Exhibit 10.1

HEALTHWAYS, INC.

2007 STOCK INCENTIVE PLAN

SECTION 1. PURPOSE; DEFINITIONS.

        The purpose of the Healthways, Inc. 2007 Stock Incentive Plan (the
“Plan”) is to enable Healthways, Inc. (the “Corporation”) to attract, retain and
reward key employees of and consultants to the Corporation and its Subsidiaries
and Affiliates, and directors who are not also employees of the Corporation, and
strengthen the mutuality of interests between such key employees, consultants
and directors by awarding such key employees, consultants and directors
performance-based stock incentives and/or other equity interests or equity-based
incentives in the Corporation, as well as performance-based incentives payable
in cash. The creation of the Plan shall not diminish or prejudice other
compensation programs approved from time to time by the Board.

        For purposes of the Plan, the following terms shall be defined as set
forth below:

(a)     “Affiliate” means any entity other than the Corporation and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Corporation directly or indirectly owns at least 20%
of the combined voting power of all classes of stock of such entity or at least
20% of the ownership interests in such entity.

(b)     “Award” shall mean any Option, Stock Appreciation Right, Restricted
Share Award, Restricted Share Unit, Performance Award, Other Stock-Based Award
or other award granted under the Plan, whether singly, in combination or in
tandem, to a Participant by the Committee pursuant to such terms, conditions,
restrictions and/or limitations, if any, as the Committee may establish.

(c)     “Award Agreement” shall mean any written agreement, contract or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.

(d)     “Board” means the Board of Directors of the Corporation.

(e)     “Cause” means (i) a felony conviction of a Participant or the failure of
a Participant to contest prosecution for a felony, or (ii) a Participant’s
willful misconduct or dishonesty, which is directly and materially harmful to
the business or reputation of the Corporation or any Subsidiary or Affiliate.

(f)     “Change in Control” means the happening of any of the following:

(i)         any person or entity, including a “group” as defined in Section
13(d)(3) of the Exchange Act, other than the Corporation or a wholly-owned
subsidiary thereof or any employee benefit plan of the Corporation or any of its
Subsidiaries, becomes the beneficial owner of the Corporation’s securities
having 35% or more of the combined voting power of the then outstanding
securities of the Corporation that may be cast for the election of directors of
the Corporation (other than as a result of an issuance of securities initiated
by the Corporation in the ordinary course of business); or

(ii)         as the result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sales of assets or
contested election, or any combination of the foregoing transactions, less than
a majority of the combined voting power of the then outstanding securities of
the Corporation or any successor corporation or entity entitled to vote
generally in the election of the directors of the Corporation or such other
corporation or entity after such transaction are held in the aggregate by the
holders of the Corporation’s securities entitled to vote generally in the
election of directors of the Corporation immediately prior to such transaction;
or

(iii)         during any period of two consecutive years, individuals who at the
beginning of any such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the Corporation’s stockholders, of each director of the
Corporation first elected during such period was approved by a vote of at least
two-thirds of the directors of the Corporation then still in office who were
directors of the Corporation at the beginning of any such period.

(g)     “Common Stock” means the Corporation’s Common Stock, par value $.001 per
share.

(h)     “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.

(i)     “Committee” means a committee of the Board consisting of all of the
Outside Directors of the Company. To the extent that compensation realized in
respect of Awards is intended to be “performance based” under Section 162(m) of
the Code and the Committee is not comprised solely of individuals who are
“outside directors” within the meaning of Section 162(m) of the Code, or that
any member of the Committee is not a “non-employee director” within the meaning
of Rule 16b-3 under the Exchange Act, the Committee may from time to time
delegate some or all of its functions under the Plan to a committee or
subcommittee composed of members that meet the relevant requirements. The term
“Committee” includes only such committee or subcommittee, to the extent of the
Committee’s delegation.

(j)     “Corporation” means Healthways, Inc., a corporation organized under the
laws of the State of Delaware or any successor corporation.

(k)     “Covered Officer” shall mean at any date (i) any individual who, with
respect to the previous taxable year of the Corporation, was a “covered
employee” of the Corporation within the meaning of Section 162(m) of the Code;
provided, however, that the term “Covered Officer” shall not include any such
individual who is designated by the Committee, in its discretion, at the time of
any Award under the Plan or at any subsequent time, as reasonably expected not
to be such a “covered employee” with respect to the current taxable year of the
Corporation and (ii) any individual who is designated by the Committee, in its
discretion, at the time of any Award or at any subsequent time, as reasonably
expected to be such a “covered employee” with respect to the current taxable
year of the Corporation or with respect to the taxable year of the Corporation
in which any applicable Award hereunder will be paid.

(l)     “Disability” means, unless otherwise provided in an Award Agreement,
either of the following: (i) the Participant is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (ii) the Participant
is, by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than 3 months under an accident and health plan covering
employees of the Participant’s employer.

(m)     “Early Retirement” for purposes of this Plan, shall be deemed to have
occurred if (i) the sum of the participant’s age plus years of employment at the
Company as of the proposed early retirement date is equal to or greater than 70,
(ii) the participant has given written notice to the company at least one year
prior to the proposed early retirement date of his or her intent to retire and
(iii) the Chief Executive Officer shall have approved in writing such early
retirement request prior to the proposed early retirement date, provided that in
the event the Chief Executive Officer does not approve the request for early
retirement or the Chief Executive Officer is the participant giving notice of
his or her intent to retire, then in both cases, the Board of Directors shall
make the determination of whether to approve or disapprove such request.

