Document:

EX-10.10 NONQUALIFIED STOCK OPTION PLAN

 

EXHIBIT 10.10

PROGRESS SOFTWARE CORPORATION

2002 NONQUALIFIED STOCK PLAN

SECTION 1. General Purpose of the
Plan; Definitions

     The name of the plan is the Progress Software Corporation 2002
Nonqualified Stock Plan (the “Plan”). The purpose of the Plan is to encourage
and enable employees of Progress Software Corporation, a Massachusetts
corporation (the “Company”), and its Subsidiaries to acquire a proprietary
interest in the Company. It is anticipated that providing employees with a
direct stake in the Company’s welfare will assure a closer identification of
their interests with those of the Company and its stockholders, thereby
stimulating their efforts on the Company’s behalf and strengthening their desire
to remain with the Company. The Company intends that this purpose will be
effected by the granting of Awards (as defined below) under the Plan.

     The following terms shall be defined as set forth below:

     “Affiliate” means any company in an “affiliated group,” as such term is
defined in Section 1504(a) of the Code, which includes the Company.

     “Award” or “Awards,” except where referring to a particular category of
grant under the Plan, shall include Non-Statutory Stock Options, Restricted
Stock Awards, Unrestricted Stock Awards and Performance Share Awards.

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

     “Cause” means (i) any material breach by the participant of any
agreement to which the participant and the Company are both parties, (ii) any
act or omission to act by the participant which may have a material and adverse
effect on the Company’s business or on the participant’s ability to perform
services for the Company, including, without limitation, the commission of any
crime (other than ordinary traffic violations), or (iii) any material misconduct
or material neglect of duties by the participant in connection with the business
or affairs of the Company or any affiliate of the Company.

     “Change of Control” shall have the meaning set forth in Section 15.

     “Code” means the Internal Revenue Code of 1986, as amended, and any
successor code, and related rules, regulations and interpretations.

     “Committee” shall mean the Board or, if appointed by the Board, a
committee of not less than two (2) directors. It is the intention of the Company
that the Plan shall be administered by “non-employee directors” within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, but
the authority and validity of any act taken or not taken by the Committee shall
not be affected if any director administering the Plan is not a non-employee
director.

 

     “Disability” means disability as set forth in Section 22(e)(3) of the
Code.

     “Effective Date” means the date on which the Plan is adopted by the
Board as set forth in Section 17.

     “Eligible Person” shall have the meaning set forth in Section 4.

     “Fair Market Value” on any given date means the closing price per share
of the Stock on such date as reported by a nationally recognized stock exchange,
or, if the Stock is not listed on such an exchange, as reported by the Nasdaq
Stock Market, or, if the Stock is not quoted by the Nasdaq Stock Market, the
fair market value of the Stock as determined by the Committee.

     “Non-Statutory Stock Option” means any stock option that is not an
incentive stock option as defined in Section 422 of the Code.

     “Normal Retirement” means retirement from active employment with the
Company and its Subsidiaries in accordance with the retirement policies of the
Company and its Subsidiaries then in effect.

     “Officer” means an officer as defined in Rule 16a-1(f) of the
Securities Exchange Act of 1934, as amended.

     “Performance Share Award” means an Award granted pursuant to Section 8.

     “Restricted Stock” shall have the meaning set forth in Section 6.

     “Restricted Stock Award” means an Award granted pursuant to Section 6.

     “Stock” means the common stock, $0.01 par value per share, of the
Company, subject to adjustments pursuant to Section 3.

     “Stock Option” means any option to purchase shares of Stock granted
pursuant to Section 5.

     “Subsidiary” means a subsidiary as defined in Section 424 of the Code.

     “Unrestricted Stock Award” means an award granted pursuant to Section
7.

SECTION 2. Administration
of Plan; Committee Authority to Select Participants and Determine Awards

     (a)  Committee. The Plan shall be administered by the Committee. The
Committee shall select one of its members as its chairman and shall hold its
meetings at such times and places as it shall deem advisable. A majority of its
members shall constitute a quorum, and all actions of the Committee shall
require the affirmative vote of a majority of its members. Any action may be
taken by a written instrument signed by all of the members, and any action so
taken shall be as fully effective as if it had been taken by a vote of a
majority of the members at a meeting duly called and held. Except as
specifically reserved to the Board under the terms of the

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Plan, the Committee
shall have full and final authority to operate, manage and administer the Plan
on behalf of the Company. Action by the Committee shall require the affirmative
vote of a majority of all members thereof.

     (b)  Powers of Committee. The Committee shall have the power and
authority to grant and modify Awards consistent with the terms of the Plan,
including the power and authority:

		
	 	     (i) to select the persons to whom Awards may from time
to time be granted;
	 
	 	     (ii) to determine the time or times of grant, and the extent,
if any, of Non-Statutory Stock Options, Restricted Stock, Unrestricted
Stock and Performance Shares, or any combination of the foregoing, granted
to any one or more participants;
	 
	 	     (iii) to determine the number of shares to be covered by any Award;
	 
	 	     (iv) to determine and modify the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of
any Award, which terms and conditions may differ among individual Awards
and participants, and to approve the form of written instruments
evidencing the Awards; provided, however, that no such action shall
adversely affect rights under any outstanding Award without the
participant’s consent;
	 
	 	     (v) to accelerate the exercisability or vesting of all
or any portion of any Award;
	 
	 	     (vi) subject to the provisions of Section 5(b), to extend
the period in which any outstanding Stock Option
may be exercised;
	 
	 	     (vii) to determine whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
participant and whether and to what extent the Company shall pay or credit
amounts equal to interest (at rates determined by the Committee) or
dividends or deemed dividends on such deferrals;
	 
	 	     (viii) to delegate to other persons the responsibility for
performing ministerial actions in furtherance of the
Plan’s purpose; and
	 
	 	     (ix) to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in connection
with the Plan; and to otherwise supervise the administration of the Plan.

