Document:

Exhibit
4.4

 

FORM OF RECAPITALIZATION AGREEMENT

 

THIS
RECAPITALIZATION AGREEMENT (this “Agreement”) is made as of September       ,
2009 by and among Echo Global Logistics, Inc., a Delaware corporation (the
“Company”), and each of the stockholders of the Company executing a
counterpart signature page hereto (collectively, the “Stockholders”).

 

WHEREAS, the Company’s
outstanding capital stock consists of (i) 25,674,205 shares of Series A
common stock, par value $0.0001 per share (the “Series A Common Stock”),
of which 550,000 constitute shares of restricted Series A Common Stock, (ii) 125,000
shares of Series B preferred stock, par value $0.0001 per share (the “Series B
Preferred Stock”) and (iii) 6,258,993 shares of Series D
preferred stock, par value $0.0001 per share (the “Series D Preferred
Stock,” and together with the Series A Common Stock and Series B
Preferred Stock, the “Company Stock”);

 

WHEREAS, the holders of Company
Stock own the respective number of shares set forth opposite their names on Exhibit A
attached hereto, and the rights and preferences, among other things, of the
Company Stock are set forth in the Company’s Amended and Restated Certificate
of Incorporation (the “Certificate”), filed with the Secretary of State
of the State of Delaware (the “Delaware SOS”) on June 7, 2006;

 

WHEREAS, the Company has
filed a Registration Statement on Form S-1 (File No. 333-150514) (the
“Registration Statement”) with the Securities and Exchange Commission
relating to, and the board of directors (the “Board”) of the Company has
previously authorized, an initial public offering (the “Offering”) of a
newly designated class of the Company’s common stock, par value $0.0001 per
share (the “New Common”), under the Securities Act of 1933, as amended
(the “Securities Act”) by the Company (the “Primary Shares”) and
certain stockholders (the “Selling Stockholders”) of the Company (the “Secondary
Shares,” and together with the Primary Shares, the “Offering Shares”),
which Offering Shares shall be sold to a group of underwriters (the “Underwriters”),
for which Morgan Stanley & Co. Incorporated, Credit Suisse Securities
(USA) LLC), William Blair & Company, LLC, Thomas Weisel Partners LLC,
Barrington Research Associates, Inc. and Craig-Hallum Capital Group LLC
(the “Representatives”), and any other underwriter agreed upon by the
Company and the Representatives, shall act as the Representatives for resale of
the Offering Shares to the public;

 

WHEREAS, in connection
with the Offering, the Company intends to enter into an underwriting agreement
(the “Underwriting Agreement”) by and among the Company, the Selling
Stockholders and the Underwriters relating to the sale of the Offering Shares
to the Representatives for resale to the public in the Offering;

 

WHEREAS, in connection
with the Offering, the Stockholders desire to acknowledge, consent to,
authorize and approve the automatic conversion of the Company Stock into fully
paid and nonassessable shares of New Common (the “Conversion”), with
each holder of Company Stock to receive the number of shares of New Common set
forth opposite his, her or its name on Exhibit A attached hereto;

 

 

WHEREAS, in connection
with the Initial Public Offering, the Stockholders desire to consent to,
authorize and approve, immediately prior to the Conversion, a reverse stock
split (the “Reverse Stock Split”), pursuant to which (i) every two (2) shares
of issued and outstanding Series D Preferred Stock shall, without any
other action on the part of the Company, the Stockholders or any other person
or entity, be reclassified and combined into one (1) fully paid and
non-assessable share of Series D Preferred Stock of the same series as the
original Series D Preferred Stock, (ii) every two (2) shares of
issued and outstanding Series B Preferred Stock shall, without any other
action on the part of the Company, the Stockholders or any other person or
entity, be reclassified and combined into one (1) fully paid and
non-assessable share of Series B Preferred Stock of the same series as the
original Series B Preferred Stock and (iii) every two (2) shares
of issued and outstanding Common Stock shall, without any other action on the
part of the Company, the Stockholders or any other person or entity, be
reclassified and combined into one (1) fully paid and non-assessable share
of Common Stock of the same series as the original Common Stock, with the
number of shares of Series D Preferred Stock, Series B Preferred
Stock and Common Stock to be held by each Stockholder, after giving effect to
the Reverse Stock Split, set forth opposite his, her or its name on Exhibit A
attached hereto;

 

WHEREAS, the Conversion
and the Reverse Stock Split shall be effected by filing Amendment No. 1 to
the Certificate (the “Certificate Amendment”), substantially in the form
attached hereto as Exhibit B, with the Delaware SOS on the Effective
Date (as hereinafter defined);

 

WHEREAS, the Company shall
subsequently file a Second Amended and Restated Certificate of Incorporation,
substantially in the form attached hereto as Exhibit C (the “Restated
Certificate”), which shall amend and restate the Certificate, as amended by
the Certificate Amendment;

 

WHEREAS,
immediately after the Conversion and Reverse Stock Split, the former holders of
Company Stock will own all of the issued and outstanding shares of New Common,
and by executing this Agreement, the holders of Company Stock desire to
acknowledge, consent to, authorize and approve (i) the Conversion, (ii) the
Reverse Stock Split and (iii) filing of the Certificate Amendment and the
Restated Certificate; and

 

WHEREAS, the Board
has previously authorized and approved the Certificate Amendment and Restated
Certificate and submitted both documents to the holders of Company Stock for their
approval.

 

NOW, THEREFORE, in
consideration of the foregoing recitals, the mutual representations, warranties
and covenants set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

 

Section 1.               Authorization and Exchange.

 

(a)           Certificate Amendment and Restated
Certificate.  The Board has previously authorized and
approved the Certificate Amendment and Restated Certificate.  The Certificate Amendment and Restated
Certificate shall be filed and deemed effective on the 

 

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Effective Date (as hereinafter defined), which date
shall be after the requisite percentage of the Stockholders have executed this
Agreement and consented to the Certificate Amendment and Restated Charter.

 

(b)           Authorization of the New Common. 
The Board has previously authorized the issuance of an aggregate of up
to 100,000,000 shares of New Common, 16,068,665 of which will be issued to the
Stockholders in exchange for all of the issued and outstanding shares of
Company Stock (after giving effect to the Conversion and the Reverse Stock
Split).  The terms of the New Common are
set forth in the Restated Certificate to be filed with the Delaware SOS, which
shall be effective in accordance with the terms of this Agreement.

 

(c)           Exchange of the Company Stock.  On
the Effective Date, the Company shall, upon the effectiveness of the Restated
Certificate and subject to the terms and conditions set forth herein, issue to
each Stockholder shares of New Common in exchange for his, her or its
respective shares of Company Stock, which shares of Company Stock shall be
cancelled immediately thereafter.  Each Stockholder
shall receive the number of shares of New Common set forth opposite his, her or
its name on Exhibit A attached hereto (after giving effect to the
Conversion and the Reverse Stock Split). 
Each Stockholder acknowledges and agrees that all certificates
representing shares of Company Stock that are outstanding immediately prior to
the Effective Date (the “Original Certificates”) shall, upon the
Effective Date, be deemed to represent only the right to receive a replacement
certificate (each, a “Replacement Certificate”) representing the
applicable number of shares of New Common to be received on or after the Effective
Date (after giving effect to the Conversion and the Reverse Stock Split).  The Stockholders acknowledge and agree that,
upon the issuance of the New Common in exchange for his, her or its respective
shares of Company Stock, the Original Certificates shall be deemed cancelled without
any further action on the part of the Company, any Stockholder or any other
person or entity.  Each Stockholder
acknowledges and agrees that the Company shall not be obligated to deliver any
Replacement Certificates until the closing of the Offering has occurred
(including the sale of Secondary Shares in connection with the Offering, if
any).

