applicable, may adopt special guidelines and provisions for persons who are
residing in, or subject to, the taxes of, countries other than the United
States to comply with applicable tax and securities laws.  To the extent applicable, this Plan is
intended to comply with the applicable requirements of Rule 16b-3 and Section 162(m)
of the Code and shall be limited, construed and interpreted in a manner so as
to comply therewith.  Notwithstanding
anything herein to the contrary, any provision in this Plan relating to any
Award that constitutes a “non-qualified deferred compensation plan” for
purposes of Code Section 409A shall be limited, construed and interpreted
in a manner so as to comply therewith and any such provision that is
inconsistent with Section 409A of the Code shall be deemed to be

 

6

 

amended to comply with Section 409A
and to the extent such provision cannot be amended to comply therewith, such
provision shall be null and void.

 

3.4.                              Decisions
Final.  Any decision, interpretation
or other action made or taken in good faith by or at the direction of the
Company, the Board, or the Committee (or any of its members) arising out of or
in connection with this Plan shall be within the absolute discretion of the
Company, the Board or the Committee, as the case may be, and shall be final,
binding and conclusive on the Company and its Affiliates and all employees and
Participants and their respective heirs, executors, administrators, successors
and assigns.

 

3.5.                              Reliance
on Counsel.  The Company, the Board
or the Committee may consult with legal counsel, who may be counsel for the
Company or other counsel, with respect to its obligations or duties hereunder,
or with respect to any action or proceeding or any question of law, and shall
not be liable with respect to any action taken or omitted by it in good faith
pursuant to the advice of such counsel.

 

3.6.                              Procedures.  The Committee shall hold meetings, subject to
the By-Laws of the Company, at such times and places as the Committee shall
deem advisable.  A majority of the
Committee members shall constitute a quorum. 
All determinations of the Committee shall be made by a majority of its
members.  Any decision or determination
reduced to writing and signed by all the Committee members in accordance with
the By-Laws of the Company shall be fully as effective as if it had been made
by a vote at a meeting duly called and held. 
The Committee may keep minutes of its meetings and may make such rules
and regulations for the conduct of its business as it shall deem advisable.

 

3.7.                              Designation
of Consultants/Liability.

 

(a)                                  The Committee or the
Board, as applicable, may designate employees of the Company and professional
advisors to assist the Committee or the Board, as applicable, in the
administration of this Plan and may grant authority to officers to grant Awards
and/or execute agreements or other documents on behalf of the Committee or the
Board, as applicable.

 

(b)                                 The Committee or the
Board, as applicable, may employ such legal counsel, consultants and agents as
it may deem desirable for the administration of this Plan and may rely upon any
opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. 
Expenses incurred by the Committee or Board in the engagement of any
such counsel, consultant or agent shall be paid by the Company.  The Board, its directors, the Committee, its
members and any person designated pursuant to Section 3.7(a) shall not be
liable for any action or determination made in good faith with respect to this
Plan.  To the maximum extent permitted by
applicable law, no officer of the Company or member or former member of the
Committee or of the Board shall be liable for any action or determination made
in good faith with respect to this Plan or any Award granted under it.  To the maximum extent permitted by applicable
law and the Certificate of Incorporation and By-Laws of the Company and to the
extent not covered by insurance, each officer and member or former member of
the Committee or of the Board shall be indemnified and held harmless

 

7

 

by the Company against any cost or expense (including reasonable fees
of counsel reasonably acceptable to the Company) or liability (including any
sum paid in settlement of a claim with the approval of the Company), and
advanced amounts necessary to pay the foregoing at the earliest time and to the
fullest extent permitted, arising out of any act or omission to act in
connection with this Plan, except to the extent arising out of such officer’s,
member’s or former member’s own fraud or bad faith.  Such indemnification shall be in addition to
any rights of indemnification the officers, directors or members or former
officers, directors or members may have under applicable law or under the
Certificate of Incorporation or By-Laws of the Company or any Affiliate.  Notwithstanding anything else herein, this
indemnification will not apply to the actions or determinations made by an
individual with regard to Awards granted to him under this Plan.

 

ARTICLE IV.

SHARE AND OTHER LIMITATIONS

 

4.1.                              Shares.

 

(a)                                  General Limitation.  The aggregate number of shares of Common
Stock which may be issued or used for reference purposes under this Plan shall
not exceed 1,500,000 shares (subject to any increase or decrease pursuant to Section 4.2)
which may be either authorized and unissued Common Stock or Common Stock held
in or acquired for the treasury of the Company, of which a maximum of 375,000
shares may be issued for Restricted Stock granted under this Plan.  If any Option or Stock Appreciation Right
granted under this Plan expires, terminates or is canceled for any reason
without having been exercised in full, the number of shares of Common Stock
underlying any unexercised Stock Appreciation Right or Option shall again be
available for the purposes of Awards under this Plan.  If a Tandem Stock Appreciation Right or a
Limited Stock Appreciation Right granted in tandem with an Option is granted
under this Plan, such grant shall only apply once against the maximum number of
shares of Common Stock which may be issued under this Plan.  If Restricted Stock is forfeited for any
reason, the number of forfeited shares of Restricted Stock shall again be
available for the purposes of Awards under the Plan.  In addition, to the extent permitted under
Code Section 422 and the Treasury Regulations thereunder with respect to
Incentive Stock Options, in determining the number of shares of Common Stock
available for Awards, if Common Stock has been delivered or exchanged by a
Participant as full or partial payment to the Company, or for withholding, in
connection with the exercise of a Stock Option or the vesting or transfer of
Restricted Stock or the number shares of Common Stock otherwise deliverable has
been reduced for withholding, the number of shares of Common Stock exchanged as
payment in connection with the exercise or for withholding or reduced shall again
be available under this Plan.  To the
extent permitted under Code Section 422 and the Treasury Regulations
thereunder, any shares of Common Stock that are issued by the Company, and any
awards that are granted through the assumption of, or in substitution for,
outstanding awards previously granted by an acquired entity shall not be
counted against the shares of Common Stock available for issuance under this
Plan other than with regard to determining the number of shares available for
Incentive Stock Options.

 

8

 

(b)                                 Individual Participant Limitations.  The maximum number of shares of Common Stock
subject to an Option, Stock Appreciation Right or Restricted Stock that is
intended to be “performance-based” compensation within the meaning of Section 162(m)
of the Code, which may be granted under this Plan during any calendar year of
the Company to each Eligible Employee shall be 500,000 shares (subject to any
increase or decrease pursuant to Section 4.2) other than with regard to
the calendar year in which an Eligible Employee initially commences employment
with the Company and its Affiliates. 
With respect to the calendar year in which an Eligible Employee
initially commences employment with the Company and its Affiliates, but only
with regard to such Eligible Employee, the maximum number of shares of Common
Stock subject to such Awards which may be granted under this Plan shall be
1,000,000 shares (subject to any increase or decrease pursuant to Section 4.2).  If a Tandem Stock Appreciation Right or
Limited Stock Appreciation Right is granted in tandem with an Option it shall
apply against the Eligible Employee’s individual share limitations for both
Stock Appreciation Rights and Options. 
To the extent that shares of Common Stock for which Awards are permitted
to be granted to a Participant pursuant to Section 4.1(b) during a
calendar year of the Company are not covered by a grant of an Award in the
Company’s calendar year, such shares of Common Stock shall be available for
grant or issuance to the Participant in any subsequent calendar year during the
term of this Plan.