     All decisions and interpretations of the Committee shall be binding on
all persons, including the Company and Plan participants.

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SECTION 3. Shares Issuable under the Plan; Mergers; Substitution

     (a)  Shares Issuable. The maximum number of shares of Stock with respect
to which Awards may be granted under the Plan, subject to adjustment upon
changes in capitalization of the Company as provided in this Section 3, shall be
three million five hundred thousand (3,500,000) shares of Stock. For purposes of
this limitation, if any shares of Stock covered by an Award granted under the
Plan, or to which such an Award relates, are repurchased or forfeited, or if an
Award has expired, terminated or been canceled for any reason whatsoever (other
than by reason of exercise or vesting), then such shares of Stock or the shares
of Stock covered by such Award, as the case may be, shall be added back to the
shares of Stock with respect to which Awards may be granted under the Plan.
Subject to such overall limitation, any type or types of Award may be granted
with respect to shares of Stock. Shares of Stock issued under the Plan may be
authorized but unissued shares or shares reacquired by the Company.

     (b)  Stock Dividends, Mergers, etc. In the event that the Company
effects a stock dividend, stock split or similar change in capitalization
affecting the Stock, the Committee shall make appropriate adjustments in (i) the
number and kind of shares of stock or securities with respect to which Awards
may thereafter be granted (including without limitation the limitations set
forth in Section 3(a) above), (ii) the number and kind of shares remaining
subject to outstanding Awards, and (iii) the option or purchase price in respect
of such shares. In the event of the merger, consolidation, dissolution or
liquidation of the Company, the Committee in its sole discretion may, as to any
outstanding Awards, make such substitution or adjustment in the aggregate number
of shares reserved for issuance under the Plan and in the number and purchase
price (if any) of shares subject to such Awards as it may determine and as may
be permitted by the terms of such transaction, or accelerate, amend or terminate
such Awards upon such terms and conditions as it shall provide (which, in the
case of the termination of the vested portion of any Award, shall require
payment or other consideration which the Committee deems equitable in the
circumstances).

     (c)  Substitute Awards. The Committee may grant Awards under the Plan by
assumption of or in substitution for stock and stock-based awards granted or
issued by another company to its directors, officers, employees, consultants and
other service providers if such persons become Eligible Persons in connection
with an acquisition of that company or any division thereof by the Company,
whether by merger, consolidation, purchase of stock, purchase of assets or
otherwise. The Committee may direct that the substitute awards be granted on
such terms and conditions as the Committee considers appropriate in the
circumstances. Shares which may be delivered under such substitute awards may be
in addition to the maximum number of shares provided for in Section 3(a).

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SECTION 4. Eligibility

     Awards may be granted to employees of the Company or its Subsidiaries,
and to consultants or other persons who render services to the Company,
regardless of whether they are also employees (“Eligible Persons”), provided,
however, that members of the Board and Officers are not eligible to receive
Awards under the Plan.

SECTION 5. Stock Options

     The Committee may grant Stock Options to Eligible Persons pursuant to
the Plan. Any Stock Option granted under the Plan shall be in writing and in
such form as the Committee may from time to time approve. Stock Options granted
under the Plan shall be Non-Statutory Stock Options.

     The Committee in its discretion may determine the effective date of
Stock Options. Stock Options granted pursuant to this Section 5 shall be subject
to the following terms and conditions and the terms and conditions of Section 9
and shall contain such additional terms and conditions, not inconsistent with
the terms of the Plan, as the Committee shall deem desirable:

     (a)  Exercise Price. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5 shall be determined
by the Committee at the time of grant; provided, however, that the exercise
price shall not be less than Fair Market Value on the date of grant.

     (b)  Option Term. The term of each Stock Option shall be
fixed by the Committee, but no Stock Option shall be exercisable more than
ten (10) years after the date the Stock Option is granted.

     (c)  Exercisability; Rights of a Stockholder. Stock Options
shall become vested and exercisable at such time or times, whether or not in
installments, and upon such conditions, as shall be determined by the Committee
at or after the grant date. The Committee may at any time accelerate the
exercisability of all or any portion of any Stock Option. An optionee shall have
the rights of a stockholder only as to shares acquired upon the exercise of a
Stock Option and not as to unexercised Stock Options.