 

(d)           Reverse Stock Split.  On the
Effective Date, immediately prior to the Conversion (i) every two (2) shares
of issued and outstanding Series D Preferred Stock shall, without any
other action on the part of the Company, the Stockholders or any other person
or entity, be reclassified and combined into one (1) fully paid and
non-assessable share of Series D Preferred Stock of the same series as the
original Series D Preferred Stock, (ii) every two (2) shares of
issued and outstanding Series B Preferred Stock shall, without any other
action on the part of the Company, the Stockholders or any other person or
entity, be reclassified and combined into one (1) fully paid and
non-assessable share of Series B Preferred Stock of the same series as the
original Series B Preferred Stock and (iii) every two (2) shares
of issued and outstanding Common Stock shall, without any other action on the
part of the Company, the Stockholders or any other person or entity, be
reclassified and combined into one (1) fully paid and non-assessable share
of Common Stock of the same series as the original Common Stock. The
Stockholders acknowledge and agree that any Replacement Certificate
representing the applicable number of shares of New Common to be received on or
after the Effective Date as a result of the Conversion shall reflect such
Reverse Stock Split, with the number of shares of Series D Preferred Stock,
Series B Preferred Stock and Common Stock to be held by each 

 

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Stockholder, after giving effect to the Reverse Stock
Split, set forth opposite his, her or its name on Exhibit A
attached hereto.

 

(e)           Deliveries by the Stockholders. 
At the Closing, each Stockholder shall, subject to the terms and
conditions set forth herein:

 

(i)            present and deliver to the Company the Original
Certificate(s) duly endorsed for transfer to the Company; and

 

(ii)           deliver the certificates, instruments and other
documents required pursuant to this Agreement or as may be reasonably requested
by the Company.

 

Notwithstanding the
foregoing, the failure of any Stockholder to deliver any of the aforementioned
documents shall not affect the consummation or validity of the Conversion or
the Reverse Stock Split.

 

(f)            Deliveries by the Company. 
At the Closing or as soon as practicable thereafter, the Company shall,
subject to the terms and conditions set forth herein:

 

(i)            subject to the receipt of each Stockholder’s Original
Certificate(s), issue and deliver, or cause the Company’s transfer agent to
deliver, to each Stockholder the Replacement Certificate(s) evidencing the
shares of New Common (after giving effect to the Conversion, the Reverse Stock
Split and any sale of Secondary Shares in connection with the Offering) to be
issued by the Company to each Stockholder, executed and registered in each such
Stockholder’s name or such Stockholder’s nominee’s name, as the case may be;
and

 

(ii)           deliver the certificates, instruments and other
documents required pursuant to this Agreement.

 

(g)           The Closing. The closing of the transactions
contemplated hereby (the “Closing”) shall take place at the offices of
Winston & Strawn LLP, 35 West Wacker Drive, Chicago, Illinois, and the
Certificate Amendment and the Restated Certificate shall each be filed with the
Delaware SOS, in each case, immediately prior to the execution of the
Underwriting Agreement by the Company, the Selling Stockholders and the
Underwriters (the “Effective Date”), or at such other place or time as
may be reasonably designated by the Company.

 

Section 2.               Dividend Payments.  Immediately
upon the closing of the Offering, the Company shall pay on a pro rata basis:

 

(i)            $[31,000] in cash, representing all accrued and unpaid
dividends through the Effective Date, to the holders of shares of Series B
Preferred Stock; and

 

(ii)           $[3,300,000]  in cash, representing
all accrued and unpaid dividends through the Effective Date, to the holders of
shares of Series D Preferred Stock.

 

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Upon receipt of the
payments set forth above, each of the holders of shares of Series B
Preferred Stock and Series D Preferred Stock acknowledge and confirm that
no other payments will be due to such holders from the Company pursuant to the
Certificate, the Certificate Amendment, the agreements set forth in Section 6
hereof, or any other document or agreement, including any preference payments,
payments relating to accrued but unpaid dividends or otherwise.

 

Section 3.               Representations
and Warranties of the Company. As a material inducement to the Stockholders
to enter into this Agreement and to exchange their shares of  Company Stock for shares of New Common
hereunder, the Company represents and warrants that:

 

(a)           Organization; Authorization;
Enforceability.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. The execution, delivery and performance of
this Agreement and all other agreements contemplated hereby and thereby to
which the Company is a party, the Certificate Amendment and the Restated
Certificate have been duly authorized by the Company.  This Agreement constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms.

 

(b)           No Violation. The execution and delivery by the
Company of this Agreement, the issuance of shares of New Common in the
Offering, the Certificate Amendment, the Restated Certificate and the
fulfillment of and compliance with the respective terms hereof and thereof by
the Company do not and shall not (i) conflict with or result in a breach
of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in the creation of any lien, security interest, charge
or encumbrance upon the Company’s capital stock or assets pursuant to, (iv) result
in a violation of or (v) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing with, any
court or administrative or governmental body or agency pursuant to, the
Certificate, or any law, statute, rule or regulation to which the Company
is subject, or any agreement, instrument, order, judgment or decree to which
the Company is a party or by which any of its properties are bound, other than
as expressly contemplated in such agreements described above and other than
those made and obtained.

 

(c)           Capital Stock and Related Matters. As of the Closing and immediately
thereafter, the authorized capital stock of the Company shall consist of 100,000,000
shares of New Common, of which approximately 32,058,198 shares shall be issued
and outstanding (subject to the Stock Split), and 2,500,000 shares of preferred
stock, par value $0.0001 per share (none of which shall be issued and
outstanding).  There are no statutory or
contractual preemptive rights or rights of refusal with respect to the issuance
of New Common hereunder which have not been waived or terminated in connection
with the Offering, or otherwise.  The
Company has not violated any applicable federal or state securities laws in
connection with the offer, sale or issuance of any of its capital stock, and
the offer, sale and issuance of the New Common hereunder does not require
registration under the Securities Act or any applicable state securities laws.

 

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Section 4.               Representations
and Warranties of the Stockholders. Each of the Stockholders hereby
represents and warrants to the Company that, with respect to such Stockholder:

 

(a)           Organization; Authorization;
Enforceability.  If such Stockholder is an incorporated
entity, limited liability company or partnership, such Stockholder has been
duly incorporated or organized, as applicable, and is validly existing and in
good standing under the laws of its respective state of incorporation or formation.  The execution, delivery and performance of
this Agreement, and all other agreements contemplated hereby and thereby to
which such Stockholder is a party, constitutes a valid and binding obligation
of such Stockholder, enforceable against such Stockholder in accordance with
its terms, and, if such Stockholder is an incorporated entity, limited
liability company or partnership, have been duly authorized by such Stockholder.

 

(b)           No Violation. Neither the execution or the delivery of
this Agreement and all other documents contemplated hereby to which such
Stockholder is a party, nor the consummation of the transactions contemplated
hereby and thereby, will (a) conflict with, result in a breach of any of
the terms, conditions or provisions of, (b) constitute a default under, (c) result
in the violation of, (d) give any third party the right to terminate or to
accelerate any obligation under or (e) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body  or agency pursuant to, the provisions of the
certificate of incorporation or bylaws of such Stockholder (where such
Stockholder is an incorporated entity), the certificate of formation or limited
liability company agreement of such Stockholder (where such Stockholder is a
limited liability company), the certificate of formation or partnership
agreement of such Stockholder (where such Stockholder is a partnership) or any
law, statute, regulation, rule, judgment, order, decree or other restriction of
any government, governmental agency or court to which such Stockholder is
subject or to which any his, her or its properties are bound.

 

(c)           Ownership.  Such
Stockholder (a) prior to the date hereof, was the unconditional and beneficial
owner of the Company Stock set forth opposite his, her or its name on Exhibit A
attached hereto, was entitled to full possession of such Company Stock, had
full right, power and authority to sell, assign, transfer (subject to any
applicable restrictions on transfer) and deliver the Company Stock and was
entitled to be reflected as the record owner of the Company Stock in the share
registry of the Company, (b) on the date hereof, owns the Company Stock
being exchanged by such Stockholder pursuant to this Agreement free and clear
of any restrictions on transfer, claims, taxes, liens, charges, encumbrances,
pledges, security interests, options, warrants, rights, contracts, calls,
commitments, equities and demands, except for applicable restrictions on
transfer under securities laws, and is entitled to be reflected as the record
owner of the Company Stock in the share registry of the Company.  No
other person or entity has an interest in, to or respecting the Company Stock
held by such Stockholder, and no other person or entity will have an interest in
the shares of New Common to be received by such Stockholder in connection with
the Conversion.

