1996 STOCK INCENTIVE PLAN

1996 STOCK INCENTIVE PLAN





Section 1. Purpose



The purpose of this 1996 Stock Incentive Plan (the "Plan") is to advance the interests of Advanced Communication Systems, Inc. by enhancing its ability to attract and retain directors, executive officers and other key employees, consultants and others who are in a position to contribute to the Company's future growth and success.



Section 2. Definitions



"Award" means any Option, Stock Appreciation Right, Performance Share, Restricted Stock or Unrestricted Stock awarded under the Plan.



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



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



"Committee" means a committee of not less than two members of the Board appointed by the Board to administer the Plan, provided that if and when the Common Stock is registered under Section 12 of the Securities Exchange Act of 1934, each member of the Committee shall be a "non-employee director" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 ("Rule 16b-3").



"Common Stock" or "Stock" means the Common Stock, $.01 par value per share, of the Company.



"Company" means Advanced Communication Systems, Inc. and, except where the content otherwise requires, all present and future subsidiaries of the Company as defined in Sections 424(f) of the Code.



"Designated Beneficiary" means the beneficiary designated by a Participant, in a manner determined by the Board, to receive amounts due to or exercise rights of the Participant in the event of the Participant's death. In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate.



"Fair Market Value" means, with respect to Common Stock or any other property, the fair market value of such property as determined by the Board in good faith or in the manner established by the Board from time to time.



"Incentive Stock Option" means an option to purchase shares of Common Stock awarded to a Participant under Section 6 which is intended to meet the requirements of Section 422 of the Code or any successor provision.



"Nonstatutory Stock Option" means an option to purchase shares of Common Stock awarded to a Participant under Section 6 which is not intended to be an Incentive Stock Option.



"Option" means an Incentive Stock Option or a Nonstatutory Stock Option.



"Outside Director" means a non-employee director of the Company.



"Participant" means a person selected by the Board to receive an Award under the Plan.



"Performance Shares" mean shares of Common Stock which may be earned by the achievement of performance goals awarded to a Participant under Section 8.



"Reporting Person" means a person subject to Section 16 of the Securities Exchange Act of 1934 or any successor provision.



"Restricted Period" means the period of time selected by the Board during which shares subject to a Restricted Stock Award may be repurchased by or forfeited to the Company.



"Restricted Stock" means shares of Common Stock awarded to a Participant under Section 9.



"Stock Appreciation Right" or "SAR" means a right to receive any excess in Fair Market Value of shares of Common Stock over the exercise price awarded to a Participant under Section 7.



"Unrestricted Stock" means shares of Common Stock awarded to a Participant under Section 9(c).



Section 3. Administration



The Plan will be administered by the Board. The Board shall have authority to make Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable from time to time, and to interpret the provisions of the Plan. The Board's decisions shall be final and binding. No member of the Board shall be liable for any action or determination relating to the Plan made in good faith. To the extent permitted by applicable law, the Board may delegate to one or more executive officers of the Company the power to make Awards to Participants who are not Reporting Persons and to make all determinations under the Plan with respect thereto, provided that the Board shall fix the maximum amount of such Awards to be made by such executive officers and a maximum amount for any one Participant. To the extent permitted by applicable law, the Board may appoint a Committee to administer the Plan and, in such event, all references to the Board in the Plan shall mean such Committee or the Board. All decisions by the Board or the Committee pursuant to the Plan shall be final and binding on all persons having or claiming any interest in the Plan or in any Award.







Section 4. Eligibility



All of the Company's employees, officers, directors, consultants and advisors who are expected to contribute to the Company's future growth and success, other than persons who have irrevocably elected not to be eligible, are eligible to be Participants in the Plan. Incentive Stock Options may be awarded only to persons eligible to receive Incentive Stock Options under the Code.



Section 5. Stock Available for Awards



(a) Subject to adjustment under subsection (b) below, Awards may be made under the Plan for up to 450,000 shares of Common Stock. If any Award in respect of shares of Common Stock expires or is terminated unexercised or is forfeited, in whole or in part, for any reason, the shares subject to such Award, to the extent of such expiration, termination or forfeiture, shall again be available for award under the Plan, subject, however, in the case of Incentive Stock Options, to any limitation required under the Code. If shares of Stock are tendered to the Company in payment of the exercise price of an Option pursuant to Section 6(a)(iv) or in satisfaction of tax withholding requirements pursuant to Section 10(g), such tendered shares shall again be available for subsequent Awards under the Plan; provided, however, that (i) in no event shall the total number of shares issued pursuant to the exercise of Incentive Stock Options under the Plan, on a cumulative basis, exceed the maximum number of shares authorized for issuance under the Plan exclusive of shares made available for issuance pursuant to this sentence and (ii) shares made available for issuance pursuant to this sentence shall not be available for Awards to Reporting Persons. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.