     (d)  Method of Exercise. Stock Options may be exercised in
whole or in part, by delivering written notice of exercise to the Company,
specifying the number of shares to be purchased. Payment of the purchase price
may be made by one or more of the following methods:

		
	 	     (i) in cash, by certified or bank check or other
instrument acceptable to the Committee;
	 
	 	     (ii) with the consent of the Committee, in the form of shares
of Stock owned by the optionee for a period of at least six (6) months
and not then subject to restrictions. Such surrendered shares shall be
valued at Fair Market Value on the exercise date;

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	 	     (iii) with the consent of the Committee, by the optionee
delivering to the Company a properly executed exercise notice together
with irrevocable instructions to a broker to promptly deliver to the
Company cash or a check payable and acceptable to the Company to pay
the purchase price; provided that in the event the optionee chooses to
pay the purchase price as so provided, the optionee and the broker
shall comply with such procedures and enter into such agreements of
indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure. The Company need not act upon such
exercise notice until the Company receives full payment of the exercise
price; or
	 
	 	     (iv) by any other means (including, without limitation, by
delivery of a promissory note of the optionee payable on such terms as
are specified by the Committee; provided, however, that the interest
rate borne by such note shall not be less than the lowest applicable
federal rate, as defined in Section 1247(d) of the Code) which the
Committee determines are consistent with the purpose of the Plan and
with applicable laws and regulations.

     The delivery of certificates representing shares of Stock to
be purchased pursuant to the exercise of a Stock Option will be contingent upon
receipt from the optionee (or a purchaser acting in his stead in accordance with
the provisions of the Stock Option) by the Company of the full purchase price
for such shares and the fulfillment of any other requirements contained in the
Stock Option or imposed by applicable laws and regulations, as determined by the
Committee in its sole discretion.

     (e)  Transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and all Stock Options shall be exercisable, during the
optionee’s lifetime, only by the optionee or his or her legal representative;
provided, however, that the Committee may, in the manner established by the
Committee, permit the transfer, without payment of consideration, of a
Non-Statutory Stock Option by an optionee to a member of the optionee’s
immediate family or to a trust or partnership whose beneficiaries are members of
the optionee’s immediate family; and such transferee shall remain subject to all
the terms and conditions applicable to the option prior to the transfer. For
purposes of this provision, an optionee’s “immediate family” shall mean the
holder’s spouse, children and grandchildren.

     (f)  Form of Settlement. Shares of Stock issued upon exercise
of a Stock Option shall be free of all restrictions under the Plan, except as
otherwise provided in this Plan or in the terms of such Stock Option.

SECTION 6. Restricted Stock Awards

     (a)  Nature of Restricted Stock Award. The Committee in its discretion
may grant Restricted Stock Awards to any Eligible Person, entitling the
recipient to acquire, for a purchase price determined by the Committee (but not
less than Fair Market Value on the date of grant), shares of Stock subject to
such restrictions and conditions as the Committee may determine at the time of
grant (“Restricted Stock”), including continued employment and/or achievement of
pre-established performance goals and objectives.

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     (b)  Acceptance of Award. A participant who is granted a Restricted
Stock Award shall have no rights with respect to such Award unless the
participant shall have accepted the Award within ten (10) days (or such shorter
date as the Committee may specify) following the delivery of written notice to
the participant of the Award by making payment to the Company of the specified
purchase price of the shares covered by the Award and by executing and
delivering to the Company a written instrument that sets forth the terms and
conditions applicable to the Restricted Stock in such form as the Committee
shall determine.

     (c)  Rights as a Stockholder. Upon complying with Section 6(b) above, a
participant shall have all the rights of a stockholder with respect to the
Restricted Stock, including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase rights described in this
Section 6 and subject to such other conditions contained in the written
instrument evidencing the Restricted Stock Award. Unless the Committee shall
otherwise determine, certificates evidencing shares of Restricted Stock shall
remain in the possession of the Company until such shares are vested as provided
in Section 6(e) below.

     (d)  Restrictions. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment with or
services to the Company and its Subsidiaries for any reason (including death,
Disability, Normal Retirement, and voluntary termination by the participant),
the Company shall have the right, at the discretion of the Committee, to
repurchase shares of Restricted Stock with respect to which conditions have not
lapsed at their purchase price from the participant or the participant’s legal
representative. The Company must exercise such right of repurchase within sixty
(60) days following such termination of employment (unless otherwise specified
in the written instrument evidencing the Restricted Stock Award).

     (e)  Vesting of Restricted Stock. The Committee at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company’s right of
repurchase shall lapse. Subsequent to such date or dates and/or the attainment
of such pre-established performance goals, objectives and other conditions, the
shares on which all restrictions have lapsed shall no longer be Restricted Stock
and shall be deemed “vested.” Subject to Section 12, the Committee at any time
may accelerate such date or dates and otherwise waive or amend any conditions of
the Award.

     (f)  Waiver, Deferral and Reinvestment of Dividends. The
written instrument evidencing the Restricted Stock Award may
require or permit the immediate payment, waiver, deferral or investment of
dividends paid on the Restricted Stock.

SECTION 7. Unrestricted Stock Awards

     (a)  Grant or Sale of Unrestricted Stock. The Committee in its
discretion may grant or sell to any Eligible Person shares of Stock free of any
restrictions under the Plan (“Unrestricted Stock”) at a purchase price
determined by the Committee. Shares of Unrestricted Stock may be granted or sold
as described in the preceding sentence in respect of past services or other
valid consideration.