(n)     “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.

(o)     “Fair Market Value” means with respect to the Stock, as of any given
date or dates, unless otherwise determined by the Committee in good faith, the
reported closing price of a share of such class of Stock on the Nasdaq Stock
Market (“Nasdaq”) or such other exchange or market as is the principal trading
market for such class of Stock, or, if no such sale of a share of such class of
Stock is reported on the Nasdaq or other exchange or principal trading market on
such date, the fair market value of a share of such class of Stock as determined
by the Committee in good faith.

(p)     “Incentive Stock Option” means any Stock Option intended to be and
designated in an Award Agreement as an “Incentive Stock Option” within the
meaning of Section 422 of the Code. Under no circumstances shall an Stock Option
that is not specifically designated as an Incentive Stock Option be considered
an Incentive Stock Option.

(q)     “Non-Employee Director” shall have the meaning set forth in Rule
16b-3(b)(3)(i) as promulgated by the Securities and Exchange Commission (the
“Commission”) under the Securities Exchange Act of 1934, as amended, or any
successor definition adopted by the Commission.

(r)     “Non-Qualified Stock Option” means any Stock Option that is not an
Incentive Stock Option.

(s)     “Normal Retirement” means retirement from active employment with the
Corporation and any Subsidiary or Affiliate on or after age 65.

(t)     “Other Stock-Based Award” means an award under Section 8 below that is
valued in whole or in part by reference to, or is otherwise based on, Stock.

(u)     “Outside Director” means a member of the Board who is not an officer or
employee of the Corporation or any Subsidiary or Affiliate of the Corporation.

(v)     “Participant” shall mean any person who is eligible under Section 4 of
the Plan and who receives an Award under the Plan.

(w)     “Performance Award ” shall mean any Award granted under Section 8.2 of
the Plan.

(x)     “Plan” means this Healthways, Inc. 2007 Stock Incentive Plan, as amended
from time to time.

(y)     “Restricted Stock” means an award of shares of Stock that is subject to
restrictions under Section 7 below.

(z)     “Restricted Stock Unit” shall mean any unit granted under Section 7.5 of
the Plan.

(aa)     “Restriction Period” shall have the meaning provided in Section 7.

(bb)     “Retirement” means Normal or Early Retirement.

(cc)     “Stock” means the Common Stock.

(dd)     “Stock Appreciation Right” means an award described in Section 6 of the
Plan.

(ee)     “Stock Option” or “Option” means any option to purchase shares of Stock
(including Restricted Stock, if the Committee so determines) granted pursuant to
Section 5 or Section 9 below.

(ff)     “Subsidiary” means any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

SECTION 2. ADMINISTRATION.

        The Plan shall be administered by the Committee, provided that, in the
absence of the Committee or to the extent determined by the Board, any action
that could be taken by the Committee may be taken by the Outside Directors. The
functions of the Committee specified in the Plan may be exercised by the
Compensation Committee of the Board, provided that the full Committee shall have
the final authority with respect to the administration of the Plan. The
Committee shall have authority to grant, pursuant to the terms of the Plan,
Awards to persons eligible under Section 4. In particular, the Committee shall
have the authority, consistent with the terms of the Plan:

(a)     to select the officers and other key employees of and consultants to the
Corporation and its Subsidiaries and Affiliates to whom Awards may from time to
time be granted hereunder;

(b)     to determine whether and to what extent Awards are to be granted
hereunder to one or more eligible employees;

(c)     to determine the number of shares to be covered by each such Award
granted hereunder;

(d)     to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Award granted hereunder (including, but not limited to, the
share price and any restriction or limitation, or any vesting acceleration or
waiver of forfeiture restrictions regarding any Award and/or the shares of Stock
relating thereto, based in each case on such factors as the Committee shall
determine, in its sole discretion); and to amend or waive any such terms and
conditions to the extent permitted by Section 11 hereof;

(e)     to determine whether and under what circumstances a Stock Option may be
settled in cash or Restricted Stock instead of Stock;

(f)     to determine whether, to what extent and under what circumstances Option
grants and/or other Awards under the Plan are to be made, and operate, on a
tandem basis vis-a-vis other Awards under the Plan and/or awards made outside of
the Plan;

(g)     to determine whether, to what extent and under what circumstances Stock
and other amounts payable with respect to an Award under this Plan shall be
deferred either automatically or at the election of the Participant (including
providing for and determining the amount (if any) of any deemed earnings on any
deferred amount during any deferral period); and

(h)     to determine whether to require payment withholding requirements in
shares of Stock.

        The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
Award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.

        All decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee’s sole discretion and shall be final and
binding on all persons, including the Corporation and Plan Participants. Subject
to the terms of the Plan and applicable law, the Committee may delegate to one
or more officers or managers of the Corporation or of any Subsidiary or
Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant
Awards under the Plan to, or to cancel, modify or waive rights with respect to,
or to alter, discontinue, suspend, or terminate such Awards held by Participants
who are not officers or directors of the Corporation for purposes of Section 16
of the Exchange Act or who are otherwise not subject to such provision of law.

SECTION 3. SHARES OF STOCK SUBJECT TO PLAN.