 

(d)           Litigation.  (a) No
action, suit, claim, proceeding or investigation is pending against such
Stockholder with respect to its ownership of the Company Stock, at law or in
equity, before or by any governmental or regulatory authority, (b) such
Stockholder is not 

 

6

 

involved in any pending arbitration proceeding
relating to its ownership of the Company Stock and (c) no governmental
inquiry is pending or, to such Stockholder’s knowledge, is threatened against
such Stockholder or any other person or entity with respect to such Stockholder’s
ownership of or right to assign the Company Stock.

 

(e)           Brokers.  Such
Stockholder has neither directly or indirectly dealt with anyone acting in the
capacity of a finder or broker nor incurred any obligations for any finder’s or
broker’s fee or commission in connection with the transactions contemplated by
this Agreement.

 

Section 5.               Covenants.

 

(a)           Legend.  The Company
and the Stockholders agree that the certificates evidencing the shares of New
Common registered in the name of the Stockholders or any transferee or assignee
of the Stockholders shall be imprinted with a legend in substantially the
following form:

 

THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “ACT”),
OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST OR
PARTICIPATION THEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED.

 

(b)           Expenses.  Whether or
not the transactions contemplated hereby are consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the Company, unless otherwise expressly
provided.

 

(c)           Filings.  Each party
hereto will make or cause to be made all such filings and submissions under the
laws and regulations applicable to such party, if any, as may be required of
such party, for the consummation of the transactions contemplated by this
Agreement.

 

(d)           Further Assurances. 
Subject to the terms and conditions herein provided, each of the parties
hereto agrees to use commercially reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations, or to remove any
injunctions or other impediments or delays, legal or otherwise, to consummate
and make effective the transactions contemplated by this Agreement.  The Stockholders hereby consent to the taking
by the Company of all actions necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement.

 

7

 

Section 6.               Prior Agreements.

 

(a)           Right of First Refusal and Co-Sale
Agreement.  The Stockholders acknowledge and agree that,
upon the closing of the Offering, pursuant to Section 6.5(a) of the
Echo Global Logistics, Inc. Right
of First Refusal and Co-Sale Agreement (the “Co-Sale Agreement”),
effective as of June 7, 2006 by and among the Company, the Investors (as
defined therein) and the Subject Holders (as defined therein), the Co-Sale
Agreement shall be terminated
and be of no further force and effect. 
The Stockholders waive all rights that they may have, including, without
limitation, any rights of first refusal or co-sale rights, pursuant to the
Co-Sale Agreement from and after the date hereof.

 

(b)           Voting Rights Agreement. 
The Stockholders acknowledge and agree that, upon the closing of the
Offering, pursuant to Section 2.1(a) of the Echo Global Logistics, Inc. Voting Agreement (the “Voting
Agreement”), effective as of June 7, 2006 by and among the Company,
the Common Holders (as defined therein) and the Investors (as defined therein),
the Voting Agreement shall be
terminated and be of no further force and effect.  The Stockholders waive all rights that they
may have pursuant to the Voting Agreement from and after the date hereof.

 

(c)           Investor Rights Agreement. 
The Stockholders acknowledge and agree that, upon the closing of the
Offering, pursuant to the Echo Global Logistics, Inc. Investor Rights
Agreement (the “Investor Rights Agreement”), effective as of June 7,
2006 by and among the Company and the Investors (as defined therein), (i) the
covenants of the Company contained in Section 3 of the Investor Rights
Agreement (other than Sections 3.3, 3.8 and 3.10) shall terminate and be of no
further force and effect, and (ii) the rights of first refusal established
by Section 4 of the Investor Rights Agreement shall terminate and be of no
further force and effect. The
Stockholders waive the rights set forth above, including, without limitation,
any rights to cause the Company to register their shares of New Common in
connection with the filing of the Registration Statement, from and after the
date hereof.

 

(d)           Management Rights. 
New Enterprise Associates 12, Limited Partnership and NEA Ventures 2006,
Limited Partnership (collectively, “NEA”) acknowledge and agree that,
upon the closing of the Offering, pursuant to that certain letter agreement (the “Management Rights Letter”), dated
June 7, 2006 by and between the Company and NEA, the contractual management rights granted to NEA therein shall be
terminated and be of no further force and effect.

 

(e)           Waiver of Notice. 
The Stockholders hereby waive all rights relating to the Company’s
compliance with the notice provisions set forth in the Co-Sale Agreement,
Voting Agreement and Investor Rights Agreement that may arise with respect to
the shares of New Common to be offered in the Offering, including, without
limitation, shares of New Common being offered and sold by the Selling
Stockholders.

 

(f)            Agreement to Delay Payments. 
In connection with the Certificate Amendment, the holders of shares of
Preferred Stock hereby agree to delay any payments due to such holders from the
Company pursuant to the Certificate, including any preference payments, 

 

8

 

payments relating to any accrued but unpaid dividends
or otherwise, until the closing of the Offering.

 

(g)           Acknowledgement of Adjustment. 
The Stockholders acknowledge and agree that the shares of Company Stock
set forth in Exhibit A attached hereto have been adjusted in
accordance with Section 5(i) of the Certificate, and the applicable
Stockholders hereby waive any and all other rights relating to the Company’s
compliance with Section 5(i) of the Certificate.

 

(h)           Secondary Shares. 
The Stockholders acknowledge and agree that the Secondary Shares, if
any, shall be issued in uncertificated form.

 

(i)            Fractional Shares. 
The Stockholders acknowledge and agree that no fractional shares of
Company Stock shall be issued by reason of the Reverse Stock Split, and any
such fractional shares resulting from the Reverse Stock Split shall be rounded
down to the nearest whole share.

 

Section 7.               Miscellaneous.

 

(a)           Unified Agreement. 
The parties intend that the provisions hereof constitute a unified
agreement, and that although certain events shall occur on different dates or
at different times, it is the intention of the parties that none of the
transactions be given permanent effect unless the Offering shall have been
consummated.

 

(b)           Rescission. The parties hereto agree that, if the closing of the
Offering has not occurred on or prior to January 31, 2010, (i) the
transactions effected pursuant to this Agreement shall be rescinded in their
entirety, (ii) the deliveries made pursuant to Sections 1(e) and
1(f) hereof shall be reversed and the parties hereto shall be returned
to their respective positions immediately prior to the Effective Date and (iii) any
rights or obligations of the parties under this Agreement shall be terminated,
and, without limitation, the Company may take such actions as necessary to
re-establish the capital structure of the Company as in effect prior to the
transactions effected pursuant to this Agreement.  At any time prior to the effectiveness of the
Conversion, the Board may abandon the Conversion without further action by the
stockholders of the Company.

 

(c)           Exemption from Registration. 
Each Stockholder understands that the acquisition of New Common pursuant
to the Conversion is intended to be exempt from registration under the
Securities Act, including as a transaction exempt from registration  pursuant to Section 3(a)(9) thereof.

 

(d)           Specific Enforcement. The parties acknowledge the unique
nature of the provisions hereof, and agree that damages in the event of breach
would be both difficult to calculate and an inadequate remedy.  Consequently, in the event of breach, and in
addition to recovering any provable damages and reimbursement of any legal
fees, the injured party shall be entitled to equitable relief, including
specific performance.

 

(e)           Survival of Representations and
Warranties. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the 

 

9

 

consummation of the transactions contemplated hereby,
regardless of any investigation made by any Stockholder or on its behalf or the
Company or on its behalf.