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     (b)  Restrictions on Transfers. The right to receive Unrestricted Stock
may not be sold, assigned, transferred, pledged or otherwise encumbered, other
than by will or the laws of descent and distribution.

SECTION 8. Performance Share Awards

     A Performance Share Award is an award entitling the recipient to
acquire shares of Stock upon the attainment of specified performance goals. The
Committee may make Performance Share Awards independent of or in connection with
the granting of any other Award under the Plan. Performance Share Awards may be
granted under the Plan to any Eligible Person. The Committee in its discretion
shall determine whether and to whom Performance Share Awards shall be made, the
performance goals applicable under each such Award, the periods during which
performance is to be measured, the conditions under which such Award shall
terminate, and all other limitations and conditions applicable to the awarded
Performance Shares.

SECTION 9. Termination of Stock Options

     (a)  Standard Termination Provisions:

		
	 	     (i) Termination by Death. If any participant’s employment by
or services to the Company and its Subsidiaries terminates by reason of
death, any Stock Option owned by such participant may thereafter be
exercised to the extent exercisable at the date of death, by the legal
representative or legatee of the participant, for a period of one (1)
year (or such longer period as the Committee shall specify at any time)
from the date of death, or until the expiration of the stated term of
the Stock Option, if earlier.
	 
	 	     (ii) Termination by Reason of Disability or Normal Retirement.

		
	 	     (A) Any Stock Option held by a participant whose
employment by or service to the Company and its Subsidiaries
has terminated by reason of Disability may thereafter be
exercised, to the extent it was exercisable at the time of
such termination, for a period of one (1) year (or such longer
period as the Committee shall specify at any time) from the
date of such termination, or until the expiration of the
stated term of the Stock Option, if earlier.
	 
	 	     (B) Any Stock Option held by a participant whose
employment by or service to the Company and its Subsidiaries
has terminated by reason of Normal Retirement may thereafter
be exercised, to the extent it was exercisable at the time of
such termination, for a period of ninety (90) days from the
date of such termination, or until the expiration of the
stated term of the Stock Option, if earlier.
	 
	 	     (C) The Committee shall have sole authority and
discretion to determine whether a participant’s employment or
services have been terminated by reason of Disability or
Normal Retirement.

		
	 	     (iii) Termination for Cause. If any participant’s employment
by or services to the Company and its Subsidiaries has been terminated
for Cause, any Stock Option held

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	 	by such participant shall immediately
terminate and be of no further force and effect; provided, however,
that the Committee may, in its sole discretion, provide that such Stock
Option can be exercised for a period of up to thirty (30) days from the
date of termination of employment or services or until the expiration
of the stated term of the Stock Option, if earlier.
	 
	 	     (iv) Voluntary Termination. If any participant’s employment by
or services to the Company and its Subsidiaries is voluntarily
terminated, any Stock Option held by such participant shall immediately
terminate and be of no further force and effect; provided, however,
that the Committee may, in its sole discretion, provide that such Stock
Option can be exercised for a period of up to ninety (90) days from the
date of termination of employment or services or until the expiration
of the stated term of the Stock Option, if earlier.
	 
	 	     (v) Other Termination. Unless otherwise determined by the
Committee, if a participant’s employment by or services to the Company
and its Subsidiaries terminates for any reason other than death,
Disability, Normal Retirement, for Cause or voluntary termination, any
Stock Option held by such participant may thereafter be exercised, to
the extent it was exercisable on the date of such termination, for
ninety (90) days (or such longer period as the Committee shall specify
at any time) from the date of termination or until the expiration of
the stated term of the Stock Option, if earlier.

     (b)  Committee Discretion. Notwithstanding the foregoing, the Committee
may grant Stock Options under the Plan which contain such terms and conditions
with respect to termination as the Committee, in its discretion, may from time
to time determine.

SECTION 10. Tax Withholding

     (a)  Payment by Participant. Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any Federal, state,
local or other taxes of any kind required by law to be withheld with respect to
such income. The Company and its Subsidiaries shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the participant.

     (b)  Payment in Shares. A participant may elect, with the consent of the
Committee, to have such tax withholding obligation satisfied, in whole or in
part, by (i) authorizing the Company to withhold from shares of Stock to be
issued pursuant to an Award a number of shares with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
minimum withholding amount due with respect to such Award, or (ii) transferring
to the Company shares of Stock owned by the participant for a period of at least
six (6) months and with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the minimum withholding amount due
with respect to such Award.

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SECTION 11. Transfer, Leave of Absence, Etc.

     For purposes of the Plan, a transfer to the employment of the Company
from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to
another, shall not be deemed a termination of employment. Whether authorized
leave of absence, or absence on military or government service, shall constitute
termination of the employment relationship between the Company and the
participant shall be determined by the Committee at the time thereof.

SECTION 12. Amendments and Termination

     The Board may at any time amend or discontinue the Plan in any manner
allowed by law and the Committee may at any time, subject to Section 2, amend or
cancel any outstanding Award (or provide substitute Awards) for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Award without the holder’s
consent.

SECTION 13. Status of Plan

     With respect to the portion of any Award that has not been exercised, a
participant shall have no rights greater than those of a general creditor of the
Company unless the Committee shall otherwise expressly determine in connection
with any Award or Awards. In its sole discretion, the Committee may authorize
the creation of trusts or other arrangements to meet the Company’s obligations
to deliver Stock or make payments with respect to Awards hereunder, provided
that the existence of such trusts or other arrangements is consistent with the
provision of the foregoing sentence.

