Stock Option & Award Of The Registrant

THE A CONSULTING TEAM, INC.


1997 STOCK OPTION AND AWARD PLAN


TABLE OF CONTENTS


Page


SECTION 1 BACKGROUND, PURPOSE AND DURATION............... 1 1.1 Effective Date and Purpose......................... 1


SECTION 2 DEFINITIONS.................................... 1 2.1 "1934 Act"......................................... 1 2.2 "Affiliate"........................................ 1 2.3 "Board"............................................ 1 2.4 "Code"............................................. 1 2.5 "Committee"........................................ 1 2.6 "Company".......................................... 2 2.7 "Consultant"....................................... 2 2.8 "Director"......................................... 2 2.9 "Disability"....................................... 2 2.10 "Employee"......................................... 2 2.11 "Exercise Price"................................... 2 2.12 "Fair Market Value"................................ 2 2.13 "Fiscal Year"...................................... 2 2.14 "Grant Date"....................................... 2 2.15 "Incentive Stock Option"........................... 2 2.16 "Nonqualified Stock Option"........................ 2 2.17 "Option"........................................... 3 2.18 "Option Agreement"................................. 3 2.19 "Participant"...................................... 3 2.20 "Plan"............................................. 3 2.21 "Rule 16b-3"....................................... 3 2.22 "Section 16 Person"................................ 3 2.23 "Shares"........................................... 3 2.24 "Subsidiary"....................................... 3 2.25 "Termination of Service"........................... 3


SECTION 3 ADMINISTRATION................................. 4 3.1 The Committee...................................... 4 3.2 Authority of the Committee......................... 4 3.3 Delegation by the Committee........................ 4 3.4 Decisions Binding.................................. 4


SECTION 4 SHARES SUBJECT TO THE PLAN..................... 4 4.1 Number of Shares................................... 4 4.2 Lapsed Options..................................... 4 4.3 Adjustments in Options and Authorized Shares....... 4


SECTION 5 STOCK OPTIONS.................................. 5 5.1 Grant of Options................................... 5 5.2 Option Agreement................................... 5 5.3 Exercise Price..................................... 5
5.3.1 Nonqualified Stock Options.................. 5
5.3.2 Incentive Stock Options..................... 5
5.3.3 Substitute Options.......................... 6 5.4 Expiration of Options.............................. 6
5.4.1 Expiration Dates............................ 6


i


Page


5.4.2 Death of Participant........................ 6
5.4.3 Committee Discretion........................ 6 5.5 Exercisability of Options.......................... 6 5.6 Payment............................................ 7 5.7 Restrictions on Share Transferability.............. 7 5.8 Certain Additional Provisions for Incentive Stock
Options............................................ 7
5.8.1 Exercisability.............................. 7
5.8.2 Termination of Service...................... 7
5.8.3 Company and Subsidiaries Only............... 7
5.8.4 Expiration.................................. 8 5.9 Grant of Reload Options............................ 8


SECTION 6 MISCELLANEOUS.................................. 8 6.1 No Effect on Employment or Service................. 8 6.2 Participation...................................... 8 6.3 Indemnification.................................... 8 6.4 Successors......................................... 9 6.5 Beneficiary Designations........................... 9 6.6 Nontransferability of Options...................... 9 6.7 No Rights as Stockholder........................... 9 6.8 Withholding Requirements........................... 9 6.9 Withholding Arrangements........................... 10


SECTION 7 AMENDMENT, TERMINATION, AND DURATION........... 10 7.1 Amendment, Suspension, or Termination.............. 10 7.2 Duration of the Plan............................... 10


SECTION 8 LEGAL CONSTRUCTION............................. 10 8.1 Gender and Number.................................. 10 8.2 Severability....................................... 10 8.3 Requirements of Law................................ 11 8.4 Compliance with Rule 16b-3......................... 11 8.5 Governing Law...................................... 11 8.6 Captions 11


ii


THE A CONSULTING TEAM, INC.
1997 STOCK OPTION AND AWARD PLAN


THE A CONSULTING TEAM, INC., hereby adopts The A Consulting Team, Inc. 1997 Stock Option Plan, as follows:


SECTION 1
BACKGROUND, PURPOSE AND DURATION


1.1 Effective Date and Purpose. The Plan is effective as of [DATE], 1997.
-------------------------- The Plan is intended to increase incentive and to encourage Share ownership on the part of (1) employees of the Company and its Affiliates, and (2) consultants who provide significant services to the Company and its Affiliates. The Plan also is intended to further the growth and profitability of the Company.


SECTION 2
DEFINITIONS


The following words and phrases shall have the following meanings unless a different meaning is plainly required by the context:


2.1 "1934 Act" means the Securities Exchange Act of 1934, as amended.
-------- Reference to a specific section of the 1934 Act or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.


2.2 "Affiliate" means any corporation or any other entity (including, but
--------- not limited to, partnerships and joint ventures) controlling, controlled by, or under common control with the Company.


2.3 "Board" means the Board of Directors of the Company.
-----


2.4 "Code" means the Internal Revenue Code of 1986, as amended. Reference
---- to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.


2.5 "Committee" means the committee appointed by the Board (pursuant to
--------- Section 3.1) to administer the Plan.


2.6 "Company" means The A Consulting Team, Inc., a New York corporation,
------- or any successor thereto.


2.7 "Consultant" means any consultant, independent contractor, or other
---------- person who provides significant services to the Company or its Affiliates, but who is neither an Employee nor a Director.


2.8 "Director" means any individual who is a member of the Board.
--------


2.9 "Disability" means a permanent and total disability within the meaning
---------- of Code section 22(e)(3), provided that in the case of Options other than Incentive Stock Options, the Committee in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non- discriminatory standards adopted by the Committee from time to time.


2.10 "Employee" means any employee of the Company or of an Affiliate,
-------- whether such employee is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.


2.11 "Exercise Price" means the price at which a Share may be purchased by
-------------- a Participant pursuant to the exercise of an Option.


2.12 "Fair Market Value" means the last quoted per share selling price for
----------------- Shares on the relevant date, or if there were no sales on such date, the arithmetic mean of the highest and lowest quoted selling prices on the nearest day before and the nearest day after the relevant date, as determined by the Committee. Notwithstanding the preceding, with respect to Options granted on the date of the initial public offering of Shares, fair market value means the price at which each Share is sold in such offering, as determined by the Committee.


2.13 "Fiscal Year" means the fiscal year of the Company.
-----------


2.14 "Grant Date" means, with respect to an Option, the date that the
---------- Option was granted.


2.15 "Incentive Stock Option" means an Option to purchase Shares which is
---------------------- designated as an Incentive Stock Option and is intended to meet the requirements of section 422 of the Code.


2.16 "Nonqualified Stock Option" means an option to purchase Shares which
------------------------- is not intended to be an Incentive Stock Option.


2


2.17 "Option" means an Incentive Stock Option or a Nonqualified Stock
------ Option.


2.18 "Option Agreement" means the written agreement setting forth the
---------------- terms and provisions applicable to each Option granted under the Plan.


2.19 "Participant" means an Employee, Consultant, or Director who has an
----------- outstanding Option.


2.20 "Plan" means The A Consulting Team, Inc. 1997 Stock Option and Award
---- Plan, as set forth in this instrument and as hereafter amended from time to time.


2.21 "Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act, as
---------- amended, and any future regulation amending, supplementing or superseding such regulation.


2.22 "Section 16 Person" means a person who, with respect to the Shares,
----------------- is subject to section 16 of the 1934 Act.


2.23 "Shares" means the shares of the Company's common stock, $.01
------ par value.


2.24 "Subsidiary" means any ...