 

(f)            Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.

 

(g)           Counterparts. This Agreement may be executed in
counterparts, including counterparts transmitted by facsimile or electronic
transmission, each of which shall be an original as against the party whose
signature appears thereon and each of which together shall constitute one and
the same instrument.

 

(h)           Descriptive Headings; Interpretation. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement. The use of the word “including” in this Agreement shall
be by way of example rather than by limitation.

 

(i)            Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors, assigns, heirs and legal representatives of the parties
hereto whether so expressed or not.  In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for any Stockholder’s benefit as a
Stockholder or holder of New Common are also for the benefit of, and
enforceable by, any subsequent holder of such New Common.

 

(j)            Governing Law. This Agreement shall be subject to the
laws of the State of Delaware without regard to principles of conflicts of law.

 

(k)           Waiver of Jury Trial. 
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER AGREEMENT ENTERED INTO IN CONNECTION HEREWITH, ANY
COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF
ANY PARTY HERETO.

 

(l)            No Strict Construction. 
The language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any party.

 

(m)          Legal Counsel. 
Each party hereby agrees and acknowledges that it has had full
opportunity to consult with counsel and tax advisors of its selection in
connection with the preparation and negotiation of this Agreement.

 

10

 

(n)           No Third Party Rights. 
No person or entity not a signatory hereto shall have any rights as a
third party beneficiary to this Agreement, or to enforce the provisions hereof
on behalf of any signatory.

 

(o)           Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or telecopied to the recipient.  Such notices, demands and other
communications shall be sent to each Stockholder at the address indicated next
to such party’s name on the signature pages hereto or to such other
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party.

 

(p)           Entire Agreement. 
This Agreement, including the exhibits hereto, embody the entire
agreement and understanding of the parties hereto in respect of the
transactions contemplated by this Agreement.  There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such
transactions.

 

(q)           Tax Treatment. The parties hereto intend that the
transactions contemplated by this Agreement shall be treated as a tax-free
recapitalization pursuant to Section 368(a)(1)(E) of the Internal
Revenue Code of 1986, as amended, and this Agreement constitutes a “plan of
reorganization.”  Each of the parties
hereto shall file all tax returns in a manner consistent with the foregoing.

 

[signature pages follow]

 

11

 

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement on the date first written
above.Exhibit 10.2

 

AMENDED
AND RESTATED ECHO GLOBAL LOGISTICS, INC.

2008
STOCK INCENTIVE PLAN

 

 

AMENDED AND RESTATED

ECHO GLOBAL LOGISTICS, INC. 2008
STOCK INCENTIVE PLAN

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 1.

  	
   

  	
  Establishment, Objectives and Duration

  	
   

  	
  1

  
	
  Article 2.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  Article 3.

  	
   

  	
  Administration

  	
   

  	
  7

  
	
  Article 4.

  	
   

  	
  Shares Subject to the Plan and Maximum Awards

  	
   

  	
  8

  
	
  Article 5.

  	
   

  	
  Eligibility and Participation

  	
   

  	
  10

  
	
  Article 6.

  	
   

  	
  Options

  	
   

  	
  10

  
	
  Article 7.

  	
   

  	
  Stock Appreciation Rights

  	
   

  	
  13

  
	
  Article 8.

  	
   

  	
  Restricted Stock and Restricted Stock Units

  	
   

  	
  14

  
	
  Article 9.

  	
   

  	
  Performance Shares

  	
   

  	
  15

  
	
  Article 10.

  	
   

  	
  Other Stock Awards

  	
   

  	
  16

  
	
  Article 11.

  	
   

  	
  Performance Measures

  	
   

  	
  16

  
	
  Article 12.

  	
   

  	
  Beneficiary Designation

  	
   

  	
  17

  
	
  Article 13.

  	
   

  	
  Deferrals and Code Section 409A

  	
   

  	
  17

  
	
  Article 14.

  	
   

  	
  Rights of Participants

  	
   

  	
  19

  
	
  Article 15.

  	
   

  	
  Amendment, Modification and Termination

  	
   

  	
  20

  
	
  Article 16.

  	
   

  	
  Nontransferability of Awards

  	
   

  	
  20

  
	
  Article 17.

  	
   

  	
  Withholding

  	
   

  	
  21

  
	
  Article 18.

  	
   

  	
  Indemnification

  	
   

  	
  22

  
	
  Article 19.

  	
   

  	
  Successors

  	
   

  	
  22

  
	
  Article 20.

  	
   

  	
  Breach of Restrictive Covenants

  	
   

  	
  22

  
	
  Article 21.

  	
   

  	
  Legal Construction

  	
   

  	
  22

  

 

 

AMENDED AND RESTATED

ECHO GLOBAL LOGISTICS, INC. 2008 STOCK INCENTIVE PLAN

 

Article 1.                                           Establishment,
Objectives and Duration

 

1.1                               Establishment of the Plan.  Echo Global
Logistics, Inc.,
a Delaware corporation, hereby establishes this Amended and Restated Echo Global
Logistics, Inc.
2008 Stock Incentive Plan (the “Plan”) as set forth herein.  Capitalized terms used but not otherwise
defined herein will have the meanings given to them in Article 2.  The Plan permits the grant of Nonstatutory
Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares, and other Stock Awards.  In addition, the Plan provides the
opportunity for the deferral of the payment of salary, bonuses and other forms
of incentive compensation in accordance with Section 409A.

 

The Plan, which has been approved by the Board of
Directors and subsequently amended and restated by the Committee, subject to
the approval of the Company’s stockholders, is to be effective upon the
consummation of the Company’s Initial Public Offering and will remain in effect
as provided in Section 1.3 hereof.

 

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

 

1.3                               Duration of the Plan. 
The Plan will commence on the Effective Date, as described in Article 2,
and will remain in effect, subject to the right of the Committee to amend or
terminate the Plan at any time pursuant to Article 15, until all Shares
subject to it pursuant to Article 4 have been issued or transferred
according to the Plan’s provisions.  In
no event may an Award be granted under the Plan on or after the tenth annual
anniversary of the Effective Date.

 

1.4                               Plan Merger. 
The Company’s Echo Global Logistics, LLC 2005 Stock Option Plan shall be
merged into this Plan as of the Effective Date. 
Except with respect to rights that may be protected under prior award
agreements, stock or unit options awarded and equity interests authorized for
awards under the Prior Plan shall be governed by, and available under, the
terms of this Plan.

 

Article 2.                                           Definitions

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Change
in Control” means
the occurrence of any one or more of the following:

 

(a)                                 An effective change of control pursuant
to which any person or persons acting as a group acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) beneficial ownership of stock of the Company
representing more than thirty-five percent (35%) of the voting power of
the Company’s then outstanding stock; provided, however, that a Change in
Control shall not be deemed to occur by virtue of any of the following
acquisitions: (i) by the Company or any Affiliate, (ii) by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Affiliate, (iii) by any underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) by any Incumbent Stockholders
(as defined below);

 

2

 

(b)                                Any person or
persons acting as a group (in each case, other than any Incumbent Stockholders)
acquires beneficial ownership of Company stock that, together with Company stock
already held by such person or group, constitutes more than fifty percent
(50%) of the total fair market value or voting power of the Company’s then
outstanding stock. The acquisition of Company stock by the Company in exchange
for property, which reduces the number of outstanding shares and increases the
percentage ownership by any person or group to more than 50% of the Company’s
then outstanding stock will be treated as a Change in Control;

 

(c)                                 Individuals who
constitute the Board immediately after the Effective Date (the “Incumbent
Directors”) cease for any reason to constitute at least a majority of the Board
during any 12-month period; provided, however, that: (i) any person
becoming a Director subsequent thereto whose election or nomination for
election was approved by a vote of a majority of the Incumbent Directors then
on the Board (either by a specific vote or by approval of the proxy statement
of the Company in which such person is named as a nominee for Director, without
written objection to such nomination) shall be an Incumbent Director, provided
that no individual initially elected or nominated as a Director of the Company
as a result of an actual or threatened election contest with respect to
Directors or as a result of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board shall be
deemed to be an Incumbent Director; and (ii) a Change in Control shall not
be deemed to have occurred pursuant to this paragraph (c) if, after the
Board is reconstituted, the Incumbent Stockholders beneficially own stock of
the Company representing more than thirty-five percent (35%) of the voting
power of the Company’s then outstanding stock;