SECTION 14. Lockup Agreement

     The acceptance of any Award under this Plan by the participant or any
subsequent holder shall constitute the agreement of such person that, upon the
request of the Company or the underwriters managing any underwritten offering of
the Company’s securities, such person will not, for a period of time (not to
exceed one hundred eighty (180) days) following the effective date of any
registration statement filed by the Company under the Securities Act of 1933, as
amended, sell, make any short sale of, loan, grant any option for the purchase
of, or otherwise dispose of any shares of Stock received pursuant to such Award,
without the prior written consent of the Company or such underwriters, as the
case may be, and that such person will execute and deliver to the Company or
such underwriters a written agreement to that effect, in such form as the
Company or such underwriters shall designate.

SECTION 15. Change in Control

     (a)  Upon the occurrence of a Change of Control as defined in this Section 15:

		
	 	     (i) subject to the provisions of clause (iii) below, after the
effective date of such Change of Control, each holder of an outstanding
Stock Option, Conditional Stock Award, Performance Share Award or Stock
Appreciation Right shall be entitled, upon exercise of such Award, to
receive, in lieu of shares of Stock (or consideration based upon the
Fair Market Value of Stock), shares of such stock or other securities,
cash or

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	 	property (or consideration based upon shares of such stock or
other securities, cash or property) as the holders of shares of Stock
received in connection with the Change of Control;
	 
	 	     (ii) the Committee may accelerate the time for exercise of,
and waive all conditions and restrictions on, each unexercised and
unexpired Stock Option, Conditional Stock Award, Performance Share
Award and Stock Appreciation Right, effective upon a date prior or
subsequent to the effective date of such Change of Control, specified
by the Committee; or
	 
	 	     (iii) each outstanding Stock Option, Conditional Stock
Award, Performance Share Award and Stock Appreciation Right may be
cancelled by the Committee as of the effective date of any such Change
of Control provided that (x) notice of such cancellation shall be given
to each holder of such an Award and (y) each holder of such an Award
shall have the right to exercise such Award to the extent that the same
is then exercisable or, if the Committee shall have accelerated the
time for exercise of all such unexercised and unexpired Awards, in full
during the 30-day period preceding the effective date of such Change of
Control.

     (b)  “Change of Control” shall mean the occurrence of any one of the
following events:

		
	 	     (i) any “person” (as such term is used in Sections 13(d) and
14(d)(2) of the Act) becomes a “beneficial owner” (as such term is
defined in Rule 13d-3 promulgated under the Act) (other than the
Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), directly or indirectly, of securities of the Company
representing thirty-five percent (35%) or more of the combined voting
power of the Company’s then outstanding securities; or
	 
	 	     (ii) persons who, as of January 1, 1997, constituted the
Company’s Board (the “Incumbent Board”) cease for any reason, including
without limitation as a result of a tender offer, proxy contest, merger
or similar transaction, to constitute at least a majority of the Board,
provided that any person becoming a director of the Company subsequent
to January 1, 1997 whose election was approved by, or who was nominated
with the approval of, at least a majority of the directors then
comprising the Incumbent Board shall, for purposes of this Plan, be
considered a member of the Incumbent Board; or
	 
	 	     (iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation or other
entity, other than (a) 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 65% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar

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	 	transaction) in
which no “person” (as hereinabove defined) acquires more than 50% of
the combined voting power of the Company’s then outstanding securities;
or
	 
	 	     (iv) the shareholders of the Company approve 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.

SECTION 16. General Provisions

     (a)  No Distribution; Compliance with Legal Requirements. The Committee
may require each person acquiring shares pursuant to an Award to represent to
and agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof, in such form as the Committee shall in
its sole discretion deem advisable.

     No shares of Stock shall be issued pursuant to an Award until, in the
opinion of the Committee, all applicable securities laws and other legal and
stock exchange requirements have been satisfied. The Committee may require the
placing of such stop orders and restrictive legends on certificates for Stock
and Awards as it deems appropriate.

     (b)  Delivery of Stock Certificates. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant’s last known address on file with the Company.

     (c)  Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, subject to stockholder approval if
such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan or any
Award under the Plan does not confer upon any employee any right to continued
employment with the Company or any Subsidiary.

SECTION 17. Effective Date of Plan

     The Plan shall become effective upon its adoption by the Board.

SECTION 18. Governing Law

     This Plan and each Award under the Plan shall be governed by, and
construed and enforced in accordance with, the substantive laws of the
Commonwealth of Massachusetts without regard to its principles of conflicts of
laws.

-12-<PAGE>

                                                                    EXHIBIT 10.1

                      LOCK UP, VOTING AND CONSENT AGREEMENT

         This Lock Up, Voting and Consent Agreement (the "Agreement"), dated as
of June 4, 2002, is entered into and made by and among Stations Holding Company,
Inc., a Delaware corporation ("Debtor" or the "Company"), Gray Communications
Systems, Inc., a Georgia corporation ("Gray") and each of the undersigned
holders (each, a "Consenting Holder" and, together, the "Consenting Holders") of
the Common Stock (as defined below). All capitalized terms not otherwise defined
herein have the meanings given to said terms in the Plan (as hereinafter
defined).