3.1 Shares Available. The aggregate number of shares of Stock reserved and
available for distribution under the Plan shall not exceed 2,036,953 shares
(which includes 35,591 shares of Stock with respect to which awards under the
Corporation’s 1996 Stock Incentive Plan (the “1996 Plan”) were authorized but
not awarded and 1,362 shares of Stock with respect to which awards under the
Corporation’s Amended and Restated 2001 Stock Option Plan (the “2001 Plan”)), of
which shares of Stock with respect to which Awards other than Stock Appreciation
Rights and Options may be granted shall be no more than 1,000,000.
Notwithstanding the foregoing and subject to adjustment as provided in Section
3.2, the maximum number of shares of Stock with respect to which Awards may be
granted under the Plan shall be increased by the number of shares with respect
to which Options or other Awards were granted under the 1996 Plan, 2001 Plan and
the 1991 Employee Stock Incentive Plan (the “1991 Plan”) as of the effective
date of this Plan, but which terminate, expire unexercised, forfeited or
cancelled without the delivery of shares under the terms of the 1996 Plan, the
2001 Plan or the 1991 Plan, as the case may be, after the effective date of this
Plan. If, after the effective date of the Plan, any shares of Stock covered by
an Award granted under this Plan, or to which such an Award relates, are
forfeited, or if such an Award otherwise terminates, expires unexercised or is
canceled without the delivery of shares of Stock, then the shares covered by
such Award, or to which such Award relates, or the number of shares of Stock
otherwise counted against the aggregate number of shares with respect to which
Awards may be granted, to the extent of any such forfeiture, termination,
expiration or cancellation, shall again become Stock with respect to which
Awards may be granted.

3.2 Adjustments. In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, Stock dividend, Stock split or
other change in corporate structure affecting the Stock, an equitable and
proportionate substitution or adjustment shall be made in the aggregate number
of shares reserved for issuance under the Plan, in the number and exercise price
of shares subject to outstanding Options or Stock Appreciation Rights granted
under the Plan and in the number of shares subject to other outstanding Awards
granted under the Plan as determined to be appropriate by the Committee, in its
sole discretion, provided that the number of shares subject to any Award shall
always be a whole number. The maximum number of shares that may be awarded to
any Participant under Section 4 and Section 8.2(b) of this Plan will be adjusted
in the same manner as the number of shares subject to outstanding Awards.

SECTION 4. ELIGIBILITY.

        Officers and other key employees of and consultants to the Corporation
and its Subsidiaries and Affiliates (but excluding members of the Committee and
any person who serves only as a director, except as otherwise provided in
Section 9) who are responsible for or contribute to the management, growth
and/or profitability of the business of the Corporation and/or its Subsidiaries
and Affiliates are eligible to be granted Awards. Subject to adjustment as
provided in Section 3.2 hereof, no Participant may receive (i) Options or Stock
Appreciation Rights under the Plan in any calendar year that, taken together,
relate to more than 150,000 shares of Stock or (ii) Awards of Restricted Stock
or Restricted Stock Units under the Plan in any calendar year that, taken
together, related to more than 75,000 shares of Stock.

SECTION 5. STOCK OPTIONS.

5.1 Grant. Stock Options may be granted alone, in addition to or in tandem with
other Awards granted under the Plan and/or cash awards made outside of the Plan.
Any Stock Option granted under the Plan shall be in such form as the Committee
may from time to time approve. Stock Options granted under the Plan may be of
two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options.
Incentive Stock Options may be granted only to individuals who are employees of
the Corporation or any Subsidiary of the Corporation. Options granted under the
Plan shall be subject to the terms and conditions set forth in this Section 5
and shall contain such additional terms and conditions, not inconsistent with
the terms of the Plan, as the Committee shall deem desirable. Options may be
settled in cash or Stock.

5.2 Option Price. The option price per share of Stock purchasable under a Stock
Option shall be determined by the Committee at the time of grant but shall be
not less than 100% of the Fair Market Value of the Stock at grant, in the case
of both Incentive Stock Options and Non-Qualified Stock Options (or, in the case
of any employee who owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Corporation or of any of its
Subsidiaries, not less than 110% of the Fair Market Value of the Stock at grant
in the case of Incentive Stock Options).

5.3 Option Term. The term of each Stock Option shall be fixed by the Committee,
but no Option shall be exercisable more than ten years after the date the Option
is granted (or, in the case of an employee who owns stock possessing more than
10% of the total combined voting power of all classes of stock of the
Corporation or any of its Subsidiaries or parent corporations, more than five
years after the date the Option is granted in the case of Incentive Stock
Options).

5.4 Exercise. Stock Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee at
or after grant; provided, however, that except as otherwise provided herein or
by the Committee at or after grant, no Stock Option shall be exercisable prior
to the first anniversary date of the granting of the Option. The Committee may
provide that a Stock Option shall vest over a period of future service at a rate
specified at the time of grant, or that the Stock Option is exercisable only in
installments. If the Committee provides that any Stock Option is exercisable
only in installments, the Committee may waive such installment exercise
provisions at any time at or after grant in whole or in part, based on such
factors as the Committee shall determine, in its sole discretion. The Committee
may establish performance conditions or other conditions to the exercise of any
Stock Options, which conditions may be waived by the Committee in its sole
discretion.