 

(d)                                Any person or
persons acting as a group acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
assets from the Company that have a total gross fair market value of at least
forty percent (40%) of the total gross fair market value of all the assets
of the Company immediately prior to such acquisition. For purposes of this
section, gross fair market value means the value of the assets of the Company,
or the value of the assets being disposed of, without regard to any liabilities
associated with such assets. The event described in this paragraph (d) shall
not be deemed to be a Change in Control if the assets are transferred to (i) any
owner of Company stock in exchange for or with respect to the Company’s stock, (ii) an
entity in which the Company owns, directly or indirectly, at least fifty
percent (50%) of the entity’s total value or total voting power, (iii) any
person that owns, directly or indirectly, at least fifty percent (50%) of
the Company stock, or (iv) an entity in which a person described in (d)(iii) above
owns at least fifty percent (50%) of the total value or voting power. For
purposes of this section, and except as otherwise 

 

3

 

provided,
a person’s status is determined immediately after the transfer of the assets;
or

 

(e)                                 Upon the happening of any other event(s) designated
as a Change in Control for purposes of Section 409A.

 

For purposes of this definition of Change in Control,
the term “Incumbent Stockholders” shall include each and every one of the
following: Polygal Row, LLC, Frog Ventures, LLC, Richard A. Heise Living Trust,
Echo Global Logistics Series C Investment Partners, LLC, Old Willow
Partners, LLC, Blue Media, LLC, Green Media, LLC, Younes and Soraya Nazarian
Revocable Trust, Younes Nazarian 2006 Annuity Trust - Echo Global, Soraya
Nazarian 2006 Annuity Trust- Echo Global, Anthony Bobulinski, David Nazarian
2005 Annuity Trust EGL, Sam Nazarian, Baradaran Revocable Trust, Shulamit
Nazarian Torbati, New Enterprise Associates 12, Limited Partnership, NEA
Ventures 2006, Limited Partnership; or any of their respective Affiliates or
successors.  In no event
will a Change in Control be deemed to have occurred, with respect to the
Participant, if an employee benefit plan maintained by the Company or an
Affiliate or the Participant is part of a purchasing group that consummates the
transaction that would otherwise result in a Change in Control. The employee
benefit plan or the Participant will be deemed “part of a purchasing group” for
purposes of the preceding sentence if the plan or the Participant is an equity
participant in the purchasing company or group, except where participation is: (i) passive
ownership of less than two percent (2%) of the stock of the purchasing
company; or (ii) ownership of equity participation in the purchasing
company or group that is otherwise not significant, as determined prior to the
Change in Control by a majority of the non-employee continuing directors.

 

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

 

“Committee” shall mean the Compensation Committee of
the Board of Directors, the composition of which shall at all times satisfy the
provisions of Code Section 162(m) and shall consist of at least two
directors who are “independent directors” within the meaning of the marketplace
rules of The NASDAQ Stock Market and “non-employee directors” within the
meaning of Exchange Act Rule 16b-3.

 

“Company” means Echo Global Logistics, Inc., a Delaware corporation, and
any successor thereto as provided in Article 19.

 

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

 

“Director” means any individual who is a member of
the Board of Directors.

 

“Disability” shall mean:

 

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

 

4

 

(b)                                If the Participant is not covered by such
a long-term disability plan, disability as defined for purposes of eligibility
for a disability award under the Social Security Act;

 

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

 

(d)                                Such other condition as may be determined
by the Committee to constitute “disability” under Section 409A.

 

“Effective Date” means the date of the consummation of
the Company’s Initial Public Offering, subject to the approval of the Plan by
the Company’s stockholders.

 

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

 

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

 

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

 

“Fair Market Value” of a Share on any given date shall be
determined by the Committee as follows:

 

(a)                                 If the Share is listed for trading on The NASDAQ
Stock Market (NASDAQ)
or one or more other national securities exchanges, the last reported sales
price on the NASDAQ or such other exchange on the date in question, or if such
Share shall not have been traded on the NASDAQ or such other exchange on such
date, the last reported sales price on the NASDAQ or such other exchange on the
first day prior thereto on which such Share was so traded;

 

(b)                                If the Share is not listed for trading,
by any means determined fair and reasonable by the Committee, which
determination shall be final and binding on all parties; or

 

5

 

(c)                                 Where the Participant pays the Exercise
Price and/or any related withholding taxes to the Company by tendering Shares
issuable to the Participant upon exercise of an Option, the actual sale price
of the Shares.

 

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

 

“Initial Public Offering” or “IPO”
means an initial public offering of the Company’s Shares pursuant to an
effective registration statement filed with the U.S. Securities and Exchange
Commission.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Performance Share” means an Award
of Shares with an initial value equal to the Fair Market Value of a Share on
the date of grant, which is based on the Participant’s attainment of certain
performance objectives specified in the Award Agreement, as described in Article 9.

 

“Personal Leave” means a leave
of absence as described in Section 5.3.

 

“Plan” means the Echo Global Logistics, Inc. 2008 Stock Incentive Plan, as
set forth in this document, and as amended from time to time.

 

“Prior Plan” means the Echo Global Logistics LLC 2005
Stock Option Plan.  The Prior Plan shall
be merged into this Plan as of the Effective Date and stock or unit options awarded
and equity interests authorized for award under the Prior Plan shall be
governed by, and available under, the terms of this Plan.

 

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

 

6

 

“Restricted Stock” means a contingent grant of Shares
awarded to a Participant pursuant to Article 8.  The Shares awarded to the Participant will
vest over the Restriction Period and according to the time-based or
performance-based criteria specified in the Award Agreement.

 

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

 

“Section 409A”
means Code Section 409A
and any applicable regulations or interpretive authority thereunder.

 

“Securities Act” means the Securities Act of 1933, as
amended from time to time, or any successor act thereto.

 

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

 

“Shares” means the shares of common stock,
$0.0001 par value of the Company, or any successor or predecessor equity
interest in the Company.

 

“Stock Appreciation Right” or “SAR” means an
Award of the contingent right to receive Shares or cash, as specified in the
Award Agreement, in the future, based on the value, or the appreciation in the
value, of Shares, pursuant to the terms of Article 7.

 

“Stock Award” means an Award
of Shares pursuant to the terms of Article 10.

 

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

 

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

 

Article 3.                                           Administration

 

3.1                               The Committee. 
The Plan will be administered by the Committee, or by any other committee
appointed by the Board whose composition satisfies the “nonemployee director”
requirements of Rule 16b-3 under the Exchange Act and the regulations of Rule 16b-3
under the 

 

7

 

Exchange Act, the “independent director” requirements of the
marketplace rules of The NASDAQ Stock Market, and the “outside director”
provisions of Code Section 162(m), or any successor regulations or
provisions.

 

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

 

The duties of the Committee or its delegatee shall
also include, but shall not be limited to, making disbursements and settlements
of Awards, creating trusts, and determining whether to defer or accelerate the
vesting of, or the lapsing of restrictions or risk of forfeiture with respect
to, Options, Restricted Stock and Restricted Stock Units, and Stock
Appreciation Rights.  Subject only to
compliance with the express provisions of the Plan, the Committee or its
delegatee may act in its, his, or her sole and absolute discretion in
performing the duties specifically set forth in the preceding sentence and
other duties under the Plan.