         WHEREAS, Debtor has issued 7,400,000 shares of Class B Common Stock
(the "Common Stock");

         WHEREAS, Debtor and the Consenting Holders have engaged in good faith
negotiations with the objective of reaching an agreement with regard to
satisfying the Debtor's obligations under the Common Stock;

         WHEREAS, Debtor and Gray are, concurrently with the execution of this
Agreement, entering into a Merger Agreement of even date herewith (the "Merger
Agreement") pursuant to which, subject to the terms and conditions set forth in
the Merger Agreement, a wholly-owned subsidiary of Gray will be merged into and
with Debtor;

         WHEREAS, Debtor and each of the Consenting Holders now desire to
implement a financial restructuring that gives effect to the Merger Agreement
(the "Financial Restructuring"), and in order to implement the Financial
Restructuring, the Debtor intends to prepare and file a disclosure statement
(the "Disclosure Statement") and plan of reorganization (the "Plan") consistent
in all material respects with the terms set forth in this Agreement and the
summary of the Plan attached hereto as Exhibit A (the "Plan Summary") which, if
confirmed, will implement the terms of the Financial Restructuring in the
Debtor's bankruptcy case number 02-10882 (MFW) (the "Chapter 11 Case") filed
under the United States Bankruptcy Code, 11 U.S.C. ss. 101 et seq. (the
"Bankruptcy Code"), and the Debtor intends to use its best efforts to have the
Disclosure Statement approved and such Plan confirmed by the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") in the
Chapter 11 Case as expeditiously as possible under the Bankruptcy Code and the
Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules");

         WHEREAS, each Consenting Holder is the legal owner, beneficial owner
and/or the investment advisor or manager for the beneficial owner (with the
power to vote and dispose of such claims on behalf of such beneficial owner) of
the number of shares of Common Stock (for each such party, the "Relevant
Claim"), in each case as set forth below each such Consenting Holder's signature
attached hereto;

<PAGE>

         WHEREAS, each Consenting Holder has reviewed, or has had the
opportunity to review, with the assistance of professional financial and legal
advisors of its choosing, the Plan Summary and the Merger Agreement; and

         WHEREAS, each Consenting Holder desires to support and vote for
confirmation of the Plan, and the Debtor desires to obtain the commitment of the
Consenting Holders to support and vote for the Plan, in each case subject to the
terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Debtor, Gray and the Consenting Holders, intending to be legally bound, agree as
follows:

         Section 1. Voting. Each Consenting Holder represents and warrants,
severally and not jointly, that, as of the date hereof, it is the legal owner,
beneficial owner and/or the investment adviser or manager for the beneficial
owner (with the power to vote and dispose of such claims on behalf of such
beneficial owner) of such legal or beneficial owner's Relevant Claim and that
there is no Common Stock of which it is the legal owner, beneficial owner and/or
investment advisor or manager for such legal or beneficial owner which are not
part of its Relevant Claim. Each Consenting Holder agrees for itself that (i) it
shall timely vote (or cause to be voted) its Relevant Claim and any other claims
or interests that it holds (and not revoke or withdraw such vote) to accept the
Plan; provided that the terms of the Plan and Disclosure Statement are
consistent in all material respects with the Plan attached hereto and (ii) to
the extent such election is available, it shall not elect on its ballot to
preserve any claims, if any, such Consenting Holder may have that may be
affected by the releases provided for under the Plan.

         Section 2. Support of the Plan.

                  (1) Each Consenting Holder agrees that it will (i) from and
after the date hereof not agree to, consent to, provide any support to,
participate in the formulation of, or vote for any plan of reorganization or
liquidation, other than the Plan; (ii) execute and deliver a customary letter,
in form and substance reasonably satisfactory to the Company and such Consenting
Holder, from the Consenting Holder for distribution to the holders of any
impaired claims against or interests in the Company, stating that such
Consenting Holder supports and has committed to vote to approve the Plan; and
(iii) agree to permit disclosure in the Disclosure Statement and any filings by
the Company with the Securities and Exchange Commission of the contents of this
Agreement, including, but not limited to, the commitments given in clause (i) of
this Section 2(a) and the aggregate Relevant Claims held by all Consenting
Holders; provided that the Company shall not disclose the number of shares of
Common Stock comprising the Relevant Claim of any individual Consenting Holder,
except as otherwise required by applicable law.

                  (2) Each Consenting Holder further agrees that it shall not
object to or otherwise commence any proceeding, or take any other action, to
oppose or alter any of the terms of the Plan or any other document filed in
connection with the confirmation of the Plan

                                       2

<PAGE>

(hereinafter a "Reorganization Document") and shall not take any action which is
inconsistent with, or that would delay approval or confirmation of any of the
Disclosure Statement, the Plan or any of the Reorganization Documents; provided
that the terms of all such Reorganization Documents are customary and otherwise
consistent with the material terms of the Plan. Without limiting the generality
of the foregoing, no Consenting Holder may directly or indirectly seek, solicit,
support or encourage any other plan, sale, proposal or offer of dissolution,
winding up, liquidation, reorganization, merger or restructuring of the Company
or any of its subsidiaries that could reasonably be expected to prevent, delay
or impede the restructuring of the Company as contemplated by the Plan or any
Reorganization Document.