5.5 Method of Exercise. The exercise price of a Stock Option Award may be paid
in cash, personal check (subject to collection), bank draft or such other method
as the Committee may determine from time to time. The exercise price may also be
paid by the tender, by either actual delivery or attestation, of Stock
acceptable to the Committee and valued at its Fair Market Value on the date of
exercise or through a combination of Stock and cash. Without limiting the
foregoing, to the extent permitted by applicable law: the Committee may, on such
terms and conditions as it may determine, permit a Participant to elect to pay
the exercise price by authorizing a third party, pursuant to a brokerage or
similar arrangement approved in advance by the Committee, to simultaneously sell
all (or a sufficient portion) of the Stock acquired upon exercise of such Option
and to remit to the Corporation a sufficient portion of the proceeds from such
sale to pay the entire exercise price of such Option and any required tax
withholding resulting therefrom. A Participant shall generally have the rights
to dividends or other rights of a stockholder with respect to shares subject to
the Option only when the Participant has given written notice of exercise, has
paid in full for such shares, and, if requested, has given the representation
described in Section 13(a).

5.6 Non-Transferability of Options. Unless otherwise provided by the Committee
at or after grant, no Stock Option shall be transferable by a Participant
otherwise than by will or by the laws of descent and distribution, and all Stock
Options shall be exercisable, during the Participant’s lifetime, only by the
Participant.

5.7 Termination by Death. Unless otherwise provided by the Committee at or after
grant, if a Participant’s employment by the Corporation and any Subsidiary or
Affiliate terminates by reason of death, any Stock Option held by such
Participant may thereafter be exercised, to the extent such option was
exercisable at the time of death or on such accelerated basis as the Committee
may determine at or after grant (or as may be determined in accordance with
procedures established by the Committee) by the legal representative of the
estate or by the legatee of the Participant under the will of the Participant,
for a period of one year (or such other period as the Committee may specify at
or after grant) from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter.

5.8 Termination by Reason of Disability. Unless otherwise provided by the
Committee at or after grant, if a Participant’s employment by the Corporation or
any Subsidiary or Affiliate terminates by reason of Disability, any Stock Option
held by such Participant may thereafter be exercised by the Participant, to the
extent it was exercisable at the time of termination or on such accelerated
basis as the Committee may determine at or after grant (or as may be determined
in accordance with procedures established by the Committee), for a period of (i)
three years from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter, in the case of a Non-Qualified Stock Option and (ii) one year from the
date of termination of employment or until the expiration of the stated term of
such Stock Option, whichever period is shorter, in the case of an Incentive
Stock Option; provided however, that, if the Participant dies within the period
specified in (i) above, any unexercised Non-Qualified Stock Option held by such
Participant shall thereafter be exercisable to the extent to which it was
exercisable at the time of death for a period of twelve months from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is shorter. In the event of termination of employment by reason
of Disability, if an Incentive Stock Option is exercised after the expiration of
the exercise period applicable to Incentive Stock Options, but before the
expiration of any period that would apply if such Stock Option were a
Non-Qualified Stock Option, such Stock Option will thereafter be treated as a
Non-Qualified Stock Option.

5.9 Termination by Reason of Retirement. Unless otherwise provided by the
Committee at or after grant, if a Participant’s employment by the Corporation
and any Subsidiary or Affiliate terminates by reason of Normal or Early
Retirement, any Stock Option held by such Participant may thereafter be
exercised by the Participant, to the extent it was exercisable at the time of
such Retirement or on such accelerated basis as the Committee may determine at
or after grant (or, as may be determined in accordance with procedures
established by the Committee), for a period of (i) three years from the date of
such termination of employment or the expiration of the stated term of such
Stock Option, whichever period is the shorter, in the case of a Non-Qualified
Stock Option and (ii) three months from the date of such termination of
employment or the expiration of the stated term of such Stock Option, whichever
period is the shorter, in the event of an Incentive Stock Option; provided
however, that, if the Participant dies within the period specified in (i) above,
any unexercised Non-Qualified Stock Option held by such Participant shall
thereafter be exercisable to the extent to which it was exercisable at the time
of death for a period of twelve months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is shorter.
In the event of termination of employment by reason of Retirement, if an
Incentive Stock Option is exercised after the expiration of the exercise period
applicable to Incentive Stock Options, but before the expiration of the period
that would apply if such Stock Option were a Non-Qualified Stock Option, the
option will thereafter be treated as a Non-Qualified Stock Option.

5.10 Other Termination. Unless otherwise provided by the Committee at or after
grant, if a Participant’s employment by the Corporation and any Subsidiary or
Affiliate is involuntarily terminated for any reason other than death,
Disability or Normal or Early Retirement, the Stock Option shall thereupon
terminate, except that such Stock Option may be exercised, to the extent
otherwise then exercisable, for the lesser of three months or the balance of
such Stock Option’s term if the involuntary termination is without Cause. If a
Participant voluntarily terminates employment with the Corporation and any
Subsidiary or Affiliate (except for Disability, Normal or Early Retirement), the
Stock Option shall thereupon terminate; provided, however, that the Committee at
grant may extend the exercise period in this situation for the lesser of three
months or the balance of such Stock Option’s term.

