Exhibit 10.1

ZHONE TECHNOLOGIES, INC.

AMENDED AND RESTATED

2001 STOCK INCENTIVE PLAN

1. Purpose.

The purpose of the Zhone Technologies, Inc. Amended and Restated 2001 Stock
Incentive Plan (the “Plan”), formerly known as the Tellium, Inc. 2001 Stock
Incentive Plan) is to strengthen Zhone Technologies, Inc., a Delaware
corporation (the “Company”), by providing an incentive to its employees,
officers, directors and consultants and thereby encouraging them to devote their
abilities and industry to the success of the Company’s business enterprise. It
is intended that this purpose be achieved by extending to employees (including
future employees who have received a formal written offer of employment),
officers, directors, and consultants of the Company and its Subsidiaries an
added long-term incentive for high levels of performance and unusual efforts
through the grant of Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Dividend Equivalent Rights, Performance Units and
Performance Shares, Share Awards, Phantom Stock and Restricted Stock (as each
term is herein defined). After the Original Effective Date of this Plan, no
further awards shall be made under the Amended and Restated 1997 Employee Stock
Incentive Plan of Tellium, Inc. (as amended and currently in effect, the “Former
Plan”). Each award outstanding under the Former Plan as of the Original
Effective Date of this Plan shall remain outstanding and continue to be subject
to the terms of the Former Plan and the award agreement under which such award
was granted. Each Share that is available for the granting of new awards under
the Former Plan as of the Original Effective Date of this Plan and each Share
that is the subject of an award under the Former Plan but is not issued prior to
the time that such award expires or otherwise terminates (collectively, the
“Former Plan Shares”) shall, after the Original Effective Date of this Plan, not
be available for the granting of awards under the Former Plan, but shall instead
be available for the granting of Options or Awards under this Plan.

2. Definitions.

For purposes of the Plan:

2.1 “Adjusted Fair Market Value” means, in the event of a Change in Control, the
greater of (a) the highest price per Share paid to holders of the Shares in any
transaction (or series of related transactions) constituting or resulting in a
Change in Control other than pursuant to Section 2.10(b) or (b) the highest Fair
Market Value of a Share during the ninety (90) day period ending on the date of
the Change in Control.

2.2 “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or under common control with, such Person. Any Relative (for this
purpose, “Relative” means a spouse, child, stepchild, parent, parent of spouse,
sibling or grandchild) of an individual shall be deemed to be an Affiliate of
such individual for purposes hereof. Neither the Company nor any Person
controlled by the Company shall be deemed to be an Affiliate of any holder of
Company stock.

2.3 “Agreement” means the written agreement between the Company and an Optionee
or Grantee evidencing the grant of an Option or Award and setting forth the
terms and conditions thereof.

2.4 “Award” means a grant of Restricted Stock, Phantom Stock, a Stock
Appreciation Right, a Performance Award, a Dividend Equivalent Right, a Share
Award, or any or all of them.

2.5 “Beneficial Ownership” means ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act.

2.6 “Beneficiary” means an individual, trust or estate who or which, by a
written designation of the Optionee or Grantee filed with the Company or by
operation of law succeeds to the rights and obligations of the Optionee or
Grantee under the Plan and an Agreement upon the Optionee’s or Grantee’s death.

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

 

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2.8 “Cause” means:

(a) with respect to directors, the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any of its Subsidiaries, and

(b) in the case of an Optionee or Grantee whose employment with the Company or a
Subsidiary is, as the date of the applicable Agreement, subject to the terms of
an employment agreement between such Optionee or Grantee and the Company or a
Subsidiary, which employment agreement includes a definition of “Cause,” the
term “Cause” as used in this Plan or any Agreement shall have the meaning set
forth in such employment agreement during the period that such employment
agreement remains in effect; or

(c) in all other cases, the term “Cause” as used in this Plan or any Agreement
shall mean (i) willfully failing to perform reasonably assigned duties within
thirty (30) days after having received written notice from the Company to do so,
(ii) dishonesty or willful misconduct in the performance of duties,
(iii) involvement in a transaction in connection with the performance of duties
to the Company or any of its Subsidiaries which transaction is adverse to the
interests of the Company or any of its Subsidiaries and which is engaged in for
personal profit or (iv) willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) in connection with the performance
of duties.