 

4.2.                              Changes.

 

(a)                                  The existence of this
Plan and the Awards granted hereunder shall not affect in any way the right or
power of the Board or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company’s
capital structure or its business, any merger or consolidation of the Company,
or Affiliates, any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting Common Stock, the authorization or issuance of
additional shares of Common Stock, the dissolution or liquidation of the
Company or Affiliates, any sale or transfer of all or part of its assets or
business or any other corporate act or proceeding.

 

(b)                                 In the event of any
change in the capital structure or business of the Company by reason of any
stock dividend or extraordinary dividend, stock split or reverse stock split,
recapitalization, reorganization, merger, consolidation, split-up, combination
or exchange of shares, distribution with respect to its outstanding Common
Stock or capital stock other than Common Stock, reclassification of its capital
stock, any sale or transfer of all or part of the Company’s assets or business,
or any similar change affecting the Company’s capital structure or business and
the Committee or the Board, as applicable, determines an adjustment is
appropriate under this Plan, then the aggregate number and kind of shares which
thereafter may be issued under this Plan, the number and kind of shares or
other property (including cash) to be issued upon exercise of an outstanding
Award or under other Awards granted under this Plan and the purchase or
exercise price thereof shall be appropriately adjusted consistent with such
change in such manner as the Committee or the Board, as applicable, may deem
equitable to prevent substantial dilution or enlargement of the rights granted
to, or available for, Participants under this Plan or as otherwise necessary to
reflect the change, and any such adjustment determined by the Committee or the
Board, as applicable, in good faith shall be binding

 

9

 

and conclusive on the Company and all Participants and employees and
their respective heirs, executors, administrators, successors and assigns.

 

(c)                                  Fractional shares of
Common Stock resulting from any adjustment in Options or Awards pursuant to Section 4.2(a)
or (b) shall be aggregated until, and eliminated by rounding-down for fractions
less than one-half and rounding-up for fractions equal to or greater than
one-half.  No cash settlements shall be
made with respect to fractional shares eliminated by rounding.  Notice of any adjustment shall be given by
the Committee or the Board, as applicable, to each Participant whose Option or
Award has been adjusted and such adjustment (whether or not such notice is
given) shall be effective and binding for all purposes of this Plan.

 

(d)                                 In the event of a
merger or consolidation in which the Company is not the surviving entity or in
the event of any transaction that results in the acquisition of all or
substantially all of the Company’s outstanding Common Stock by a single person
or entity or by a group of persons and/or entities acting in concert, or in the
event of the sale or transfer of all or substantially all of the Company’s
assets (all of the foregoing being referred to as “Acquisition Events”), then
the Committee may, in its sole discretion, terminate all outstanding Options
and Stock Appreciation Rights of Eligible Employees and Consultants, effective
as of the date of the Acquisition Event, by delivering notice of termination to
each such Participant at least 30 days prior to the date of consummation of the
Acquisition Event; provided, that during the period from the date on which such
notice of termination is delivered to the consummation of the Acquisition
Event, each such Participant shall have the right to exercise in full all of
his or her Options and Stock Appreciation Rights that are then outstanding
(whether vested or not vested) but contingent on the occurrence of the
Acquisition Event, and, provided that, if the Acquisition Event does not take
place within a specified period after giving such notice for any reason
whatsoever, the notice and exercise shall be null and void.  If an Acquisition Event occurs, to the extent
the Committee does not terminate the outstanding Options and Stock Appreciation
Rights pursuant to this Section 4.2(d), then the provisions of Section 4.2(b)
shall apply.  This provision shall not
apply to any Options granted to Non-Employee Directors.

 

4.3.                              Purchase
Price.  Notwithstanding any provision
of this Plan to the contrary, if authorized but previously unissued shares of
Common Stock are issued under this Plan, such shares shall not be issued for a
consideration which is less than as permitted under applicable law.

 

ARTICLE V.

ELIGIBILITY

 

5.1.                              All
employees, prospective employees and Consultants of the Company and its
Affiliates are eligible to be granted Non-Qualified Stock Options, Stock
Appreciation Rights and Restricted Stock under this Plan.  Eligibility shall be determined by the
Committee in its sole discretion.

 

10

 

5.2.                              All
employees of the Company and its Affiliates described in Section 2.2(i) or
(ii) are eligible to be granted Incentive Stock Options under this Plan.  Eligibility shall be determined by the
Committee in its sole discretion.  The
vesting and exercise of Awards granted to prospective employees and Consultants
are conditioned upon such individual actually becoming an employee or
Consultant.

 

5.3.                              Non-Employee
Directors of the Company are eligible to receive automatic awards of
Non-Qualified Stock Options in accordance with Article IX of this Plan and
discretionary awards of Non-Qualified Stock Options under Article VI of
this Plan.  Eligibility for discretionary
awards of Non-Qualified Stock Options shall be determined by the Board in its
sole discretion.  The vesting and
exercise of Awards granted to prospective employees and Consultants are
conditioned upon such individual actually becoming an employee or Consultant.

 

ARTICLE VI.

STOCK OPTIONS

 

6.1.                              Options.  Each Stock Option granted hereunder shall be
one of two types:  (i) an Incentive Stock
Option intended to satisfy the requirements of Section 422 of the Code, or
(ii) a Non-Qualified Stock Option.

 

6.2.                              Grants.  The Committee shall have the authority to
grant to any Eligible Employee one or more Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options (in each case with
or without Stock Appreciation Rights). 
To the extent that any Stock Option does not qualify as an Incentive Stock
Option (whether because of its provisions or the time or manner of its exercise
or otherwise), such Stock Option or the portion thereof which does not so
qualify, shall constitute a separate Non-Qualified Stock Option.  The Committee shall have the authority to
grant to any Consultant one or more Non-Qualified Stock Options (with or
without Stock Appreciation Rights).  The
Board shall have the authority to grant to any Non-Qualified Director a
Non-Qualified Stock Option. 
Notwithstanding any other provision of this Plan to the contrary or any
provision in an agreement evidencing the grant of an Option to the contrary,
any Option granted to an Employee of an Affiliate (other than one described in Section 2.2(i)
or (ii)), a Non-Employee Director or a Consultant shall be a Non-Qualified
Stock Option.

 

6.3.                              Terms
of Options.  Options granted under
this Plan shall be subject to the following terms and conditions, and shall be
in such form and contain such additional terms and conditions, not inconsistent
with the terms of this Plan, as the Committee or the Board, as applicable,
shall deem desirable:

 

(a)                                  Option Exercise Price.  The exercise price per share of Common Stock
subject to a Stock Option granted under this Article VI shall be
determined by the Committee or the Board, as applicable, at the time of grant
but shall not be less than 100% of the Fair Market Value of a share of Common
Stock at the time of grant; provided, however, that if an Incentive Stock
Option is granted to a Ten Percent

 

11

 

Stockholder, the exercise price per share shall be no less than 110% of
the Fair Market Value of the Common Stock.