5.11 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the optionee(s) affected, to
disqualify any Incentive Stock Option under such Section 422. No Incentive Stock
Option shall be granted to any Participant under the Plan if such grant would
cause the aggregate Fair Market Value (as of the date the Incentive Stock Option
is granted) of the Stock with respect to which all Incentive Stock Options
issued after December 31, 1986 are exercisable for the first time by such
Participant during any calendar year (under all such plans of the Corporation
and any Subsidiary) to exceed $100,000. To the extent permitted under Section
422 of the Code or the applicable regulations thereunder or any applicable
Internal Revenue Service pronouncement:

(a)     if (x) a Participant’s employment is terminated by reason of death,
Disability or Retirement and (y) the portion of any Incentive Stock Option that
is otherwise exercisable during the post-termination period specified under this
Section 5 of the Plan, applied without regard to the $100,000 limitation
contained in Section 422(d) of the Code, is greater than the portion of such
Option that is immediately exercisable as an “Incentive Stock Option” during
such post-termination period under Section 422, such excess shall be treated as
a Non-Qualified Stock Option; and

(b)     if the exercise of an Incentive Stock Option is accelerated by reason of
a Change in Control, any portion of such Option that is not exercisable as an
Incentive Stock Option by reason of the $100,000 limitation contained in Section
422(d) of the Code shall be treated as a Non-Qualified Stock Option.

5.12 Buyout Provisions. Subject to the provisions of Section 11, the Committee
may at any time offer to buy out for a payment in cash, Stock or Restricted
Stock an Option previously granted, based on such terms and conditions as the
Committee shall establish and communicate to the Participant at the time that
such offer is made.

SECTION 6. STOCK APPRECIATION RIGHTS.

6.1 Grant and Exercise. A Stock Appreciation Right is a right to receive an
amount payable entirely in cash, entirely in Stock or partly in cash and partly
in Stock and exercisable at such time or times and subject to such conditions as
the Committee may determine in its sole discretion subject to the Plan,
including but not limited to the achievement of specific performance goals.
Stock Appreciation Rights may be granted alone or in conjunction with all or
part of any Stock Option granted under the Plan.

    (a)        A Stock Appreciation Right may be exercised by a Participant,
subject to Section 6.2, in accordance with the procedures established by the
Committee for such purpose. Upon such exercise, the Participant shall be
entitled to receive an amount determined in the manner prescribed in Section
6.2. Stock Options relating to exercised Stock Appreciation Rights shall no
longer be exercisable to the extent that the related Stock Appreciation Rights
have been exercised.

    (b)        In the case of a Non-Qualified Stock Option, Stock Appreciation
Rights may be granted either at or after the time of the grant of such Stock
Option. In the case of an Incentive Stock Option, such rights may be granted
only at the time of the grant of such Stock Option. A Stock Appreciation Right
or applicable portion thereof granted with respect to a given Stock Option shall
terminate and no longer be exercisable upon the termination or exercise of the
related Stock Option, subject to such provisions as the Committee may specify at
grant where a Stock Appreciation Right is granted with respect to less than the
full number of shares covered by a related Stock Option.

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

    (a)        Stock Appreciation Rights granted in conjunction with an Option
shall be exercisable only at such time or times and to the extent that the
Options to which they relate shall be exercisable in accordance with the
provisions of Section 5 and this Section 6 of the Plan; provided, however, that
any Stock Appreciation Right granted to a Participant subject to Section 16(a)
of the Exchange Act subsequent to the grant of the related Stock Option shall
not be exercisable during the first six months of its term. The exercise of
Stock Appreciation Rights held by Participants who are subject to Section 16(a)
of the Exchange Act shall comply with Rule 16b-3(e) thereunder, to the extent
applicable. In particular, such Stock Appreciation Rights shall be exercisable
only pursuant to an irrevocable election made at least six months prior to the
date of exercise or within the applicable ten business day “window” periods
specified in Rule 16b-3(e)(3).

    (b)        Upon the exercise of a Stock Appreciation Right, a Participant
shall be entitled to receive an amount in cash and/or shares of Stock equal in
value to the excess of the Fair Market Value of one share of Stock over the
exercise price per share specified in the Stock Appreciation Right multiplied by
the number of shares in respect of which the Stock Appreciation Right shall have
been exercised, with the Committee having the right to determine the form of
payment.

    (c)        Unless otherwise provided by the Committee at or after grant, no
Stock Appreciation Right shall be transferable by a Participant otherwise than
by will or by the laws of descent and distribution, and all such rights shall be
exercisable, during the Participant’s lifetime, only by the Participant.

    (d)        Upon the exercise of a Stock Appreciation Right issued in
conjunction with an Option, the Option or part thereof to which such Stock
Appreciation Right is related shall be deemed to have been exercised for the
purpose of the limitation set forth in Section 3 of the Plan on the number of
shares of Stock to be issued under the Plan.

SECTION 7. RESTRICTED STOCK AND RESTRICTED STOCK UNITS.

7.1 Administration. Shares of Restricted Stock may be issued either alone, in
addition to or in tandem with other Awards granted under the Plan and/or cash
awards made outside the Plan. The Committee shall determine the other terms,
restrictions and conditions of the Awards in addition to those set forth in this
Section 7. The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the Committee
may determine, in its sole discretion. The provisions of Restricted Stock Awards
need not be the same with respect to each Participant.

7.2 Awards and Certificates. A Participant shall not have any rights with
respect to a Restricted Stock Award unless and until such Participant has
executed an agreement evidencing the Award and has delivered a fully executed
copy thereof to the Corporation, and has otherwise complied with the applicable
terms and conditions of such Award.

    (a)        The purchase price for shares of Restricted Stock shall be
established by the Committee and may be zero.

    (b)        Awards of Restricted Stock must be accepted within a period of 60
days (or such shorter period as the Committee may specify at grant) after the
award date, by executing a Restricted Stock Award Agreement and paying whatever
price (if any) is required under Section 7.2(a).

    (c)        Each Participant receiving a Restricted Stock Award shall be
issued a stock certificate in respect of such shares of Restricted Stock. Such
certificate shall be registered in the name of such Participant, and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award.