         Section 3. Forbearance. So long as this Agreement shall remain in
effect, each Consenting Holder hereby agrees to forbear from exercising any
rights or remedies it may have under the Common Stock and all related documents,
applicable law, or otherwise, with respect to any existing default under the
Common Stock and all related documents.

         Section 4. Restrictions on Transfer. Each of the Consenting Holders
hereby agrees that, for so long as this Agreement shall remain in effect, it
shall not sell, transfer or assign all or any of its Relevant Claims or any
option thereon or any right, interest (voting or otherwise) therein, unless the
transferee agrees in writing to be bound by the terms of this Agreement by
executing a counterpart signature page to this Agreement and the transferor
promptly provides the Company with a copy thereof, in which event the Company
shall be deemed to have acknowledged that its obligations to the Consenting
Holders hereunder shall be deemed to constitute obligations in favor of such
transferee, and the Company shall confirm such acknowledgment in writing.

         Section 5. Further Acquisition of Common Stock. This Agreement shall in
no way be construed to preclude the Consenting Holders or any of their
respective subsidiaries or affiliates from acquiring additional shares of Common
Stock. However, any such additional Common Stock acquired by a Consenting Holder
shall automatically be deemed to be Relevant Claims and to be subject to the
terms of this Agreement. The Consenting Holder agrees that it shall not create
any subsidiary or affiliate for the sole purpose of acquiring any Common Stock.
Upon the request of the Company, each Consenting Holder shall provide an
accurate and current list of the Relevant Claims held by such Consenting Holder.

         Section 6. Company Agreement. The Company hereby agrees to use its
commercially reasonable efforts to have the Disclosure Statement approved by the
Bankruptcy Court, and thereafter or in conjunction therewith to use its
commercially reasonable efforts to obtain an order of the Bankruptcy Court
confirming the Plan, in each case as expeditiously as commercially reasonable
under the Bankruptcy Code and Bankruptcy Rules, and consistent in all material
respects (including with respect to the treatment of claims and interests) with
the terms and conditions of the Plan.

         Section 7. Acknowledgment. This Agreement is not and shall not be
deemed to be a solicitation for consents to the Plan. The acceptance of the
Consenting Holders will not be

                                       3

<PAGE>

solicited until the Consenting Holders have received the Disclosure Statement
and related ballot, as approved by the Bankruptcy Court.

         Section 8. Termination. The obligations of the Consenting Holders
hereunder shall remain effective and binding and shall terminate only upon the
earlier to occur of the time at which (i) the Plan provides or is modified to
provide for treatment of such Holder which is materially adverse to the
treatment described in the Plan Summary; and (ii) the Plan provides or is
modified without the consent of the Consenting Holders in a manner which
substantially decreases the likelihood that the Plan will be confirmed.

         Section 9. Good Faith Negotiation of Documents. Each party hereby
further covenants and agrees to negotiate the Reorganization Documents and any
definitive documents relating thereto, in good faith and, in any event, in all
material respects consistent with the Plan Summary.

         Section 10. Representations and Warranties. Each of the Consenting
Holders, severally and not jointly, represents and warrants to Debtor and Gray,
and Gray and the Debtor each represents and warrants, only as to itself and not
as to the other, to each Consenting Holder that the following statements, as
applicable, are true, correct and complete as of the date hereof:

                  (1) Power and Authority. It has all requisite corporate,
partnership, or limited liability company power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby, and to perform
its obligations hereunder.

                  (2) Due Organization. It is duly organized, validly existing
and in good standing under the laws of its state of organization and it has the
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.

                  (3) Authorization. The execution and delivery of this
Agreement and the performance of its obligations hereunder have been duly
authorized by all necessary corporate, partnership or limited liability company
action on its part (other than the approval of the Bankruptcy Court in the case
of the Debtor).

                  (4) No Conflicts. The execution, delivery and performance of
this Agreement does not and shall not: (i) violate any provision of law, rule or
regulation applicable to it or any of its subsidiaries, (ii) violate its
certificate of incorporation, bylaws or other organizational documents or those
of any of its subsidiaries; or (iii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation to which it or any of its subsidiaries is a
party.

                  (5) Governmental Consents. The execution, delivery and
performance by it of this Agreement do not and shall not require any
registration or filing with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body (other than the approval of the Bankruptcy Court in the case of
the Debtor).

                                       4

<PAGE>

                  (6) Binding Obligation. Subject to the provision of sections
1125 and 1126 of the Bankruptcy Code, this Agreement is a legally valid and
binding obligation, enforceable in accordance with its terms.

         Section 11. Complete Agreement, Modification of Agreement. This
Agreement and the other agreements referenced herein constitute the complete
agreement between the parties with respect to the subject matter hereof. This
Agreement may not be modified, altered, amended or supplemented except by an
agreement in writing signed by the Company, Gray and the Consenting Holders that
hold not less than two-thirds of the outstanding shares of Common Stock.