 

(b)                                 Option Term.  The term of each Stock Option shall be fixed
by the Committee or the Board, as applicable, but no Stock Option shall be exercisable
more than 10 years after the date the Option is granted, provided, however, the
term of an Incentive Stock Option granted to a Ten Percent Stockholder may not
exceed five years.

 

(c)                                  Exercisability.  Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined
by the Committee or the Board, as applicable, at the time of grant.  If the Committee or the Board provides, in
its discretion, that any Stock Option is exercisable subject to certain
limitations (including, without limitation, that it is exercisable only in
installments or within certain time periods), the Committee or the Board, as
applicable, may waive such limitations on the exercisability at any time at or
after the time of grant in whole or in part (including, without limitation,
that the Committee or the Board, may waive the installment exercise provisions
or accelerate the time at which Options may be exercised), based on such
factors, if any, as the Committee or the Board shall determine, in its sole
discretion.

 

(d)                                 Method of Exercise.  Subject to whatever installment exercise and
waiting period provisions apply under Section 6.3(c), Stock Options may be
exercised in whole or in part at any time during the Option term, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased.  Common Stock purchased
pursuant to the exercise of a Stock Option shall be paid for at the time of
exercise as follows:  (i) in cash or by
check, bank draft or money order payable to the order of Company; (ii) solely
to the extent permitted by applicable law, if the Common Stock is traded on a
national securities exchange, the Nasdaq Stock Market, Inc. or quoted on a
national quotation system sponsored by the National Association of Securities
Dealers, through the delivery of irrevocable instructions to a broker to
deliver promptly to the Company an amount equal to the purchase price; or (iii)
on such other terms and conditions as may be acceptable to the Committee or the
Board, as applicable, (which may include payment in full or part in the form of
Common Stock owned by the Participant for a period of at least 6 months (and
for which the Participant has good title free and clear of any liens and
encumbrances) based on the Fair Market Value of the Common Stock on the payment
date as determined by the Committee or the Board or the surrender of vested
Options owned by the Participant).  No
shares of Common Stock shall be issued until payment therefor, as provided herein,
has been made or provided for.

 

(e)                                  Incentive Stock Option Limitations.  To the extent that the aggregate Fair Market
Value (determined as of the time of grant) of the Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by an Eligible
Employee during any calendar year under this Plan and/or any other stock option
plan of the Company or any Subsidiary or parent corporation (within the meaning
of Section 424(e) of the Code) exceeds $100,000, such Options shall be treated
as Options which are not Incentive Stock Options.  In addition, if an Eligible Employee does not
remain employed by the Company, any Subsidiary or parent corporation (within
the meaning of Section 424(e) of the Code) at all times from the time the Option
is granted until 3 months prior

 

12

 

to the date of exercise (or such other period as required by applicable
law), such Option shall be treated as an Option which is not an Incentive Stock
Option.

 

Should the foregoing provision
not be necessary in order for the Stock Options to qualify as Incentive Stock
Options, or should any additional provisions be required, the Committee may
amend this Plan accordingly, without the necessity of obtaining the approval of
the stockholders of the Company.

 

(f)                                    Form, Modification, Extension and Renewal of Options.  Subject to the terms and conditions and
within the limitations of this Plan, an Option shall be evidenced by such form
of agreement or grant as is approved by the Committee or the Board, as
applicable, and the Committee or the Board may modify, extend or renew
outstanding Options granted under this Plan (provided that the rights of a
Participant are not reduced without his consent), or accept the surrender of outstanding
Options (up to the extent not theretofore exercised) and authorize the granting
of new Options in substitution therefor (to the extent not theretofore
exercised).  Notwithstanding the
foregoing, an outstanding Option may not be modified to reduce the exercise
price thereof nor may a new Option at a lower price be substituted for a
surrendered Option (other than adjustments or substitutions in accordance with Section 4.2),
unless such action is approved by the stockholders of the Company.

 

(g)                                 Other Terms and Conditions.  Options may contain such other provisions,
which shall not be inconsistent with any of the foregoing terms of this Plan,
as the Committee or the Board, as applicable, shall deem appropriate including,
without limitation, permitting “reloads” such that the same number of Options
are granted as the number of Options exercised, shares used to pay for the
exercise price of Options or shares used to pay withholding taxes (“Reloads”).  With respect to Reloads, the exercise price
of the new Stock Option shall be the Fair Market Value on the date of the “reload”
and the term of the Stock Option shall be the same as the remaining term of the
Options that are exercised, if applicable, or such other exercise price and
term as determined by the Committee or the Board, as applicable.

 

ARTICLE VII.

STOCK APPRECIATION RIGHTS

 

7.1.                              Tandem
Stock Appreciation Rights.  A Tandem
Stock Appreciation Right may be granted in conjunction with all or part of any
Stock Option (a “Reference Stock Option”) granted under Article VI of this
Plan.  In the case of a Tandem Stock
Appreciation Right which is granted in conjunction with a Non-Qualified Stock
Option, such rights may be granted either at or after the time of the grant of
such Reference Stock Option.  In the case
of a Tandem Stock Appreciation Right which is granted in conjunction with an
Incentive Stock Option, such rights may be granted only at the time of the
grant of such Reference Stock Option. 
Consultants shall not be eligible for a grant of Tandem Stock
Appreciation Rights granted in conjunction with all or part of an Incentive
Stock Option.

 

13

 

7.2.                              Terms
and Conditions of Tandem Stock Appreciation Rights.  Tandem Stock Appreciation Rights shall be subject
to such terms and conditions, not inconsistent with the provisions of this
Plan, as shall be determined from time to time by the Committee, including Article X
and the following:

 

(a)                                  Term. 
A Tandem Stock Appreciation Right or applicable portion thereof granted
with respect to a Reference Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the Reference Stock Option,
except that, unless otherwise determined by the Committee, in its sole
discretion, at the time of grant, a Tandem Stock Appreciation Right granted
with respect to less than the full number of shares covered by the Reference
Stock Option shall not be reduced until and then only to the extent the
exercise or termination of the Reference Stock Option causes the number of
shares covered by the Tandem Stock Appreciation Right to exceed the number of
shares remaining available and unexercised under the Reference Stock Option.

 

(b)                                 Exercisability.  Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Reference
Stock Options to which they relate shall be exercisable in accordance with the
provisions of Article VI and this Article VII.  Tandem Stock Appreciation Rights shall expire
no later than the Reference Stock Options to which they relate.

 

(c)                                  Method of Exercise.  A Tandem Stock Appreciation Right may be
exercised by an optionee by surrendering the applicable portion of the
Reference Stock Option.  Upon such
exercise and surrender, the Participant shall be entitled to receive an amount
determined in the manner prescribed in this Section 7.2 and the Reference
Stock Option or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of the limitation set
forth in Article IV of this Plan on the number of shares of Common Stock
to be issued under this Plan.  The Stock
Options which have been so surrendered, in whole or in part, shall no longer be
exercisable to the extent the related Tandem Stock Appreciation Rights have
been exercised.

 

(d)                                 Payment. 
Upon the exercise of a Tandem Stock Appreciation Right a Participant
shall be entitled to receive a number of shares of Common Stock equal in value
to the excess of the Fair Market Value of one share of Common Stock over the
exercise price per share specified in the Reference Stock Option (which may not
be less than the Fair Market Value of a share of Common Stock on the grant
date) multiplied by the number of shares in respect of which the Tandem Stock
Appreciation Right shall have been exercised.