2.9 “Change in Capitalization” means any increase or reduction in the number of
Shares, or any change (including, without limitation, in the case of a spin-off,
dividend or other distribution in respect of Shares, a change in value) in the
Shares or exchange of Shares for a different number or kind of shares or other
securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, issuance of warrants or rights or debentures, stock
dividend, stock split or reverse stock split, cash dividend, property dividend,
combination or exchange of shares, repurchase of shares, change in corporate
structure or a substantially similar transaction.

2.10 A “Change in Control” shall mean the occurrence of any of the following:

(a) An acquisition (other than directly from the Company) of any Voting
Securities of the Company by any Person, immediately after which such Person has
Beneficial Ownership of fifty percent (50%) or more of the then outstanding
Shares or the combined voting power of the Company’s then outstanding Voting
Securities, provided, however, in determining whether a Change in Control has
occurred pursuant to this Section 2.10(a), Shares or Voting Securities which are
acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A “Non-Control
Acquisition” shall mean an acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the Company (for purposes of this definition, a “Related Entity”), (ii) the
Company or any Related Entity, or (iii) any Person in connection with a
“Non-Control Transaction” (as hereinafter defined);

(b) The individuals who, as of the date hereof, are members of the Board (the
“Incumbent Board”), cease for any reason to constitute at least a majority of
the members of the Board, or following a Merger (as defined in paragraph (c)(i)
below) which results in a Parent corporation, the board of directors of the
ultimate Parent Corporation (as defined in paragraph (c)(i)(A) below); provided,
however, that if the election, or nomination for election by the Company’s
common stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes of this
Plan, be considered as a member of the Incumbent Board; provided further,
however, that no individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of either an actual or
threatened “Election Contest” (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or

 

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threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a “Proxy Contest”) including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or

(c) The consummation of:

(i) A merger, consolidation or reorganization with or into the Company or in
which securities of the Company are issued (a “Merger”), unless such Merger is a
“Non-Control Transaction.” A “Non-Control Transaction” shall mean a Merger
where:

(A) the stockholders of the Company, immediately before such Merger own directly
or indirectly immediately following such Merger at least fifty percent (50%) of
the combined voting power of the outstanding voting securities of (x) the
corporation resulting from such Merger (the “Surviving Corporation”) if fifty
percent (50%) or more of the combined voting power of the then outstanding
voting securities of the Surviving Corporation is not Beneficially Owned,
directly or indirectly by another Person (a “Parent Corporation”), or (y) if
there are one or more Parent Corporations, the ultimate Parent Corporation; and

(B) the individuals who were members of the Incumbent Board immediately prior to
the execution of the agreement providing for such Merger constitute at least a
majority of the members of the board of directors of (x) the Surviving
Corporation, if there is no Parent Corporation, or (y) if there are one or more
Parent Corporations, the ultimate Parent Corporation; and

(C) no Person other than (1) the Company, (2) any Related Entity, (3) any
employee benefit plan (or any trust forming a part thereof) that, immediately
prior to such Merger was maintained by the Company or any Related Entity, or
(4) any Person who, together with its Affiliates, immediately prior to such
Merger, had Beneficial Ownership of fifty percent (50%) or more of the then
outstanding Voting Securities or Shares, owns, together with its Affiliates,
Beneficial Ownership of (i) fifty percent (50%) or more of the combined voting
power of the outstanding voting securities or common stock of (x) the Surviving
Corporation if there is no Parent Corporation, or (y) if there are one or more
Parent Corporations, the ultimate Parent Corporation.

(ii) A complete liquidation or dissolution of the Company; or

(iii) The sale or other disposition of all or substantially all of the assets of
the Company to any Person (other than a transfer to a Related Entity or under
conditions that would constitute a Non-Control Transaction with the disposition
of the assets being regarded as a Merger for this purpose or the distribution to
the Company’s stockholders of the stock of a Related Entity or any other
assets).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Shares or Voting
Securities as a result of the acquisition of Shares or Voting Securities by the
Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company, and (1) before such share acquisition by the
Company the Subject Person becomes the Beneficial Owner of any new or additional
Shares or Voting Securities in contemplation of such share acquisition by the
Company or (2) after such share acquisition by the Company the Subject Person
becomes the Beneficial Owner of any new or additional Shares or Voting
Securities which in either case increases the percentage of the then outstanding
Shares or Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.