         Section 12. Specific Performance. It is understood and agreed by the
parties that money damages would not be a sufficient remedy for any breach of
this Agreement by any party and each non-breaching party shall be entitled to
the sole and exclusive remedy of specific performance and injunctive or other
equitable relief, including attorneys' fees and costs, as a remedy of any such
breach, and each party agrees to waive any requirement for the securing or
posting of a bond in connection with such remedy.

         Section 13. Assignment. Except as set forth in Section 4, no rights or
obligations of any party under this Agreement may be assigned or transferred to
any other person or entity.

         Section 14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE. By its execution and delivery
of this Agreement, each of the parties hereto hereby irrevocably and
unconditionally agrees for itself that any legal action, suit or proceeding
against it with respect to any matter under or arising out of or in connection
with this Agreement or for recognition or enforcement of any judgment rendered
in any such action, suit or proceeding, may be brought in the Bankruptcy Court.
By execution and delivery of this Agreement, each of the Parties hereto hereby
irrevocably accepts and submits itself to the exclusive jurisdiction of each
such court, generally and unconditionally, with respect to any such action, suit
or proceeding.

         Section 15. Modification of Plan. No modification or change to the Plan
shall release the Consenting Holder from obligations under this Agreement if the
Plan remains substantially similar in all economic and other respects to the
Plan Summary, and if such modification or change does not negatively impact or
lessen the economic recovery or other rights that such Consenting Holder will
receive under the Plan.

         Section 16. Independent Due Diligence and Decision-Making. Each of the
Consenting Holders hereby confirms that its decision to execute this Agreement
has been based upon its independent investigation of the operations, businesses,
financial and other conditions and prospects of Debtor. To the extent any
materials or information have been furnished to it by Debtor, the undersigned
hereby acknowledges that they have been provided for informational purposes
only, without any representation or warranty.

                                       5

<PAGE>

         Section 17. Headings. The headings of the sections, paragraphs and
subsections of this Agreement are inserted for convenience only and shall not
affect the interpretation hereof.

         Section 18. Prior Negotiations. This Agreement, the Plan Summary and
the Reorganization Documents supersede all prior negotiations with respect to
the subject matter hereof.

         Section 19. Consideration. It is hereby acknowledged by the Company,
Gray and each of the Consenting Holders that no consideration shall be due or
paid to the Consenting Holders for their agreement to vote to accept the Plan in
accordance with the terms and conditions of this Agreement, other than the
Company's agreement to use its reasonable best efforts to obtain approval of the
Disclosure Statement and to confirm the Plan in accordance with the terms and
conditions of this Agreement.

         Section 20. No Third Party Beneficiaries. This Agreement shall be
solely for the benefit of the parties hereto, including their permitted assigns,
and no other person or entity shall be a third party beneficiary hereof. Nothing
in this Agreement, express or implied, shall give to any party or entity other
than the parties any benefit or any legal or equitable right, remedy or claim
under this Agreement.

         Section 21. Several Obligations. The obligations of the Consenting
Holders hereunder are several and not joint.

         Section 22. Notices. All notices hereunder to be served to the Company
or Gray, as applicable, shall be deemed given if in writing and delivered or
sent by telecopy, courier or by registered or certified mail (return receipt
requested) to the following addresses or telecopier numbers (or at such other
addresses or telecopier numbers as shall be specified by like notice):

                           Stations Holding Company, Inc.
                           c/o Paul S. Goodman
                           Shack Siegel Katz Flaherty & Goodman P.C.
                           530 Fifth Avenue
                           New York, New York 10036
                           Fax:  212.730.1964

                           with copies to:

                           Kirkland & Ellis
                           200 E. Randolph Drive
                           Chicago, Illinois 60601
                           Attn:  Geoffrey A. Richards
                           Fax:  312.861.2200

                                       6

<PAGE>

To Gray:                   Gray Communications Systems, Inc.
                           4370 Peachtree Road, NE
                           Atlanta, Georgia  30319
                           Attn:  Robert S. Prather, Jr.
                           Fax:  404.261.9607

                           with copies to:

                           Alston & Bird LLP
                           1201 West Peachtree Street
                           Atlanta, Georgia  30309
                           Attn:  Stephen A. Opler
                           Fax:  404.881.4777

         Section 23. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall, collectively and separately, constitute
one and the same agreement.

                                    * * * * *

                                       7

<PAGE>

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

                                   STATIONS HOLDING COMPANY, INC.

                                   By: /s/ K. James Yager
                                      ----------------------------------------

                                   Its:  President and Chief Operating Officer

<PAGE>

                                 GRAY COMMUNICATIONS
                                    SYSTEMS, INC.

                                 By: /s/ James C. Ryan
                                    -------------------------------------------
                                 Its: Vice President and Chief Financial Officer

<PAGE>

                                    HOLDER OF RELEVANT CLAIM:

                                    Name of Holder:
                                                    ----------------------------

                                    Number of Shares
                                    of Common Stock:
                                                    ----------------------------

<PAGE>

                                    HOLDER OF RELEVANT CLAIM:

                                    Name of Holder:
                                                   -----------------------------

                                    Number of Shares
                                    of Common Stock:
                                                    ----------------------------

<PAGE>

                                    HOLDER OF RELEVANT CLAIM:

                                    Name of Holder:
                                                    ----------------------------

                                    Number of Shares
                                    of Common Stock:
                                                    ----------------------------

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