 

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

 

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

 

Article 4.                                           Shares Subject to the
Plan and Maximum Awards

 

4.1                               Number of Shares
Available for Awards.

 

(a)                                 Subject to adjustment as provided below
and in Sections 4.2 and 4.3, the maximum number of Shares that may be issued or
transferred to Participants under the Plan will be 1,500,000 (prior to giving
effect to the Company’s one for two reverse stock split).  The maximum number of Shares that may be
issued or transferred to Participants as Incentive Stock Options is
1,000,000.  Except during any
private-to-public transition period during which Section 162(m) does
not apply (such as that described in Treas. Reg. § 1.162-27(f)), the maximum
number of Shares and Share equivalent units that may be granted during any
calendar year to any one Participant under all types of Awards 

 

8

 

available under the Plan is
1,000,000 (on an aggregate basis); the foregoing limit will apply whether the
Awards are paid in Shares or in cash.  All limits described in this Section 4.1(a) are
subject to adjustment as provided in Section 4.3.

 

(b)                                The Prior Plan shall be merged into and
continued in the form of this Plan as of the Effective Date.  Awards made and Shares awarded under the
Prior Plan prior to the Effective Date, which remain outstanding on the
Effective Date, plus any Shares available for grant under the Prior Plan
(including Shares subject to prior awards that expire unexercised or that are
forfeited, terminated or canceled and Shares that are surrendered or withheld
from any award under such Prior Plan to satisfy a participant’s tax
withholding) shall be governed by and available under the terms of this Plan,
but shall not count against the number of Shares authorized under the first
sentence of Section 4.1(a) above to the extent Shares remain
available for issuance under the Prior Plan. 
To the extent that Awards are granted under the Prior Plan in excess of
the number of Shares available for issuance under the Prior Plan, such Awards
will be available for issuance under this Plan and will count against the
number of Shares authorized under the first sentence of Section 4.1(a) above.  No additional awards will be made under the
Prior Plan on or after the Effective Date.

 

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

 

4.3                               Adjustments in Authorized Shares.

 

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

 

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

 

9

 

Article 5.                                           Eligibility and
Participation

 

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

 

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

 

5.3                               Personal Leave Status.

 

(a)                                 Notwithstanding anything in the Plan to
the contrary, the Committee, in its sole discretion, reserves the right to
designate a Participant’s leave of absence as “Personal Leave.”  No Options shall be granted to a Participant
during Personal Leave.  A Participant’s
Unvested Options shall remain Unvested during such Personal Leave and the time
spent on such Personal Leave shall not count towards the Vesting of such
Options.  A Participant’s Vested Options
that may be exercised pursuant to Section 6.6 hereof shall remain
exercisable upon commencement of Personal Leave until the earlier of (i) a
period of one year from the date of commencement of such Personal Leave; or (ii) the
remaining exercise period of such Options. 
Notwithstanding the foregoing, if a Participant returns to the Company
from a Personal Leave of less than one year and the Participant’s Options have
not lapsed, the Options shall remain exercisable for the remaining exercise
period as provided at the time of grant and subject to the conditions contained
herein.

 

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

 

Article 6.                                           Options

 

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

 

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

 

6.3                               Exercise Price. 
The Exercise Price for each Share subject to an Option will be
determined by the Committee; provided, however, that the exercise price of
Incentive Stock Options shall in all cases be equal or greater to the Fair Market
Value on the date the Option is granted.

 

10

 

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

 

6.5                               Dividend Equivalents. 
The Committee may, but will not be required to, provide under an
agreement for payments in connection with Options that are equivalent to
dividends declared and paid on the Shares underlying the Options prior to the date
of exercise.  Such dividend equivalent
agreement shall be separate and apart from the Award Agreement and shall be
designed to comply separately with Section 409A.

 

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

 

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

 

The Exercise Price and any related withholding taxes
will be payable to the Company in full:  (a) in
cash, or its equivalent, in United States dollars; (b) if permitted in the
governing Award Agreement, by tendering Shares owned by the Participant duly
endorsed for transfer to the Company, or Shares issuable to the Participant
upon exercise of the Option; (c) any combination of (a) and (b); or (d) by
any other means the Committee determines to be consistent with the Plan’s
purposes and applicable law.  The
Committee, in its discretion, may require that no Shares may be tendered until
such Shares have been owned by the Participant for at least six months (or such
other period determined by the Committee).

 

6.8                               Special Provisions for ISOs.  Notwithstanding any other provision of this Article 6
to the contrary, the following special provisions
shall apply to any Award of Incentive Stock Options:

 

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

 

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

 

(c)                                 If the Employee
to whom the Incentive Stock Option is granted owns stock possessing more than
ten (10%) percent of the total combined voting power of all classes of the
Company or any Affiliate, then:  (i) the
exercise Price for each Share subject to an Incentive Stock Option will be at
least one hundred ten percent (110%) of the Fair Market Value of the Share on
the Effective Date of the Award; and (ii) the Option will expire upon the
earlier of (A) the time specified 

 

11

 

by the Committee in the Award Agreement, or (B) the
fifth anniversary of the date of grant.

 

(d)                                No Option that
is intended to be an Incentive Stock Option may be granted under the Plan until
the Company’s stockholders approve the Plan. 
If such stockholder approval is not obtained within 12 months after the
Board’s adoption of the Plan, then no Options may be granted under the Plan
that are intended to be Incentive Stock Options.  No Option that is intended to be an Incentive
Stock Option may be granted under the Plan after the tenth anniversary of the
date the Company adopted the Plan or the Company’s stockholders approved the
Plan, whichever is earlier.

 

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

 

(f)                                   An Option that
is intended but fails to be an ISO shall be treated as an NQSO for purposes of
the Plan.

 

6.9                               Restrictions on Share
Transferability.

 

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

 

6.10                        Termination of Service.  Unless the applicable
Award Agreement provides otherwise and subject to Section 6.8(e):

 

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

 

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

 

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

 

12

 

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

 

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

 

Article 7.                                           Stock Appreciation
Rights

 

7.1                               Grant of SARs. 
Subject to the terms and conditions of the Plan, SARs may be granted to
Participants at any time and from time to time, as determined by the
Committee.  Within the limits of Article 4,
the Committee will have sole discretion to determine the number of SARs granted
to each Participant and, consistent with the provisions of the Plan, to
determine the terms and conditions pertaining to SARs.

 

The grant price for any SAR shall be determined by the
Committee, but the grant price for any SAR intended to be exempt from Section 409A
shall in all cases be equal or greater to the Fair Market Value on the date the
SAR is granted.  If the Committee
determines that a SAR shall have a grant price that at any time can be less
than the Fair Market Value on the date of grant, such SAR shall be subject to Section 409A
and the provisions of Article 13 of the Plan.

 

7.2                               Exercise of SARs. 
SARs may be exercised upon whatever terms and conditions the Committee,
in its sole discretion, imposes.

 

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

 

7.4                               Term of SAR. 
The term of a SAR will be determined by the Committee, in its sole
discretion, but may not exceed ten years.

 

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

 

7.6                               Termination of Service. 
Each SAR Award Agreement will set forth the extent to which the
Participant has the right to exercise the SAR after his or her termination of
Service.  These terms will be determined
by the Committee, in its sole discretion, need not be uniform 

 

13

 

among all SARs issued under the Plan, and may reflect, among other
things, distinctions based on the reasons for termination of Service.

 

Article 8.                                           Restricted Stock and
Restricted Stock Units

 

8.1                               Grant of Restricted Stock or
Restricted Stock Units.  Subject to the terms and
provisions of the Plan, the Committee may, at any time and from time to time,
grant Restricted Stock or Restricted Stock Units to Participants in such
amounts as it determines.

 

8.2                               Deferral of Compensation into
Restricted Stock Units.  Subject to the terms and
provisions of the Plan, the Committee may, at any time and from time to time,
allow (or require, as to bonuses) selected Employees and Directors to defer the
payment of any portion of their salary or bonuses or both pursuant to this
section.  A Participant’s deferral under
this section will be credited to the Participant in the form of Restricted
Stock Units.  The Committee will
establish rules and procedures for the deferrals, as it deems appropriate
and in accordance with Article 13 of the Plan.