2.11 “Code” means the Internal Revenue Code of 1986, as amended.

2.12 “Committee” means a committee, as described in Section 3.1, appointed by
the Board from time to time to administer the Plan and to perform the functions
set forth herein.

 

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2.13 “Company” means Zhone Technologies, Inc., a Delaware corporation.

2.14 “Director” means a director of the Company.

2.15 “Disability” means:

(a) in the case of an Optionee or Grantee whose employment with the Company or a
Subsidiary is, as of the date of the applicable Agreement, subject to the terms
of an employment agreement between such Optionee or Grantee and the Company or a
Subsidiary, which employment agreement includes a definition of “Disability,”
the term “Disability” as used in this Plan or any Agreement shall have the
meaning set forth in such employment agreement during the period that such
employment agreement remains in effect; or

(b) in all other cases, the term “Disability” as used in this Plan or any
Agreement shall mean a physical or mental infirmity which impairs the Optionee’s
or Grantee’s ability to perform substantially his or her duties for a period of
one hundred eighty (180) consecutive days.

2.16 “Disability Date” means the date which is one hundred eighty
(180) consecutive days after the date on which an Optionee or Grantee is first
absent from active employment with the Company or ceases to perform his or her
duties as a director, by reason of a Disability.

2.17 “Dividend Equivalent Right” means a right to receive all or some portion of
the cash dividends that are or would be payable with respect to Shares.

2.18 “Division” means any of the operating units or divisions of the Company
designated as a Division by the Committee.

2.19 “Eligible Individual” means any of the following individuals who is
designated by the Committee as eligible to receive Options or Awards subject to
the conditions set forth herein: (a) any director, officer or employee of the
Company or a Subsidiary, (b) any individual to whom the Company or a Subsidiary
has extended a formal, written offer of employment, or (c) any consultant or
advisor of the Company or a Subsidiary.

2.20 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

2.21 “Fair Market Value” on any date means the closing sales prices of the
Shares on such date on the principal national securities exchange on which such
Shares are listed or admitted to trading, or, if such Shares are not so listed
or admitted to trading, the average of the per Share closing bid price and per
Share closing asked price on such date as quoted on the National Association of
Securities Dealers Automated Quotation System or such other market in which such
prices are regularly quoted, or, if there have been no published bid or asked
quotations with respect to Shares on such date, the Fair Market Value shall be
the value established by the Board in good faith and, in the case of an
Incentive Stock Option, in accordance with Section 422 of the Code.

2.22 “Former Plan” means the Amended and Restated 1997 Employee Stock Incentive
Plan of Tellium, Inc.

2.23 [Reserved]

2.24 “Grantee” means a person to whom an Award has been granted under the Plan.

2.25 “Incentive Stock Option” means an Option satisfying the requirements of
Section 422 of the Code and designated by the Committee as an Incentive Stock
Option.

2.26 “Initial Public Offering” means the consummation of the first public
offering of Shares pursuant to a registration statement (other than a Form S-8
or successor forms) filed with, and declared effective by, the Securities and
Exchange Commission.

2.27 “Nonemployee Director” means a director of the Company who is a
“nonemployee director” within the meaning of Rule 16b-3 promulgated under the
Exchange Act.

 

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2.28 “Nonqualified Stock Option” means an Option which is not an Incentive Stock
Option.

2.29 “Normal Retirement Date” means the date on which an Optionee or Grantee
terminates active employment with the Company or ceases to perform his or her
duties as a director on or after attainment of age 65, but does not include
termination by the Company for Cause.

2.30 “Option” means a Nonqualified Stock Option, an Incentive Stock Option, or
any or all of them.

2.31 “Optionee” means a person to whom an Option has been granted under the
Plan.

2.32 “Outside Director” means a director of the Company who is an “outside
director” within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.

2.33 “Parent” means any corporation which is a parent corporation (within the
meaning of Section 424(e) of the Code) with respect to the Company.

2.34 “Performance Awards” means Performance Units, Performance Shares or either
or both of them.