 

7.3.                              Non-Tandem
Stock Appreciation Rights. 
Non-Tandem Stock Appreciation Rights may also be granted without
reference to any Stock Options granted under Article VI of this Plan.

 

7.4.                              Terms
and Conditions of Non-Tandem Stock Appreciation Rights.  Non-Tandem Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with

 

14

 

the provisions of this Plan, as
shall be determined from time to time by the Committee, including Article X
and the following:

 

(a)                                  Term. 
The term of each Non-Tandem Stock Appreciation Right shall be fixed by
the Committee, but shall not be greater than 10 years after the date the right
is granted.

 

(b)                                 Exercisability.  Non-Tandem Stock Appreciation Rights shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee at grant. 
If the Committee provides, in its discretion, that any such right is exercisable
subject to certain limitations (including, without limitation, that it is
exercisable only in installments or within certain time periods), the Committee
may waive such limitation on the exercisability at any time at or after grant
in whole or in part (including, without limitation, that the Committee may
waive the installment exercise provisions or accelerate the time at which
rights may be exercised), based on such factors, if any, as the Committee shall
determine, in its sole discretion.

 

(c)                                  Method of Exercise.  Subject to whatever installment exercise and
waiting period provisions apply under subsection (b) above, Non-Tandem
Stock Appreciation Rights may be exercised in whole or in part at any time
during its term, by giving written notice of exercise to the Company specifying
the number of Non-Tandem Stock Appreciation Rights to be exercised.

 

(d)                                 Payment. 
Upon the exercise of a Non-Tandem Stock Appreciation Right a Participant
shall be entitled to receive, for each right exercised, a number of shares of
Common Stock equal in value to the excess of the Fair Market Value of one share
of Common Stock on the date the right is exercised over the Fair Market Value
of one share of Common Stock on the date the right was awarded to the
Participant.

 

7.5.                              Limited
Stock Appreciation Rights.  The
Committee may, in its sole discretion, grant Limited Stock Appreciation
Rights.  Limited Stock Appreciation
Rights may be exercised only upon the occurrence of a Change in Control or such
other event as the Committee may, in its sole discretion, designate at the time
of grant or thereafter.  Upon the
exercise of Limited Stock Appreciation Rights, except as otherwise provided in
an Award agreement, the Participant shall receive a number of shares of Common
Stock equal to the amount:  (i) set forth
in Section 7.2(d) with respect to Tandem Stock Appreciation Rights, or
(ii) set forth in Section 7.4(d) with respect to Non-Tandem Stock
Appreciation Rights.

 

ARTICLE VIII.

RESTRICTED STOCK

 

8.1.                              Awards
of Restricted Stock.  Restricted
Stock may be issued to all eligible Participants pursuant to Section 5.1
of the Plan either alone or in addition to other Awards granted under the
Plan.  The Committee shall determine the
eligible Participants to whom, and the time or times at which, grants of
Restricted Stock will be made, the number of shares to be awarded, the purchase
price (if any) to be paid by the Participant (subject to Section 8.3), the

 

15

 

time or times at which such
Awards may be subject to forfeiture (if any), the vesting schedule (if
any) and rights to acceleration thereof, and all other terms and conditions of
the Awards.  The Committee may condition
the grant or vesting of Restricted Stock upon the attainment of specified
performance targets (including, the Performance Goals specified in Exhibit A
hereto) or such other factors as the Committee may determine, in its sole
discretion, including to comply with the requirements of Section 162(m) of
the Code.  Unless otherwise determined by
the Committee, the Participant shall not be permitted to transfer shares of
Restricted Stock awarded under this Plan during a period set by the Committee
(if any) (the “Restriction Period”) commencing with the date of such Award, as
set forth in the applicable Award agreement.

 

8.2.                              Objective
Performance Goals, Formulae or Standards. 
Notwithstanding the foregoing, if the award of Restricted Stock is
intended to comply with the “performance based” compensation exception under Section 162(m)
of the Code and if the grant of such Award or the lapse of restrictions is
based on the attainment of Performance Goals, the Committee shall establish the
objective Performance Goals and the applicable number of shares of Restricted
Stock to be granted or the applicable vesting percentage of the Restricted
Stock applicable to each Participant or class of Participants in writing prior
to the beginning of the applicable fiscal year or at such later date as
otherwise determined by the Committee and while the outcome of the Performance
Goals are substantially uncertain in accordance with Section 162(m) of the
Code.  Such Performance Goals may
incorporate provisions for disregarding (or adjusting for) changes in
accounting methods, corporate transactions (including, without limitation,
dispositions and acquisitions) and other similar type events or
circumstances.  The Performance Goals are
set forth in Exhibit A hereto.

 

8.3.                              Awards
and Certificates.  A Participant
selected to receive Restricted Stock shall not have any rights with respect to
such Award, unless and until such Participant has delivered a fully executed
copy of the Award agreement evidencing the Award to the Company and has
otherwise complied with the applicable terms and conditions of such Award.  Further, such Award shall be subject to the
following conditions:

 

(a)                                  Purchase Price.  The purchase price of Restricted Stock shall
be determined by the Committee, but shall not be less than as permitted under
applicable law.

 

(b)                                 Acceptance.  Awards of Restricted Stock must be accepted
within a period of sixty (60) days (or such shorter period as the Committee may
specify at grant) after the grant date, by executing an Award agreement and by
paying whatever price (if any) the Committee has designated thereunder.

 

(c)                                  Legend.  Each Participant receiving Restricted Stock
shall be issued a stock certificate in respect of such shares of Restricted
Stock, unless the Committee elects to use another system, such as book entries
by the transfer agent, as evidencing ownership of Restricted Stock.  Such certificate shall be registered in the
name of such Participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award, substantially in
the following form:

 

16

 

“The anticipation, alienation, attachment,
sale, transfer, assignment, pledge, encumbrance or charge of the shares of
stock represented hereby are subject to the terms and conditions (including forfeiture)
of the AXS-One Inc. (the “Company”) 2005 Stock Incentive Plan, and an Award
agreement entered into between the registered owner and the Company dated                .  Copies of such Plan and Award agreement are
on file at the principal office of the Company.”

 

(d)                                 Custody.  The Committee may require that any stock
certificates evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock Award, the Participant shall have delivered a duly signed
stock power, endorsed in blank, relating to the Common Stock covered by such
Award.

 

(e)                                  Rights as
Stockholder.  Except as provided in
this subsection and subsection (d) above and as otherwise determined
by the Committee, the Participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a holder of shares of Common Stock of
the Company including, without limitation, the right to receive any dividends,
the right to vote such shares and, subject to and conditioned upon the full
vesting of shares of Restricted Stock, the right to tender such shares.  Notwithstanding the foregoing, the payment of
dividends shall be deferred until, and conditioned upon, the expiration of the
applicable Restriction Period, unless the Committee, in its sole discretion,
specifies otherwise at the time of the Award.