 

If a Participant’s compensation is deferred under this
Section 8.2, he or she will be credited, as of the date specified in the
Award Agreement, with a number of Restricted Stock Units no less than the
amount of the deferral divided by the Fair Market Value on that date, rounded
to the nearest whole unit.

 

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

 

8.4                               Other Restrictions. 
Subject to Article 12, the Committee may impose such other
conditions or restrictions on any Restricted Stock or Restricted Stock Units as
it deems advisable, including, without limitation, restrictions based upon the
achievement of specific performance objectives (Company-wide, business unit,
individual, or any combination of them), time-based restrictions on vesting,
and restrictions under applicable federal or state securities laws.  The Committee may provide that restrictions
established under this Section 8.4 as to any given Award will lapse all at
once or in installments.

 

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

 

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

 

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

 

14

 

8.7                               Dividends and Other
Distributions.  During the Restriction Period, Participants
awarded Shares of Restricted Stock hereunder will be credited with regular cash
dividends paid on those Shares. 
Dividends on vested Shares shall be paid as soon as practicable as
dividends are received by other Company stockholders.  Dividends on unvested Shares shall be subject
to the same vesting conditions as the underlying Shares, and will be targeted
to be paid within 2-1/2 months following the end of the calendar year in which
the underlying Shares vest, but shall be paid no later than the end of the
calendar year following the year in which the underlying Shares vest unless
otherwise deferred pursuant to Article 13.

 

An Award Agreement may provide that, during the Restriction
Period, Participants awarded Restricted Stock Units shall be credited with
regular cash dividend equivalents paid with respect to those Share equivalent
units.  Distribution of such dividend
equivalents shall be made at such time as permissible under Section 409A.

 

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

 

Article 9.                                           Performance Shares

 

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

 

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

 

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

 

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

 

9.5                               Form and Timing of Payment
of Performance Shares.  Except as provided in Article 13,
the target payment date of earned Performance Shares will be within the first
two and 

 

15

 

one-half (2-1/2) months following the end of the later of the calendar
year or tax year of the Company in which the Performance Shares are earned, but
in no event later than the end of the calendar year following the calendar year
in which the Performance Shares are earned. 
The Committee will pay earned Performance Shares in the form of cash, in
Shares, or in a combination of cash and Shares, as specified in the Award
Agreement.  Performance Shares may be
paid subject to any restrictions deemed appropriate by the Committee.

 

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

 

Article 10.                                    Other Stock Awards

 

Subject to the terms of the Plan, other Stock Awards
may be granted to Participants in such amounts and upon such terms, and at any
time and from time to time, as the Committee determines.

 

Article 11.                                    Performance Measures

 

Unless and until the Committee proposes and the
Company’s stockholders approve a change in the general performance measures set
forth in this Article 11, the performance measure(s) to be used for
purposes of Awards designed to qualify for the Performance-Based Exception will
be chosen from among the following alternatives (or in any combination of such
alternatives):

 

(a)                                  earnings before interest and taxes
(EBIT);

 

(b)                                 earnings before interest, taxes,
depreciation and amortization (EBITDA);

 

(c)                                  net earnings;

 

(d)                                 operating earnings or income;

 

(e)                                  earnings growth;

 

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

 

(g)                                 net income applicable to Shares;

 

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

 

(i)                                     earnings per Share;

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

(p)                                 customer satisfaction;

 

(q)                                 expense reduction;

 

(r)                                    ratio of operating expenses to operating
revenues;

 

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

 

(t)                                    revenue backlog; and

 

(u)                                 margins realized on delivered services.

 

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

 

If Code Section 162(m) or other applicable
tax or securities laws change to allow the Committee discretion to change the
types of performance measures without obtaining stockholder approval, the
Committee will have sole discretion to make such changes without obtaining
stockholder approval.  In addition, if
the Committee determines it is advisable to grant Awards that will not qualify
for the Performance-Based Exception, the Committee may grant Awards that do not
so qualify.

 

Article 12.                                    Beneficiary Designation

 

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

 

Article 13.                                    Deferrals and Code Section 409A

 

13.1                        Purpose.  As provided in an Award Agreement, the Committee may
permit or require a Participant to defer receipt of cash or Shares that would
otherwise be due to him or her under the Plan or otherwise create a deferred
compensation arrangement (as defined in Section 409A) in accordance with
this Article 13.

 

13.2                        Initial Deferral Elections.  The deferral of an Award or compensation otherwise
payable to the Participant shall be set forth in the terms of the Award
Agreement or as elected by the Participant pursuant to such rules and
procedures as the Committee may establish. 
Any such initial deferral election by a Participant will designate a
time and form of payment and shall be made at such time as provided below:

 

17

 

(a)                                 A Participant may make a deferral
election with respect to an Award (or compensation giving rise thereto) at any
time in any calendar year preceding the year in which services giving rise to
such compensation or Award are rendered.

 

(b)                                In the case of the first year in which a
Participant becomes eligible to receive an Award or defer compensation under
the Plan (aggregating other plans of its type as defined in Section 1.409A-1(c) of
the applicable regulations), the Participant may make a deferral election
within 30 days after the date the Participant becomes eligible to participate
in the Plan; provided that such election may apply only with respect to the
portion of the Award or compensation attributable to services to be performed
subsequent to the election.

 

(c)                                 Where the grant of an Award or payment of
compensation or the vesting is conditioned upon the satisfaction of
pre-established organizational or individual performance criteria relating to a
performance period of at least 12 consecutive months in which the Participant
performs Service, a Participant may make a deferral election no later than six
months prior to the end of the applicable performance period.

 

(d)                                Where the vesting of an Award is
contingent upon the Participant’s continued Service for a period of no less
than 13 months, the Participant may make a deferral election within 30 days of
receiving an Award.

 

(e)                                 A Participant may make a deferral
election in other circumstances and at such times as may be permitted under Section 409A.

 

13.3                        Distribution Dates.  Any deferred compensation arrangement created under
the Plan shall be distributed at such times as provided in the Award Agreement,
which may be upon the earliest or latest of one or more of the following:

 

(a)                                 a fixed date as set forth in the Award
Agreement or pursuant to a Participant’s election;

 

(b)                                the Participant’s death;

 

(c)                                 the Participant’s Disability;

 

(d)                                a change in control (as defined in Section 409A);

 

(e)                                 an Unforeseeable Emergency, as defined in
Section 409A and implemented by the Committee;

 

(f)                                   a Participant’s termination of Service,
or in the case of a Key Employee (as defined in Section 409A) six months
following the Participant’s termination of Service; or

 

18

 

(g)                                such other events as permitted under Section 409A.

 

13.4                        Restrictions on Distributions.  No distribution may be made pursuant to the Plan if
the Committee reasonably determines that such distribution would (i) violate
federal securities laws or other applicable law; (ii) be nondeductible
pursuant to Section 162(m) of the Code; or (iii) violate a loan
covenant or similar contractual requirement of the Company causing material
harm to the Company.  In any such case,
distribution shall be made at the earliest date at which the Company determines
such distribution would not trigger clause (i), (ii) or (iii) above.

 

13.5                        Redeferrals.  The Company, in its discretion, may permit the
Participant to make a subsequent election to delay a distribution date, or, as
applicable, to change the form of distribution payments, attributable to one or
more events triggering a distribution, so long as (i) such election may
not take effect until at least twelve (12) months after the election is made, (ii) such
election defers the distribution for a period of not less than five years from
the date such distribution would otherwise have been made, and (iii) such
election may not be made less than twelve (12) months prior to the date the
distribution was to be made.