2.35 “Performance-Based Compensation” means any Option or Award that is intended
to constitute “performance based compensation” within the meaning of
Section 162(m)(4)(C) of the Code and the regulations promulgated thereunder.

2.36 “Performance Cycle” means the time period specified by the Committee at the
time Performance Awards are granted during which the performance of the Company,
a Subsidiary or a Division will be measured.

2.37 “Performance Objectives” has the meaning set forth in Section 11.

2.38 “Performance Shares” means Shares issued or transferred to an Eligible
Individual under Section 11.

2.39 “Performance Units” means Performance Units granted to an Eligible
Individual under Section 11.

2.40 “Person” means ‘person’ as such term is used for purposes of Section 13(d)
or 14(d) of the Exchange Act, including without limitation, any individual,
corporation, limited liability company, partnership, trust, unincorporated
organization, government or any agency or political subdivision thereof, or any
other entity or any group of Persons.

2.41 “Phantom Stock” means a right granted to an Eligible Individual under
Section 12 representing a number of hypothetical Shares.

2.42 “Plan” means the Zhone Technologies, Inc. Amended and Restated 2001 Stock
Incentive Plan, as amended and restated from time to time.

2.43 [Reserved]

2.44 “Restricted Stock” means Shares issued or transferred to an Eligible
Individual pursuant to Section 10.

2.45 “Share Award” means a grant of Shares pursuant to Section 12.

2.46 “Shares” means the common stock, par value $0.001 per share, of the Company
and any other securities into which such shares are changed or for which such
shares are exchanged.

2.47 “Stock Appreciation Right” means a right to receive all or some portion of
the increase in the value of the Shares as provided in Section 8 hereof.

2.48 “Subsidiary” means (i) except as provided in subsection (ii) below, any
corporation which is or becomes a subsidiary corporation (within the meaning of
Section 424(f) of the Code) with respect to the Company, and (ii) with respect
to provisions relating to the eligibility to receive Options or Awards other
than Incentive Stock Options and to continued employment for purposes of Options
and Awards (unless the Committee determines otherwise), any entity, whether or
not incorporated, in which the Company directly or indirectly owns fifty percent
(50%) or more of the outstanding equity or other ownership interests.

 

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2.49 “Successor Corporation” means a corporation, or a parent or subsidiary
thereof, which issues or assumes an Option or Award in a transaction described
in Section 424(a) of the Code without regard to Sections 424(a)(1) and
(2) thereof.

2.50 “Tax Benefit” means an actual decrease in the Company’s liability for taxes
in any period.

2.51 “Ten-Percent Stockholder” means an Eligible Individual, who, at the time an
Incentive Stock Option is to be granted to him or her, owns (within the meaning
of Section 422(b)(6) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
or of a Parent or a Subsidiary.

2.52 “Termination of Employment” means the later of (i) severance of the
employer-employee relationship with the Company, a Parent or a Subsidiary or
(ii) the resignation, removal or termination of an officer or Director of the
Company, a Parent or a Subsidiary.

2.53 [Reserved]

2.54 “Voting Securities” means all outstanding voting securities of the Company
entitled to vote generally in the election of the Board of Directors.

3. Administration.

3.1 The Plan shall be administered by the Committee, which shall hold meetings
at such times as may be necessary for the proper administration of the Plan. The
Committee shall keep minutes of its meetings. If the Committee consists of more
than one (1) member, a quorum shall consist of not fewer than two (2) members of
the Committee and a majority of a quorum may authorize any action. Any decision
or determination reduced to writing and signed by all of the members of the
Committee shall be as fully effective as if made by a majority vote at a meeting
duly called and held. The Committee shall consist of at least one (1) Director
and may consist of the entire Board; provided, however, that from and after the
date of an Initial Public Offering, (A) if the Committee consists of less than
the entire Board, then with respect to any Option or Award to an Eligible
Individual who is subject to Section 16 of the Exchange Act, the Committee shall
consist of at least two (2) Directors each of whom shall be a Nonemployee
Director and (B) to the extent necessary for any Option or Award intended to
qualify as Performance-Based Compensation to so qualify, the Committee shall
consist of at least two (2) Directors each of whom shall be an Outside Director.
For purposes of the preceding sentence, if one or more members of the Committee
is not a Nonemployee Director and, if necessary for any Option or Award intended
to qualify as Performance-Based Compensation to so qualify, an Outside Director,
but recuses himself or herself or abstains from voting with respect to a
particular action taken by the Committee, then the Committee, with respect to
that action, shall be deemed to consist only of the members of the Committee who
have not recused themselves or abstained from voting. Subject to applicable law,
the Committee may delegate its authority under the Plan to any other person or
persons. Notwithstanding the foregoing, with respect to any Option or Award
granted to an Eligible Individual who is a Nonemployee Director, the Committee
should consist of the entire Board.