 

(f)                                    Lapse of
Restrictions.  If and when the
Restriction Period expires without a prior forfeiture of the Restricted Stock
subject to such Restriction Period, the certificates for such shares shall be
delivered to the Participant.  All
legends shall be removed from said certificates at the time of delivery to the
Participant except as otherwise required by applicable law.  Notwithstanding the foregoing, actual
certificates shall not be issued to the extent that book entry recordkeeping is
used.

 

(g)                                 Termination.  Unless otherwise determined by the Committee
at grant or thereafter, upon a Termination of Employment or Termination of
Consultancy for any reason during the relevant Restriction Period, all
Restricted Stock still subject to restriction shall be forfeited.

 

ARTICLE IX.

NON-EMPLOYEE DIRECTOR STOCK OPTIONS

 

9.1.                              Options.  The terms of this Article IX shall apply
only to Options granted to Non-Employee Directors.

 

9.2.                              Grants.  Without further action by the Board or the
stockholders of the Company, each Non-Employee Director shall, subject to the
terms of this Plan, be granted:

 

(a)                                  Options to purchase
40,000 shares (or such other quantity of shares as the Board shall, from time
to time during the term of the Plan, determine) of Common Stock

 

17

 

as of the date the Non-Employee Director begins service as a
Non-Employee Director on the Board on or after the Effective Date of this Plan,
and

 

(b)                                 Options to purchase
10,000 shares (or such other quantity of shares as the Board shall, from time
to time during the term of the Plan, determine) of Common Stock on the date of
each annual stockholders meeting of the Company, beginning with the 2005 annual
stockholders meeting, provided such Non-Employee Director has, as of each such
annual stockholders meeting, been a Non-Employee Director for at least 12
months and has not experienced a Termination of Directorship.

 

Notwithstanding any other
provisions in the Plan to the contrary, the provisions of this Section 9.2
shall not take effect until the provisions set forth in Section 9.2 of the
Company’s 1998 Stock Option Plan, as amended, can no longer be implemented in
full.

 

9.3.                              Non-Qualified
Stock Options.  Stock Options granted
under this Article IX shall be Non-Qualified Stock Options.

 

9.4.                              Terms
of Options.  Options granted under
this Article IX shall be subject to the following terms and conditions and
shall be in such form and contain such additional terms and conditions, not
inconsistent with terms of this Plan, as the Board shall deem desirable:

 

(a)                                  Option Exercise Price.  The Option exercise price per share of Common
Stock subject to an Option granted pursuant to Section 9.2 shall be equal
to 100% of the Fair Market Value of the share of Common Stock at the time of
grant.

 

(b)                                 Exercisability.  Except as otherwise provided herein, 25% of
any Option granted under this Article IX shall be exercisable on or after
each of the four anniversaries immediately following the date of grant.  Notwithstanding the foregoing, all Options
shall fully vest and become exercisable upon a Change in Control.

 

(c)                                  Method of Exercise.  A Non-Employee Director electing to exercise
one or more Options shall give written notice of exercise to the Company
specifying the number of shares to be purchased.  Common Stock purchased pursuant to the
exercise of a Stock Option shall be paid for at the time of exercise as
follows:  (i) in cash or by check, bank
draft or money order payable to the order of Company; (ii) solely to the extent
permitted by applicable law, if the Common Stock is traded on a national
securities exchange, the Nasdaq Stock Market, Inc. or quoted on a national
quotation system sponsored by the National Association of Securities Dealers,
through the delivery of irrevocable instructions to a broker to deliver
promptly to the Company an amount equal to the purchase price; or (iii) on such
other terms and conditions as may be acceptable to the Board (which may include
payment in full or part in the form of Common Stock owned by the Participant
for a period of at least 6 months (and for which the Participant has good title
free and clear of any liens and encumbrances) based on the Fair Market Value of
the Common Stock on the payment date as determined by the Board or the
surrender of vested Options owned by the Participant).  No shares of Common Stock shall be issued
until payment therefore, as provided herein, has been made or provided for.

 

18

 

(d)                                 Option Term.  Except as otherwise provided herein, if not
previously exercised each Option shall expire upon the tenth anniversary of the
date of the grant thereof.

 

9.5.                              Termination
of Directorship.  The following rules
apply with regard to Options (including Options granted under Articles VI and
IX) upon the Termination of Directorship:

 

(a)                                  Termination of Directorship by reason of Death or
Disability.  Except as
otherwise provided herein, upon the Termination of Directorship, on account of
death or Disability, all then outstanding Options shall fully vest and become
exercisable and shall remain exercisable by the Participant or, in the case of
death, by the Participant’s estate or by the person given authority to exercise
such Options by his or her will or by operation of law, at any time within a
period of one year from the date of such Termination of Directorship, but in no
event beyond the expiration of the stated term of such Stock Option.

 

(b)                                 Otherwise Ceasing to be a Director Other than for
Cause.  Except as otherwise
provided herein, upon the Termination of Directorship, on account of
Retirement, resignation, failure to stand for reelection or failure to be
reelected or otherwise other than as set forth in (b) below, all outstanding
Options then exercisable and not exercised by the Participant prior to such
Termination of Directorship shall remain exercisable, to the extent exercisable
at the Termination of Directorship, at any time within a period of one year
from the date of such Termination of Directorship, but in no event beyond the
expiration of the stated term of such Stock Option.

 

(c)                                  Cause. 
Upon removal, failure to stand for reelection or failure to be
renominated for Cause, or if the Company obtains or discovers information after
Termination of Directorship that such Participant had engaged in conduct that
would have justified a removal for Cause during such directorship, all
outstanding Options of such Participant shall immediately terminate and shall
be null and void.

 

(d)                                 Cancellation of Options.  Except as provided in (a) above, no Options
that were not exercisable during the period such person serves as a director
shall thereafter become exercisable upon a Termination of Directorship for any
reason or no reason whatsoever, and such Options shall terminate and become
null and void upon a Termination of Directorship.

 

9.6.                              Changes.

 

(a)                                  The Awards to a
Non-Employee Director under Articles VI and IX shall be subject to Sections
4.2(a), (b) and (c) of this Plan and this Section 9.6, but shall not be
subject to Section 4.2(d).

 

(b)                                 If the Company shall
not be the surviving corporation in any merger or consolidation, or if the
Company is to be dissolved or liquidated, then, unless the surviving
corporation assumes the Options or substitutes new Options which are determined
by the Board in its sole discretion to be substantially similar in nature and
equivalent in terms and value for Options then outstanding, upon the effective
date of

 

19

 

such merger, consolidation, liquidation or dissolution, any unexercised
Options shall expire without additional compensation to the holder thereof;
provided, that, the Board shall deliver notice to each Non-Employee Director at
least 30 days prior to the date of consummation of such merger, consolidation,
dissolution or liquidation which would result in the expiration of the Options
and during the period from the date on which such notice of termination is
delivered to the consummation of the merger, consolidation, dissolution or
liquidation, such Participant shall have the right to exercise in full
effective as of such consummation all Options that are then outstanding
(without regard to limitations on exercise otherwise contained in the Options)
but contingent on occurrence of the merger, consolidation, dissolution or
liquidation, and, provided that, if the contemplated transaction does not take
place within a 90 day period after giving such notice for any reason
whatsoever, the notice, accelerated vesting and exercise shall be null and void
and, if and when appropriate, new notice shall be given as aforesaid.