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

7.3 Restrictions and Conditions. The shares of Restricted Stock awarded pursuant
to this Section 7 shall be subject to the following restrictions and conditions:

    (a)        In accordance with the provisions of this Plan and the Award
Agreement, during a period set by the Committee commencing with the date of such
Award (the “Restriction Period”), the Participant shall not be permitted to
sell, transfer, pledge, assign or otherwise encumber shares of Restricted Stock
awarded under the Plan. Subject to Section 10 of the Plan, an Award of
Restricted Stock shall be subject to a Restriction Period of not less than three
(3) years provided, that the Committee, in its sole discretion, may (i) provide
for the lapse of such restrictions in installments over the Restriction Period
and (ii) accelerate or waive such restrictions in whole or in part in the event
of a Change of Control, death, Disability, Normal or Early Retirement of the
Participant or in the event the Participant’s employment with the Company is
terminated without cause.

    (b)        Except as provided in this Section 7.3, the Participant shall
have, with respect to the shares of Restricted Stock, all of the rights of a
stockholder of the Corporation, including the right to vote the shares, and the
right to receive any cash dividends. The Committee, in its sole discretion, as
determined at the time of Award, may permit or require the payment of cash
dividends to be deferred and, if the Committee so determines, reinvested,
subject to Section 14.5, in additional Restricted Stock to the extent shares are
available under Section 3, or otherwise reinvested. Pursuant to Section 3 above,
stock dividends issued with respect to Restricted Stock shall be treated as
additional shares of Restricted Stock that are subject to the same restrictions
and other terms and conditions that apply to the shares with respect to which
such dividends are issued. If the Committee so determines, the Award Agreement
may also impose restrictions on the right to vote and the right to receive
dividends.

    (c)        Subject to the applicable provisions of the Award Agreement,
Section 10 of the Plan and this Section 7, upon termination of a Participant’s
employment with the Corporation and any Subsidiary or Affiliate for any reason
other than death, Disability or Retirement during the Restriction Period, all
shares still subject to restriction will be forfeited, in accordance with the
terms and conditions established by the Committee at or after grant. Upon
termination of a Participant’s employment with the Corporation and any
Subsidiary or Affiliate for by reason of death, Disability or Retirement during
the Restriction Period, all shares still subject to restriction will vest, or be
forfeited, in accordance with the terms and conditions established by the
Committee at or after grant.

    (d)        If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period,
certificates for an appropriate number of unrestricted shares shall be delivered
to the Participant promptly.

7.4 Minimum Value Provisions. In order to better ensure that Award payments
actually reflect the performance of the Corporation and service of the
Participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other Award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a Restricted Stock Award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.

7.5 Restricted Stock Units. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Participants to whom
Restricted Stock Units shall be granted, the number of Restricted Stock Units to
be granted to each Participant, the duration of the period during which, and the
conditions under which, the Restricted Stock Units may be forfeited to the
Corporation, and the other terms and conditions of such awards. The Restricted
Stock Unit awards shall be evidenced by Award Agreements in such form as the
Committee shall from time to time approve, which agreements shall comply with
and be subject to the terms and conditions provided hereunder and any additional
terms and conditions determined by the Committee that are consistent with the
terms of the Plan.

    (a)        Each Restricted Stock Unit Award made under the Plan shall be for
such number of shares of Stock as shall be determined by the Committee and set
forth in the Award Agreement containing the terms of such Restricted Stock Unit
Award. The agreement shall set forth a period of time during which the
Participant must remain in the continuous employment of the Corporation in order
for the forfeiture and transfer restrictions to lapse, which period shall not be
less than three (3) years, provided, that the Committee, in its sole discretion,
may (i) provide for the lapse of such restrictions in installments over the
Restriction Period and (ii) accelerate or waive such restrictions in whole or in
part in the event of a Change of Control, death, Disability, Normal or Early
Retirement of the Participant or in the event the Participant’s employment with
the Company is terminated without cause. The Award Agreement may, in the
discretion of the Committee, set forth performance or other conditions that will
subject the Restricted Stock Units to forfeiture and transfer restrictions.

    (b)        Each Restricted Stock Unit shall have a value equal to the Fair
Market Value of a share of Stock. Restricted Stock Units shall be paid in cash,
shares of Stock, other securities or other property, as determined in the sole
discretion of the Committee, upon the lapse of the restrictions applicable
thereto, or otherwise in accordance with the applicable Award Agreement or other
procedures approved by the Committee. Unless otherwise provided in the
applicable Award Agreement, a Participant shall be credited with dividend
equivalents on any Restricted Stock Units credited to the Participant’s account
at the time of any payment of dividends to shareholders on shares of Stock. The
amount of any such dividend equivalents shall equal the amount that would have
been payable to the Participant as a shareholder in respect of a number of
shares of Stock equal to the number of vested Restricted Stock Units then
credited to the Participant. Unless otherwise provided by the Committee, any
such dividend equivalents shall be credited to the Participant’s account as of
the date on which such dividend would have been payable and shall be converted
into additional Restricted Stock Units (which shall be immediately vested) based
upon the Fair Market Value of a share of Stock on the date of such crediting.
Except as otherwise determined by the Committee at or after grant, and subject
to the “retirement” exceptions, Restricted Stock Units may not be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed
of, and all Restricted Stock Units and all rights of the Participant to such
Restricted Stock Units shall terminate, without further obligation on the part
of the Corporation, unless the Participant remains in continuous employment of
the Corporation for the entire restricted period in relation to which such
Restricted Stock Units were granted and unless any other restrictive conditions
relating to the Restricted Stock Unit Award are met.