(b) If the Board, in its sole discretion, determines that any stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or other similar transaction affects the Common Stock such that an adjustment is required in order to preserve the benefits or potential benefits intended to be made available under the Plan, then the Board, subject, in the case of Incentive Stock Options, to any limitation required under the Code, shall equitably adjust any or all of (i) the number and kind of shares in respect of which Awards may be made under the Plan, (ii) the number and kind of shares subject to outstanding Awards, and (iii) the award, exercise or conversion price with respect to any of the foregoing, and if considered appropriate, the Board may make provision for a cash payment with respect to an outstanding Award, provided that the number of shares subject to any Award shall always be a whole number.



(c) The Board may grant Awards under the Plan in substitution for stock and stock based awards held by employees of another corporation who concurrently become employees of the Company as a result of a merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a subsidiary of property or stock of the employing corporation. The substitute Awards shall be granted on such terms and conditions as the Board considers appropriate under the circumstances.







Section 6. Stock Options



(a) General.



(i) Subject to the provisions of the Plan, the Board may award Incentive Stock Options and Nonstatutory Stock Options, and determine the number of shares to be covered by each Option, the option price therefor and the conditions and limitations applicable to the exercise of the Option. The terms and conditions of Incentive Stock Options shall be subject to and comply with Section 422 of the Code, or any successor provision, and any regulations thereunder.



(ii) The Board shall establish the exercise price at the time each Option is awarded. In the case of Incentive Stock Options, such price shall not be less than 100% of the Fair Market Value of the Common Stock on the date of award.



(iii) Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable Award or thereafter. The Board may impose such conditions with respect to the exercise of Options, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable.



(iv) Options granted under the Plan may provide for the payment of the exercise price by delivery of cash or check in an amount equal to the exercise price of such Options or, to the extent permitted by the Board at or after the award of the Option, by (A) delivery of shares of Common Stock owned by the optionee for at least six months (or such shorter period as is approved by the Board), valued at their Fair Market Value, (B) delivery of a promissory note of the optionee to the Company on terms determined by the Board, (C) delivery of an irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the exercise price or delivery of irrevocable instructions to a broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price, (D) payment of such other lawful consideration as the Board may determine, or (E) any combination of the foregoing.



(v) The Board may provide for the automatic award of an Option upon the delivery of shares to the Company in payment of the exercise price of an Option for up to the number of shares so delivered.



(vi) The Board may at any time accelerate the time at which all or any part of an Option may be exercised.



(vii) For all purposes of the Plan and any Option granted hereunder, "employment" shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations (or any successor regulations).



(b) Incentive Stock Options.



Options granted under the Plan which are intended to be Incentive Stock Options shall be subject to the following additional terms and conditions:







(i) All Incentive Stock Options granted under the

Plan shall, at the time of grant, be specifically designated as such in

the option agreement covering such Incentive Stock Options. The Option

exercise period shall not exceed ten years from the date of grant.



(ii) If any employee to whom an Incentive Stock

Option is to be granted under the Plan is, at the time of the grant of

such option, the owner of stock possessing more than 10% of the total

combined voting power of all (after taking into account the attribution

of Section 424(b) and of the Code), then the following special

provisions shall be applicable to the Incentive Stock Option granted to

such individual:



(x) The purchase price per share of the

Common Stock subject to such Incentive Stock Option

shall not be less than 110% of the Fair Market value

of one share of Common Stock at the time of grant;



(y) The option exercise period shall not

exceed five years from the date of grant.



(iii) For so long as the Code shall so provide,

options granted to any employee under the Plan (and any other incentive

stock option plans of the Company, if any) which are intended to

constitute Incentive Stock Options shall not constitute Incentive Stock

Options to the extent that such options, in the aggregate, become

exercisable for the first time in any one calendar year for shares of

Common Stock with an aggregate Fair Market Value (determined as of the

respective date or dates of grant) of more than $100,000.



(iv) No Incentive Stock Option may be exercised

unless, at the time of such exercise, the Participant is, and has been

continuously since the date of grant of his or her Option, employed by

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