 

ARTICLE X.

NON-TRANSFERABILITY AND TERMINATION OF

EMPLOYMENT/CONSULTANCY PROVISIONS APPLICABLE TO STOCK OPTIONS

AND STOCK APPRECIATION RIGHTS

 

10.1.                        Except as
otherwise provided in this Section 10.1, no Stock Option or Stock
Appreciation Right shall be Transferred by the Participant otherwise than by
will or by the laws of descent and distribution.  All Stock Options and all Stock Appreciation
Rights shall be exercisable, during the Participant’s lifetime, only by the
Participant.  Tandem Stock Appreciation
Rights may be Transferred, to the extent permitted above, only with, and upon
the same terms and conditions as, the underlying Stock Option.  No Award shall, except as otherwise
specifically provided by law or herein, be Transferred in any manner, and any
attempt to Transfer any such Award shall be void, and no such Award shall in
any manner be used for the payment of, subject to, or otherwise encumbered by
or hypothecated for the debts, contracts, liabilities, engagements or torts of
any person who shall be entitled to such Award, nor shall it be subject to
attachment or legal process for or against such person.  Notwithstanding the foregoing, the Committee
may determine at the time of grant or thereafter, that a Non-Qualified Stock
Option granted pursuant to Article VI (other than a Non-Qualified Stock
Option granted to a Non-Employee Director) that is otherwise not transferable
pursuant to this Article X is transferable in whole or part and in such
circumstances, and under such conditions, as specified by the Committee.

 

10.2.                        Termination
of Employment or Termination of Consultancy.  The following rules apply with regard to
Options and SARs upon the Termination of Employment or Termination of
Consultancy of a Participant, unless otherwise determined by the Committee at
grant or, if no rights of the Participant (or his estate in the event of death)
are reduced, thereafter:

 

(a)                                  Termination by Reason of Death.  If a Participant’s Termination of Employment
or Termination of Consultancy is by reason of his death, any Stock Option or
SAR held by such Participant may be exercised, to the extent exercisable at the
Participant’s Termination of Employment or Termination of Consultancy, by the

 

20

 

Participant’s estate or by the person given authority to exercise such
Options by his or her will or by operation of law, at any time within a period
of one year from the date of such death, but in no event beyond the expiration
of the stated term of such Stock Option or SAR.

 

(b)                                 Termination by Reason of Disability or Retirement.  If a Participant’s Termination of Employment
or Termination of Consultancy is by reason of his  Disability or Retirement, any Stock Option or
SAR held by such Participant may be exercised, to the extent exercisable at the
Participant’s Termination of Employment or Termination of Consultancy, by the
Participant, at any time within a period of one year from the date of such
Termination of Employment or Termination of Consultancy, but in no event beyond
the expiration of the stated term of such Stock Option or SAR; provided,
however, that, if the Participant dies within such exercise period, any
unexercised Stock Option or SAR held by such Participant shall thereafter be
exercisable by the Participant’s estate or by the person given authority to
exercise such Options by his or her will or by operation of law, to the extent
to which it was exercisable at the time of death, for a period of one year (or
such other period as the Committee may specify at grant or, if no rights of the
Participant’s estate are reduced, thereafter) from the date of such death, but
in no event beyond the expiration of the stated term of such Stock Option or
SAR.

 

(c)                                  Involuntary Termination Without Cause.  If a Participant’s Termination of Employment
or Termination of Consultancy is by involuntary termination without Cause, any
Stock Option or SAR held by such Participant may be exercised, to the extent
exercisable at termination, by the Participant at any time within a period of
90 days from the date of such termination, but in no event beyond the
expiration of the stated term of such Stock Option or SAR.

 

(d)                                 Voluntary Termination by the Participant.  If a Participant’s Termination of Employment
or Termination of Consultancy is a voluntary termination by the Participant and
occurs prior to, or more than 90 days after, the occurrence of an event which
would be grounds for Termination of Employment or Termination of Consultancy
for Cause (without regard to any notice or cure period requirements), any Stock
Option or SAR held by such Participant may be exercised, to the extent
exercisable at termination, by the Participant at any time within a period of
30 days from the date of such termination, but in no event beyond the
expiration of the stated term of such Stock Option or SAR.

 

(e)                                  Termination for Cause.  If a Participant’s Termination of Employment
or Termination of Consultancy is:  (i)
for Cause, or (ii) a voluntary termination (as provided in subsection (d)
above) within 90 days after an event which would be grounds for a Termination
of Employment or Termination of Consultancy for Cause, any Stock Option or SAR
held by such Participant shall thereupon terminate and expire as of the date of
termination.

 

10.3.                        Termination
Repayment.  Notwithstanding anything
else in this Plan to the contrary, in the event (i) a Participant’s Termination
of Employment or Termination of Consultancy occurs not more than 3 months after
the exercise of a Stock Option or SAR or

 

21

 

vesting of Restricted Stock, or
(ii) a Participant engages in a competitive activity as determined by
the Committee in its sole discretion after the exercise of a Stock Option or
SAR or vesting of Restricted Stock, the Committee may, in its sole discretion,
require the Participant to pay the Company an amount in cash, for each share
with respect to which the Option or SAR was exercised or to which the
Restricted Stock vested, equal to the difference between:  (i) the Fair Market Value of the Common Stock
on the date of such termination or determination, as applicable, and (ii) the
exercise price or purchase price (as applicable) for each such share.

 

ARTICLE XI.

CHANGE IN CONTROL PROVISIONS

 

11.1.                        Benefits.  In the event of a Change in Control of the
Company (as defined below), except as otherwise provided by the Committee upon
the grant of an Award to an Eligible Employee or Consultant, the Participant
shall be entitled to the following benefits:

 

(a)                                  Subject to paragraph
(b) below with regard to Options granted to Eligible Employees and Consultants,
all outstanding Awards granted prior to the Change in Control shall be fully
vested and immediately exercisable (as applicable) in their entirety.  The Committee or the Board (as applicable),
in its sole discretion, may provide for the purchase of any such Stock Options
by the Company for an amount of cash equal to the excess of the Change in
Control Price (as defined below) of the shares of Common Stock covered by such
Stock Options, over the aggregate exercise price of such Stock Options.  For purposes of this Section 11.1, Change
in Control Price shall mean the higher of: 
(i) the highest price per share of Common Stock paid in any transaction
related to the Change in Control of the Company, or (ii) the highest Fair
Market Value per share of Common Stock at any time during the 60 day period
preceding the Change in Control.

 

(b)                                 Notwithstanding
anything to the contrary herein, unless the Committee provides otherwise at the
time an Option is granted to an Eligible Employee or Consultant hereunder or
thereafter, no acceleration of exercisability shall occur with respect to such
Option if the Committee reasonably determines in good faith, prior to the
occurrence of the Change in Control, that the Options shall be honored or
assumed, or new rights substituted therefor (each such honored, assumed or
substituted option hereinafter called an “Alternative Option”), by a
Participant’s employer (or the parent or an subsidiary of such employer), or,
in the case of a Consultant, by the entity (or its parent or subsidiary) which
retains the Consultant, immediately following the Change in Control, provided
that any such Alternative Option must meet the following criteria:

 

(i)                                     the Alternative
Option must be based on stock which is traded on an established securities
market, or which will be so traded within 30 days of the Change in Control;

 

(ii)                                  the Alternative
Option must provide such Participant with rights and entitlements substantially
equivalent to or better than the rights, terms and conditions

 

22

 

applicable under such Option, including, but not limited to, an
identical or better exercise schedule; and

 

(iii)                               the Alternative Option
must have economic value substantially equivalent to the value of such Option
(determined at the time of the Change in Control).