SECTION 8. OTHER STOCK-BASED AWARDS AND PERFORMANCE AWARDS.

8.1 Other Stock-Based Awards. The Committee shall have the authority to
determine the Participants who shall receive an Other Stock-Based Award, which
shall consist of any right that is (i) not an Award described in Sections 6 and
7 above and (ii) an Award of Stock or an Award denominated or payable in, valued
in whole or in part by reference to, or otherwise based on or related to, Stock
(including, without limitation, securities convertible into Stock), as deemed by
the Committee to be consistent with the purposes of the Plan, provided that the
Other Stock-Based Awards that are payable in Stock shall not exceed 10% of the
shares of Stock authorized under the Plan as set forth in Section 3. Subject to
the terms of the Plan and any applicable Award Agreement, the Committee shall
determine the terms and conditions of any such Other Stock-Based Award.

8.2 Performance Awards. The Committee shall have sole and complete authority to
determine the Participants who shall receive a Performance Award, which shall
consist of a right that is (i) denominated in cash or shares of Stock, (ii)
valued, as determined by the Committee, in accordance with the achievement of
such performance goals during such performance periods as the Committee shall
establish, and (iii) payable at such time and in such form as the Committee
shall determine. Subject to Section 10 of the Plan, Performance Awards shall
vest no sooner than one year after grant and shall otherwise be subject to the
terms and provisions of this Section 8.2.

    (a)        The Committee may grant Performance Awards to Covered Officers
based solely upon the attainment of performance targets related to one or more
performance goals selected by the Committee from among the goals specified
below. For the purposes of this Section 8.2, performance goals shall be limited
to one or more of the following Corporation, Subsidiary, operating unit or
division financial performance measures:

(i)  

earnings before interest, taxes, depreciation and/or amortization;

(ii)  

operating income or profit;

(iii)  

operating efficiencies;

(iv)  

return on equity, assets, capital, capital employed, or investment;

(v)  

after tax operating income;

(vi)  

net income;

(vii)  

earnings or book value per share;

(viii)  

cash flow(s);

(ix)  

total sales or revenues or sales or revenues per employee;

(x)  

production;

(xi)  

stock price or total shareholder return;

(xii)  

dividends;

(xiii)  

strategic business objectives, consisting of one or more objectives based on
meeting specified cost targets, business expansion goals, and goals relating to
acquisitions or divestitures;

or any combination thereof. Each goal may be expressed on an absolute and/or
relative basis, may be based on or otherwise employ comparisons based on
internal targets, the past performance of the Corporation or any Subsidiary,
operating unit or division of the Corporation and/or the past or current
performance of other companies, and in the case of earnings-based measures, may
use or employ comparisons relating to capital, shareholders’ equity and/or
shares of Stock outstanding, or to assets or net assets.

    (b)        With respect to any Covered Officer, the aggregate maximum number
of shares of Stock in respect of which all Performance Awards and Stock Options
may be granted under Sections 5 and 8.2 of the Plan in each year of the
performance period is 450,000, and the maximum amount of the aggregate
Performance Awards denominated in cash is $1,000,000 (measured by the Fair
Market Value of the maximum Award at the time of grant) in each year of the
performance period.

    (c)        To the extent necessary to comply with Section 162(m) of the
Code, with respect to grants of Performance Awards to Covered Officers, no later
than 90 days following the commencement of each performance period (or such
other time as may be required or permitted by Section 162(m) of the Code), the
Committee shall, in writing, (1) select the performance goal or goals applicable
to the performance period, (2) establish the various targets and bonus amounts
which may be earned for such performance period, and (3) specify the
relationship between performance goals and targets and the amounts to be earned
by each Covered Officer for such performance period. Following the completion of
each performance period, the Committee shall certify in writing whether the
applicable performance targets have been achieved and the amounts, if any,
payable to Covered Officers for such performance period. In determining the
amount earned by a Covered Officer for a given performance period, subject to
any applicable Performance Award agreement, the Committee shall have the right
to reduce the amount payable at a given level of performance to take into
account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the performance period.

SECTION 9. AWARDS TO OUTSIDE DIRECTORS.

        The Committee or the Nominating and Corporate Governance Committee of
the Board (provided such committee is comprised solely of Outside Directors) may
provide that all or a portion of an Outside Director’s annual retainer, meeting
fees and/or other awards or compensation as determined by the Board, be payable
(either automatically or at the election of the Outside Director) in the form of
Non-Qualified Stock Options, Restricted Shares, Restricted Share Units and/or
Other Stock-Based Awards, including unrestricted Shares. The Committee or the
Nominating and Corporate Governance Committee of the Board (provided such
committee is comprised solely of Outside Directors) shall determine the terms
and conditions of any such Awards, including the terms and conditions which
shall apply upon a termination of the Outside Director’s service as a member of
the Board, and shall have full power and authority in its discretion to
administer such Awards, subject to the terms of the Plan and applicable law.

SECTION 10. CHANGE IN CONTROL PROVISIONS.