3.2 No member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan or
any transaction hereunder. The Company hereby agrees to indemnify each member of
the Committee for all costs and expenses and, to the extent permitted by
applicable law, any liability incurred in connection with defending against,
responding to, negotiating for the settlement of or otherwise dealing with any
claim, cause of action or dispute of any kind arising in connection with any
actions in administering this Plan or in authorizing or denying authorization to
any transaction hereunder.

3.3 Subject to the express terms and conditions set forth herein, the Committee
shall have the power from time to time to:

(a) determine those Eligible Individuals to whom Options shall be granted under
the Plan and the number of such Options to be granted and to prescribe the terms
and conditions (which need not be

 

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identical) of each such Option, including the purchase price per Share, the
vesting schedule and the duration of each Option, and make any amendment or
modification to any Option Agreement consistent with the terms of the Plan;

(b) select those Eligible Individuals to whom Awards shall be granted under the
Plan and to determine the number of Shares in respect of which each Award is
granted, the terms and conditions (which need not be identical) of each such
Award, including the restrictions or Performance Objectives relating to Awards
and the maximum value of any Award, and make any amendment or modification to
any Award Agreement consistent with the terms of the Plan;

(c) construe and interpret the Plan and the Options and Awards granted hereunder
and to establish, amend and revoke rules and regulations for the administration
of the Plan, including, without limitation, correcting any defect or supplying
any omission, or reconciling any inconsistency in the Plan or in any Agreement,
in the manner and to the extent it shall deem necessary or advisable, including
so that the Plan and the operation of the Plan complies with Rule 16b-3 under
the Exchange Act, the Code to the extent applicable and other applicable law,
and otherwise to make the Plan fully effective. All decisions and determinations
by the Committee in the exercise of this power shall be final, binding and
conclusive upon the Company, its Subsidiaries, the Optionees and Grantees, and
all other persons having any interest therein;

(d) determine the duration and purposes for leaves of absence which may be
granted to an Optionee or Grantee on an individual basis without constituting a
Termination of Employment or service for purposes of the Plan;

(e) exercise its sole discretion with respect to the powers and rights granted
to it as set forth in the Plan; and

(f) exercise, generally, such powers and to perform such acts as are deemed
necessary or advisable to promote the best interests of the Company with respect
to the Plan.

4. Stock Subject to the Plan; Grant Limitations.

4.1 The maximum number of Shares that may be made the subject of Options and
Awards granted under this Plan shall not exceed (a) 5,493,021, which is the
number of Shares remaining available for issuance under the Plan plus the number
of Shares subject to outstanding options or awards, each as of the Restatement
Effective Date, plus (b) the Shares that are subject to outstanding options or
awards granted under the Former Plan which Shares are not issued prior to the
expiration or termination of such options or awards (including Shares subject to
options or awards that expire or terminate after the expiration of the term of
the Former Plan), plus, (c) if on January 1 of any year in which this Plan is in
effect, commencing on January 1, 2008 and ending on January 1, 2017, the
aggregate number of Shares with respect to which Options or Awards may be
granted under the Plan (not including Shares that are subject to outstanding
Options or Awards granted under the Plan) is less than five percent (5%) of the
total number of outstanding Shares on such date, an annual increase (determined
as of January 1 of each year) in an amount such that the aggregate number of
Shares with respect to which Options or Awards may be granted under the Plan
(not including Shares that are subject to outstanding Options or Awards granted
under the Plan) is equal to the lesser of (i) five percent (5%) of the total
number of outstanding Shares on such date, (ii) 5,000,000 shares, or (iii) such
other number of Shares as determined by the Board; provided, however, that in
the aggregate, not more than one-quarter of the number of allotted Shares may be
made the subject of Restricted Stock Awards under Section 10 of the Plan (other
than shares of Restricted Stock made in settlement of Performance Units pursuant
to Section 11.2(b)). The Company shall reserve for the purposes of the Plan, out
of its authorized but unissued Shares or out of Shares held in the Company’s
treasury, or partly out of each, such number of Shares as shall be determined by
the Board.