 

For purposes of Incentive Stock
Options, any assumed or substituted Option shall comply with the requirements
of Treasury regulation Section 1.425-1 (and any amendments thereto).

 

(c)                                  Notwithstanding
anything else herein, the Committee may, in its sole discretion, provide for
accelerated vesting of an Option (other than a grant to a Non-Employee Director
pursuant to Article IX hereof), Stock Appreciation Right or Restricted
Stock, upon a Termination of Employment or Termination of Consultancy during
the Pre-Change in Control Period.  Unless
otherwise determined by the Committee, the Pre-Change in Control Period shall
be the 180 day period prior to a Change in Control.

 

11.2.                        Change
in Control.  A “Change in Control”
shall be deemed to have occurred:

 

(a)                                  upon any “person” as
such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than
the Company, any trustee or other fiduciary holding securities under any
employee benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of Common Stock of the Company), becoming the
owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company’s then outstanding securities (including,
without limitation, securities owned at the time of any increase in ownership);

 

(b)                                 during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect a
transaction described in paragraph (a), (c), or (d) of this section) or a
director whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
the two year period or whose election or nomination for election was previously
so approved, cease for any reason to constitute at least a majority of the
Board;

 

(c)                                  upon the merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of 

 

23

 

the Company or such surviving entity outstanding immediately after such
merger or consolidation, provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no person acquires more than 50% of the combined voting
power of the Company’s then outstanding securities shall not constitute a
Change in Control of the Company; or

 

(d)                                 upon the stockholder’s
of the Company approval of a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially
all of the Company’s assets other than the sale of all or substantially all of
the assets of the Company to a person or persons who beneficially own, directly
or indirectly, at least 50% or more of the combined voting power of the
outstanding voting securities of the Company at the time of the sale.

 

ARTICLE XII.

TERMINATION OR AMENDMENT OF PLAN

 

12.1.                        Termination
or Amendment.  Notwithstanding any
other provision of this Plan, the Board or the Committee may at any time, and
from time to time, amend, in whole or in part, any or all of the provisions of
this Plan (including any amendment deemed necessary to ensure that the Company
may comply with any regulatory requirement referred to in this Article XII),
or suspend or terminate it entirely, retroactively or otherwise; provided, however,
that, unless otherwise required by law or specifically provided herein, the
rights of a Participant with respect to Awards granted prior to such amendment,
suspension or termination, may not be impaired without the consent of such
Participant and, provided further, without the approval of the stockholders of
the Company in accordance with the laws of the State of Delaware or applicable
rules of any exchange or system on which the Company’s securities are listed or
traded, to the extent required by the applicable provisions of Rule 16b-3 or Section 162(m)
of the Code, or with respect to Incentive Stock Options, Section 422 of
the Code, no amendment may be made which would: 
(i) increase the aggregate number of shares of Common Stock that may be
issued under this Plan; (ii) increase the maximum individual Participant
limitations for a fiscal year under Section 4.1(b); (iii) change the
classification of employees and Consultants eligible to receive Awards under
this Plan; (iv) decrease the minimum exercise price of any Stock Option or SAR;
or (v) extend the maximum option term under Section 6.3(b).

 

The Committee
(and in the case of awards of Stock Options to Non-Employee Directors, the
Board) may amend the terms of any Award theretofore granted, prospectively or
retroactively, but, subject to Article IV or as otherwise specifically
provided herein, no such amendment or other action by the Committee (or the
Board) shall impair the rights of any Participant without the Participant’s
consent.

 

Notwithstanding
anything herein to the contrary, any provision in this Plan relating to any
Award that constitutes a “non-qualified deferred compensation plan” for
purposes of Code Section 409A that is inconsistent with Section 409A
of the Code shall be deemed to be amended to comply with Section 409A and
to the extent such provision cannot be amended to comply therewith, such
provision shall be null and void.

 

24

 

ARTICLE XIII.

UNFUNDED PLAN

 

13.1.                        Unfunded
Status of Plan.  This Plan is
intended to constitute an “unfunded” plan for incentive and deferred
compensation.  With respect to any
payments as to which a Participant has a fixed and vested interest but which
are not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a
general creditor of the Company.

 

ARTICLE XIV.

GENERAL PROVISIONS

 

14.1.                        Legend.  The Committee or the Board, as applicable,
may require each person receiving shares pursuant to an Award under this Plan
to represent to and agree with the Company in writing that the Participant is
acquiring the shares without a view to distribution thereof.  In addition to any legend required by this
Plan, the certificates for such shares may include any legend which the
Committee or the Board, as applicable, deems appropriate to reflect any
restrictions on Transfer.

 

All
certificates for shares of Common Stock delivered under this Plan shall be
subject to such stock transfer orders and other restrictions as the Committee
or the Board, as applicable, may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed or any national securities
association system upon whose system the Common Stock is then quoted, any
applicable Federal or state securities law, and any applicable corporate law,
and the Committee or the Board, as applicable, may cause a legend or legends to
be put on any such certificates to make appropriate reference to such
restrictions.

 

14.2.                        Other
Plans.  Nothing contained in this
Plan shall prevent the Board from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is required; and
such arrangements may be either generally applicable or applicable only in
specific cases.

 

14.3.                        No
Right to Employment/Consultancy/Directorship.  Neither this Plan nor the grant of any Award
hereunder shall give any Participant or other employee or Consultant any right
with respect to continuance of employment or consultancy by the Company or any
Affiliate, nor shall they be a limitation in any way on the right of the
Company or any Affiliate by which an employee is employed or consultant retained
to terminate his employment or consultancy, as applicable, at any time.  Neither this Plan nor the grant of any Option
hereunder shall impose any obligations on the Company to retain any Participant
as a director nor shall it impose on the part of any Participant any obligation
to remain as a director of the Company.

 

14.4.                        Withholding
of Taxes.  The Company shall have the
right to deduct from any payment to be made to a Participant, or to otherwise
require, prior to the issuance or delivery of

 

25

 

any shares of Common Stock or
the payment of any cash hereunder, payment by the Participant of, any Federal,
state or local taxes required by law to be withheld.

 

The Committee
shall permit any such withholding obligation with regard to an Eligible
Employee or Consultant to be satisfied by reducing the number of shares of
Common Stock otherwise deliverable or by delivering shares of Common Stock
already owned.  Any fraction of a share
of Common Stock required to satisfy such tax obligations shall be disregarded
and the amount due shall be paid instead in cash by the Participant.