        In the event of a Change of Control, in addition to any action required
or authorized by the terms of an Award Agreement, the Committee may, in its sole
discretion, take any of the following actions as a result, or in anticipation,
of any such event to assure fair and equitable treatment of Participants: (i)
accelerate time periods for purposes of vesting in, or realizing gain from, any
outstanding Award made pursuant to this Plan and/or extend the time during which
an Award may be exercised following a Participant’s termination of employment;
(ii) offer to purchase any outstanding Award made pursuant to this Plan from the
holder for its equivalent cash value, as determined by the Committee, as of the
date of the Change of Control; or (iii) make adjustments or modifications to
outstanding Awards as the Committee deems appropriate to maintain and protect
the rights and interests of Participants following such Change of Control.
Unless otherwise provided in an Award Agreement, upon a Change in Control, any
Outstanding Awards under the Plan not previously exercisable and vested shall
become fully exercisable and vested.

SECTION 11. AMENDMENTS AND TERMINATION.

        The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of a
Participant under an Award theretofore granted, without the Participant’s
consent or which, without the approval of the Corporation’s stockholders, would:

    (a)        except as expressly provided in this Plan, increase the total
number of shares reserved for the purpose of the Plan;

    (b)        materially increase the benefits accruing to Participants under
the Plan;

    (c)        materially modify the requirements as to eligibility for
participation in the Plan; or

    (d)        materially modify the Plan within the meaning of the Nasdaq
listing standards.

        The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder’s consent. The Committee may also substitute new Stock Options for
previously granted Stock Options (on a one for one or another basis), provided
that, except as provided in Section 3.2, the Committee may not modify any
outstanding Stock Option so as to specify a lower exercise price or accept the
surrender of an outstanding Stock Option and authorize the granting of a new
Stock Option in substitution therefor specifying a lower exercise price. Subject
to the above provisions, the Board shall have broad authority to amend the Plan
to take into account changes in applicable securities and tax laws and
accounting rules, as well as other developments.

SECTION 12. UNFUNDED STATUS OF THE PLAN.

        The Plan is intended to constitute an “unfunded” plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant by the Corporation, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Corporation. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Stock or payments in lieu of or with respect to Awards hereunder;
provided, however, that, unless the Committee otherwise determines with the
consent of the affected Participant, the existence of such trusts or other
arrangements is consistent with the “unfunded” status of the Plan.

SECTION 13. GENERAL PROVISIONS.

    (a)        The Committee may require each person purchasing shares pursuant
to a Stock Option or other Award under the Plan to represent to and agree with
the Corporation in writing that the Participant is acquiring the shares without
a view to distribution thereof. The certificates for such shares may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer.

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

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

    (c)        The adoption of the Plan shall not confer upon any employee of
the Corporation or any Subsidiary or Affiliate any right to continued employment
with the Corporation or a Subsidiary or Affiliate, as the case may be, nor shall
it interfere in any way with the right of the Corporation or a Subsidiary or
Affiliate to terminate the employment of any of its employees at any time.

    (d)        No later than the date as of which an amount first becomes
includible in the gross income of the Participant for Federal income tax
purposes with respect to any Award under the Plan, the Participant shall pay to
the Corporation, or make arrangements satisfactory to the Committee regarding
the payment of, any Federal, state, or local taxes of any kind required by law
to be withheld with respect to such amount. The Committee may require
withholding obligations to be settled with Stock, including Stock that is part
of the Award that gives rise to the withholding requirement. The obligations of
the Corporation under the Plan shall be conditional on such payment or
arrangements and the Corporation and its Subsidiaries or Affiliates shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the Participant.

    (e)        The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or other types of Plan Awards) at
the time of any dividend payment shall only be permissible if sufficient shares
of Stock are available under Section 3 for such reinvestment (taking into
account then outstanding Stock Options and other Plan Awards).

    (f)        The Plan and all Awards made and actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of
Delaware.

    (g)        The members of the Committee and the Board shall not be liable to
any employee or other person with respect to any determination made hereunder in
a manner that is not inconsistent with their legal obligations as members of the
Board. In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys’ fees actually and necessarily incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any option granted
thereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by the
Corporation) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member is liable
for negligence or misconduct in the performance of his duties; provided that
within 60 days after institution of any such action, suit or proceeding, the
Committee member shall in writing offer the Corporation the opportunity, at its
own expense, to handle and defend the same.

    (h)        In addition to any other restrictions on transfer that may be
applicable under the terms of this Plan or the applicable Award Agreement, no
Option, Stock Appreciation Right, Restricted Stock award, or Other Stock-Based
Award or other right issued under this Plan is transferable by the Participant
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined under the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended. The designation of
a beneficiary will not constitute a transfer.

SECTION 14. COMPLIANCE WITH SECTION 409A OF THE CODE.

        No Award (or modification thereof) shall provide for deferral of
compensation that does not comply with Section 409A of the Code unless the
Committee, at the time of grant, specifically provides that the Award is not
intended to comply with Section 409A of the Code. Notwithstanding any provision
of this Plan to the contrary, if one or more of the payments or benefits
received or to be received by a Participant pursuant to an Award would cause the
Participant to incur any additional tax or interest under Section 409A of the
Code, the Committee may reform such provision to maintain to the maximum extent
practicable the original intent of the applicable provision without violating
the provisions of Section 409A of the Code.

SECTION 15. EFFECTIVE DATE OF PLAN.

        The Plan shall be effective as of the date of approval of the Plan by a
majority of the votes cast by the holders of the Corporation’s Stock.

SECTION 16. TERM OF PLAN.

        No Award shall be granted pursuant to the Plan on or after February 2,
2017, but Awards granted prior to February 2, 2017 may be extended beyond that
date.