4.2 Upon the granting of an Option or an Award, the number of Shares available
under Section 4.1 for the granting of further Options and Awards shall be
reduced as follows:

(a) In connection with the granting of an Option or an Award (other than the
granting of a Performance Unit denominated in dollars), the number of Shares
shall be reduced by the number of

 

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Shares in respect of which the Option or Award is granted or denominated;
provided, however, that if any Option is exercised by tendering Shares, either
actually or by attestation, to the Company as full or partial payment of the
purchase price, the maximum number of Shares available under Section 4.1 shall
be increased by the number of Shares so tendered.

(b) In connection with the granting of a Performance Unit denominated in
dollars, the number of Shares shall be reduced by an amount equal to the
quotient of (i) the dollar amount in which the Performance Unit is denominated,
divided by (ii) the Fair Market Value of a Share on the date the Performance
Unit is granted.

4.3 Whenever any outstanding Option or Award or portion thereof under this Plan
or the Former Plan expires, is canceled, is settled in cash (including the
settlement of tax withholding obligations using Shares), or is otherwise
terminated for any reason without having been exercised or payment having been
made in respect of the entire Option or Award, the Shares allocable to the
expired, canceled, settled or otherwise terminated portion of the Option or
Award may again be the subject of Options or Awards granted hereunder.

5. Option Grants for Eligible Individuals.

5.1 Authority of Committee. Subject to the provisions of the Plan, the Committee
shall have full and final authority to select those Eligible Individuals who
will receive Options, the terms and conditions of which shall be set forth in an
Agreement. Without limiting the generality of the preceding sentence, unless the
Committee determines otherwise in its sole discretion, in consideration of
granting an Option, the Optionee shall agree, in the Agreement, to remain in the
employ of the Company or any Subsidiary for a period of at least one (1) year
(or such shorter period as may be fixed in the Agreement or by action of the
Committee following grant of the Option) after the Option is granted. Incentive
Stock Options may be granted only to Eligible Individuals who are employees of
the Company or any Subsidiary.

5.2 Purchase Price. The purchase price (which may be greater than, less than or
equal to the Fair Market Value on the date of grant) or the manner in which the
purchase price is to be determined for Shares under each Option shall be
determined by the Committee and set forth in the Agreement pursuant to which
each Option is granted; provided, however, that the purchase price per Share
under each Option intended to qualify as Performance-Based Compensation shall
not be less than 100% of the Fair Market Value of a Share on the Date the Option
is granted and provided, further, however, that the purchase price per Share
under each Incentive Stock Option shall not be less than 100% of the Fair Market
Value of a Share on the date the Option is granted (110% in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder).

5.3 Maximum Duration. Options granted hereunder shall be for such term as the
Committee shall determine; provided, however, that an Option shall not be
exercisable after the expiration of ten (10) years from the date it is granted
(five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder); and provided, further, however, that the Committee may
provide that an Option (other than an Incentive Stock Option) may, upon the
death of the Optionee prior to the expiration of the Option, be exercised for up
to one (1) year following the date of the Optionee’s death even if such period
extends beyond ten (10) years from the date the Option is granted. The Committee
may, subsequent to the granting of any Option, extend the term thereof, but in
no event shall the term as so extended exceed the maximum term provided for in
the preceding sentence.

5.4 Vesting and Exercisability. Subject to Sections 5.5 and 7.5, each Option
shall become vested and exercisable in such installments (which need not be
equal) and at such times as may be designated by the Committee and set forth in
the Agreement. To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.

 

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5.5 Termination. Subject to Sections 5.3, 7.5 and 13 and unless otherwise
provided by the Committee, in its sole discretion, at the time of grant (and set
forth in the applicable Agreement) or at a later date, the following provisions
shall apply to Options upon a Termination of Employment:

(a) Except in the case of termination for Cause, Disability, retirement on or
after the Optionee’s Normal Retirement Date, or death as provided in Sections
5.5(b), (c) and (d) below, upon an Optionee’s Termination of Employment with the
Company, a Parent or a Subsidiary for any reason, any unexercised Option (or
portion thereof) held by such Optionee shall expire three (3) months after the
Optionee has a Termination of Employment and such Option (or portion thereof)
may only be exercised by the Optionee or his or her Beneficiary to the extent
that the Option (or a portion thereof) was exercisable on the date of
Termination of Employment.