 

14.5.                        Listing
and Other Conditions.

 

(a)                                  As long as the Common
Stock is listed on a national securities exchange or system sponsored by a
national securities association, the issue of any shares of Common Stock
pursuant to an Award shall be conditioned upon such shares being listed on such
exchange or system.  Notwithstanding the
foregoing, the grant of an Award hereunder is not intended to be conditional
and the Company shall have no obligation to issue such shares unless and until
such shares are so listed; provided, however, that any delay in the issuance of
such shares shall be based solely on a reasonable business decision and the right
to exercise any Option with respect to such shares shall be suspended until
such listing has been effected.

 

(b)                                 If at any time counsel
to the Company shall be of the opinion that any sale or delivery of shares of
Common Stock pursuant to an Award is or may in the circumstances be unlawful or
result in the imposition of excise taxes on the Company under the statutes,
rules or regulations of any applicable jurisdiction, the Company shall have no
obligation to make such sale or delivery, or to make any application or to
effect or to maintain any qualification or registration under the Securities
Act of 1933, as amended, or otherwise with respect to shares of Common Stock or
Awards, and the right to exercise any Option shall be suspended until, in the
opinion of said counsel, such sale or delivery shall be lawful or will not
result in the imposition of excise taxes on the Company.

 

(c)                                  Upon termination of
any period of suspension under this Section 14.5, any Award affected by
such suspension which shall not then have expired or terminated shall be
reinstated as to all shares available before such suspension and as to shares
which would otherwise have become available during the period of such
suspension, but no such suspension shall extend the term of any Option.

 

14.6.                        Governing
Law.  This Plan shall be governed and
construed in accordance with the laws of the State of Delaware (regardless of
the law that might otherwise govern under applicable Delaware principles of
conflict of laws).

 

14.7.                        Construction.  Wherever any words are used in this Plan in
the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form they shall be construed as though
they were also used in the plural form in all cases where they would so
apply.  To the extent applicable, this
Plan shall be limited, construed and interpreted in a manner

 

26

 

so as to comply with Section 162(m)
of the Code and the applicable requirements of Rule 16b-3; however,
noncompliance with Section 162(m) of the Code and Rule 16b-3 shall have no
impact on the effectiveness of an Award under this Plan.

 

14.8.                        Other
Benefits.  No Award payment under
this Plan shall be deemed compensation for purposes of computing benefits under
any retirement plan of the Company or its subsidiaries or affiliates nor affect
any benefits under any other benefit plan now or subsequently in effect under
which the availability or amount of benefits is related to the level of
compensation.

 

14.9.                        Costs.  The Company shall bear all expenses included
in administering this Plan, including expenses of issuing Common Stock pursuant
to any Awards hereunder.

 

14.10.                  No Right to
Same Benefits.  The provisions of
Awards need not be the same with respect to each Participant, and such Awards
to individual Participants need not be the same in subsequent years.

 

14.11.                  Death/Disability.  The Committee or the Board, as applicable,
may in its discretion require the transferee of a Participant’s Award to supply
the Company with written notice of the Participant’s death or Disability and to
supply the Company with a copy of the will (in the case of the Participant’s
death) or such other evidence as the Committee or the Board, as applicable,
deems necessary to establish the validity of the Transfer of an Award.  The Committee or the Board, as applicable,
may also require that the transferee agree in writing to be bound by all of the
terms and conditions of this Plan.

 

14.12.                  Severability
of Provisions.  If any provision of
this Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof, and this Plan
shall be construed and enforced as if such provisions had not been included.

 

14.13.                  Headings and
Captions.  The headings and captions
herein are provided for reference and convenience only, shall not be considered
part of this Plan, and shall not be employed in the construction of this Plan.

 

ARTICLE XV.

EFFECTIVE DATE OF PLAN

 

This Plan was
originally adopted by the Board on April 13, 2005 (the “Effective Date”),
subject to and conditioned upon the approval of this Plan by the stockholders
of the Company in accordance with the requirements of the laws of the State of
Delaware and any applicable exchange requirements.

 

27

 

ARTICLE XVI.

TERM OF PLAN

 

No Award shall
be granted pursuant to this Plan on or after the tenth anniversary of the
Effective Date, but Awards granted prior to such tenth anniversary may extend
beyond that date.

 

ARTICLE XVII.

NAME OF PLAN

 

This Plan
shall be known as the AXS-One Inc. 2005 Stock Incentive Plan.

 

28

 

EXHIBIT A

PERFORMANCE GOALS

 

Performance
Goals established for purposes of the grant and/or vesting of Restricted Stock
intended to be “performance-based” under Section 162(m) of the Code shall
be based on one or more of the following (“Performance Goals”): (i) the
attainment of certain target levels of, or a specified increase in, enterprise
value or value creation targets of the Company (or any subsidiary, division,
other operational unit of the Company or administrative department); (ii) the
attainment of certain target levels of, or a percentage increase in after-tax
or pre-tax profits of the Company, including without limitation that
attributable to continuing and/or other operations of the Company (or in either
case a subsidiary, division, other operational unit or administrative
department of the Company); (iii) the attainment of certain target levels of,
or a specified increase in, operational cash flow of the Company (or a
subsidiary, division, other operational unit or administrative department of
the Company); (iv) the attainment of a certain level of reduction of, or other
specified objectives with regard to limiting the level of increase in all or a
portion of, the Company’s bank debt or other long-term or short-term public or
private debt or other similar financial obligations of the Company, which may
be calculated net of cash balances and/or other offsets and adjustments as may
be established by the Committee; (v) the attainment of a specified percentage
increase in earnings per share or earnings per share from continuing operations
of the Company (or a subsidiary, division, other operational unit or
administrative department of the Company); (vi) the attainment of certain
target levels of, or a specified percentage increase in, net sales, revenues,
net income or earnings before income tax or other exclusions of the Company (or
a subsidiary, division, other operational unit or administrative department of
the Company); (vii) the attainment of certain target levels of, or a specified
increase in, return on capital employed (including, without limitation, return
on invested capital or return on committed capital of the Company (or any
subsidiary, division, other operational unit or administrative department of
the Company); (viii) the attainment of certain target levels of, or a
percentage increase in, after-tax or pre-tax return on stockholder equity of
the Company (or any subsidiary, division, other operational unit or
administrative department of the Company); (ix) the attainment of certain
target levels of, or a percentage increase in, market share; (x) the attainment
of certain target levels in the fair market value of the shares of the Company’s
Common Stock; (xi) the growth in the value of an investment in the Company’s
Common Stock assuming the reinvestment of dividends; (xii)  the attainment of a certain level of,
reduction of, or other specified objectives with regard to limiting the level
of or increase in, all or a portion of controllable expenses or costs or other
expenses or costs of the Company, subsidiary, parent, division, operational
unit or administrative department; or (xiii) the attainment of certain target
levels of, or a specified increase in, economic value added targets based on a
cash flow return on investment formula.

 

In addition, such Performance Goals may be
based upon the attainment of specified levels of Company (or subsidiary,
division, other operational unit or administrative department of the Company)
performance under one or more of the measures described above relative to the
performance of other corporations.  To
the extent permitted under Section 162(m) of the Code, but only to the
extent permitted under Section 162(m) of the Code (including, without
limitation, compliance with any requirements for stockholder approval), the
Committee may: (i) designate additional business criteria on which the
Performance Goals may be based or (ii) adjust, modify or amend the
aforementioned business criteria.

 

29

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