 

13.6                        Termination of Deferred
Compensation Arrangements.  In addition, the Company may in its
discretion terminate the deferred compensation arrangements created under this
Plan subject to the following:

 

(a)                                 the arrangement may be terminated within
the 30 days preceding, or 12 months following, a change in control (as defined
in Section 409A), provided that all payments under such arrangement are
distributed in full within 12 months after termination;

 

(b)                                the arrangement may be terminated in the
Company’s discretion at any time, provided that (i) all deferred
compensation arrangements of similar type maintained by the Company are
terminated, (ii) all payments are made at least 12 months and no more than
24 months after the termination, and (iii) the Company does not adopt a
new arrangement of a similar type for a period of five years following the
termination of the arrangement; and

 

(c)                                 the arrangement may be terminated within
12 months of a corporate dissolution taxed under Section 331 of the Code
or with the approval of a bankruptcy court pursuant to 11 U.S.C. 503(b)(1)(A) provided
that the payments under the arrangement are distributed by the latest of (i) the
end of the calendar year of the termination, (ii) the calendar year in
which such payments are fully vested, or (iii) the first calendar year in
which such payment is administratively practicable.

 

Article 14.                                    Rights of Participants

 

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

 

19

 

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

 

Article 15.                                    Amendment, Modification
and Termination

 

15.1                        Amendment, Modification and
Termination.  The Committee may at any time and from time
to time, alter, amend, modify or terminate the Plan in whole or in part.  The Committee will not, however, increase the
number of Shares that may be issued or transferred to Participants under the
Plan, as described in the first sentence of Section 4.1 (and subject to
adjustment as provided in Sections 4.2 and 4.3), without the approval of the
Company’s stockholders.

 

Subject to the terms and conditions of the Plan, the
Committee may modify, extend or renew outstanding Awards under the Plan, or
accept the surrender of outstanding Awards (to the extent not already
exercised) and grant new Awards in substitution of them (to the extent not
already exercised).  The Committee will
not, however, modify any outstanding Option so as to specify a lower Exercise
Price (other than pursuant to Section 4.3), without the approval of the Company’s
stockholders.  Notwithstanding the
foregoing, no modification of an Award will materially alter or impair any
rights or obligations under any Award already granted under the Plan, without
the prior written consent of the Participant.

 

15.2                        Adjustment of Awards Upon the
Occurrence of Certain Unusual or Nonrecurring Events. 
In recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 4.3) affecting the Company or
its financial statements, or in recognition of changes in applicable laws,
regulations, or accounting principles, and, whenever adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, the Committee
shall, using reasonable care, make adjustments in the terms and conditions of,
and the criteria included in, Awards, as may be determined to be appropriate
and equitable by the Committee.  In case
of an Award designed to qualify for the Performance-Based Exception, the
Committee will take care not to make an adjustment that would disqualify the
Award.

 

15.3                        Awards Previously Granted. 
No termination, amendment or modification of the Plan will adversely
affect in any material way any Award already granted, without the written
consent of the Participant who holds the Award.

 

15.4                        Compliance with Code Section 162(m). 
Awards will comply with the requirements of Code Section 162(m), if
the Committee determines that such compliance is desired with respect to an
Award available for grant under the Plan. 
In addition, if changes are made to Code Section 162(m) to
permit greater flexibility as to any Award available under the Plan, the
Committee may, subject to this Article 15, make any adjustments it deems
appropriate.

 

Article 16.                                    Nontransferability of Awards.

 

Except as otherwise provided
in a Participant’s Award Agreement, no Option, SAR, Performance Share,
Restricted Stock, or Restricted Stock Unit granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution, or pursuant to a
domestic relations order (as defined in Code Section 414(p)).  All rights with respect to Performance
Shares, Restricted Stock and 

 

20

 

Restricted Stock Units will be available
during the Participant’s lifetime only to the Participant or his or her
guardian or legal representative.  Except
as otherwise provided in a Participant’s Award Agreement or in paragraph (a) below,
all Options and SARs will be exercisable during the Participant’s lifetime only
by the Participant or his or her guardian or legal representative.  The Participant’s beneficiary may exercise
the Participant’s rights to the extent they are exercisable under the Plan
following the Participant’s death.  The
Committee may, in its discretion, require a Participant’s guardian, legal
representative or beneficiary to supply it with the evidence the Committee
deems necessary to establish the authority of the guardian, legal
representative or beneficiary to act on behalf of the Participant.

 

(a)                                 Notwithstanding
the foregoing, with respect to any Nonstatutory Stock Options, each Participant
shall be permitted at all times to transfer any or all of the Options, or, in
the event the Options have not yet been issued to the Participant, the Company
shall be permitted to issue any or all of the Options, to certain trusts
designated by the Participant as long as such transfer or issuance is made as a
gift (i.e., a transfer for no
consideration, with donative intent), whether during his or her lifetime or to
take effect upon (or as a consequence of) his or her death, to his or her
spouse or children.  Gifts in trust shall
be deemed gifts to every beneficiary and contingent beneficiary, and so shall
not be permitted under this paragraph (a) if the beneficiaries or
contingent beneficiaries shall include anyone other than such spouse or
children.  Transfers to a spouse or child
for consideration, regardless of the amount, shall not be permitted under this
Plan.

 

(b)                                Any Options
issued or transferred under this Article 16 shall be subject to all terms
and conditions contained in the Plan and the applicable Award Agreement.  If the Committee makes an Option
transferable, such Option shall contain such additional terms and conditions,
as the Committee deems appropriate.

 

Article 17.                                    Withholding

 

17.1                        Tax Withholding. 
The Company will have the power and the right to deduct or withhold, or
require a Participant to remit to the Company, the minimum amount necessary to
satisfy federal, state, and local taxes, domestic or foreign, required by law
or regulation to be withheld with respect to any taxable event arising under this
Plan.

 

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

 

21

 

Article 18.                                    Indemnification

 

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

 

Article 19.                                    Successors

 

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

 

Article 20.                                    Breach of Restrictive
Covenants

 

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

 

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

 

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

 

Article 21.                                    Legal Construction

 

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

 

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

 

22

 

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

 

21.4                        Securities Law Compliance. 
As to any individual who is, on the relevant date, an officer, director
or more than ten percent beneficial owner of any class of the Company’s equity
securities that is registered pursuant to Section 12 of the Exchange Act,
all as defined under Section 16 of the Exchange Act, transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3
under the Exchange Act, or any successor rule. 
To the extent any provision of the Plan or action by the Committee fails
to so comply, it will be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.

 

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

 

21.5                        Awards to Foreign Nationals and
Employees Outside the United States.  To the extent
the Committee deems it necessary, appropriate or desirable to comply with
foreign law or practice and to further the purposes of this Plan, the Committee
may, without amending the Plan, (i) establish rules applicable to
Awards granted to Participants who are foreign nationals or are employed
outside the United States, or both, including rules that differ from those
set forth in this Plan, and (ii) grant Awards to such Participants in
accordance with those rules.

 

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

 

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

 

21.8                        Electronic Delivery and
Evidence of Award.  The Company may deliver by email or other
electronic means (including posting on a web site maintained by the Company or
by a third party) all documents relating to the Plan or any Award hereunder
(including, without limitation, any Award Agreement and prospectus required by
the SEC) and all other documents that the Company is required to deliver to its
securities holders (including, without limitation, annual reports and proxy
statements).  In addition, evidence of an
Award may be in electronic form, may be limited to notation on the books and
records of the Company and, with the approval of the Board, need not be signed
by a representative of the Company or a Participant.  Any Shares that become deliverable to the
Participant pursuant to the Plan may be issued in 

 

23

 

certificate form in the name of the Participant or in book entry form
in the name of the Participant.

 

21.9                        No Limitation on Rights
of the Company.  The grant of the Award does not and will not
in any way affect the right or power of the Company to make adjustments,
reclassifications or changes in its capital or business structure, or to merge,
consolidate, dissolve, liquidate, sell or transfer all or any part of its business
or assets.

 

21.10                 Participant to Have No
Rights as a Stockholder.  Before the date as of which he
or she is recorded on the books of the Company as the holder of any Shares
underlying an Award, a Participant will have no rights as a stockholder with
respect to those Shares.

 

24

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