(b) If the Optionee’s Termination of Employment arises as a result of a
termination for Cause, then, unless the Committee determines otherwise at the
time of the Termination of Employment, any unexercised Options (whether or not
vested and exercisable) held by such Optionee shall terminate and expire
concurrently with the Optionee’s Termination of Employment and no rights
thereunder may be exercised.

(c) If an Optionee suffers a Disability or retires on or after the Optionee’s
Normal Retirement Date, any unexercised Option (or portion thereof) held by such
disabled or retired Optionee shall expire one (1) year after the Disability Date
or date of Termination of Employment by reason of retirement, as the case may
be, and such Option (or portion thereof) may only be exercised by the Optionee
or his or her guardian or legal representative to the extent that the Option (or
a portion thereof) was exercisable on the Disability Date or the date of
Termination of Employment by reason of retirement, as the case may be.

(d) If an Optionee dies while still employed by the Company, each Option (or
portion thereof) held by such Optionee shall immediately become vested and
exercisable with respect to those Shares that otherwise would have vested during
the one-year period following the Optionee’s death and will be deemed to have
become vested and exercisable on the day preceding the date of the Optionee’s
death. The Options (or portions thereof) which the Optionee was entitled to
exercise on the date of the Optionee’s death (which shall include those Options
(or portions thereof) that become vested and exercisable pursuant to the
preceding sentence by reason of the Optionee’s death) may be exercised at any
time after the Optionee’s death by the Optionee’s Beneficiary; provided,
however, that no Option (or portion thereof) may be exercised after the earlier
of: (i) one (1) year after the Optionee’s death or (ii) the expiration date
specified for the particular Option in the Agreement. If an Optionee dies after
his or her Termination of Employment, then the Option (or portions thereof)
which the Optionee was entitled to exercise on the date of the Optionee’s death
may be exercised by his or her Beneficiary within the remaining portion of the
period specified in Sections 5.5(a) or 5.5(c), as the case may be.

(e) The Option (or portion thereof), to the extent not yet vested and
exercisable as of the date of the Optionee’s Termination of Employment, shall
terminate immediately upon such date.

5.6 Deferred Delivery of Option Shares. The Committee may, in its sole
discretion, permit Optionees to elect to defer the issuance of Shares upon the
exercise of one or more Nonqualified Stock Options granted pursuant to the Plan.
The terms and conditions of such deferral shall be determined at the time of the
grant of the Option or thereafter and shall be set forth in the Agreement
evidencing the Option.

5.7 Modification. No modification of an Option shall adversely alter or impair
any rights or obligations under the Option without the Optionee’s consent.

5.8 Limitations on Incentive Stock Options. To the extent that the aggregate
Fair Market Value (determined as of the date of the grant) of Shares with
respect to which Incentive Stock Options granted under the Plan and “incentive
stock options” (within the meaning of Section 422 of the Code) granted under all
other plans of the Company or its Subsidiaries (in either case determined
without regard to this Section 5.8) are exercisable by an Optionee for the first
time during any calendar year exceeds $100,000,

 

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such Incentive Stock Options shall be treated as Nonqualified Stock Options. In
applying the limitation in the preceding sentence in the case of multiple Option
grants, Options which were intended to be Incentive Stock Options shall be
treated as Nonqualified Stock Options according to the order in which they were
granted such that the most recently granted Options are first treated as
Nonqualified Stock Options.

6. [Reserved. All options granted under this Article prior to May 12, 2005, the
effective date of the amendment and restatement of this plan pursuant to which
this Article was removed, shall be governed by the terms of the Plan as in
effect prior to such date.]

7. Terms and Conditions Applicable to All Options.

7.1 Additional Terms. The provisions of this Section 7 shall apply to all
Options, unless otherwise provided by the Committee, in its sole discretion, in
the applicable Agreement.

7.2 Non-Transferability. No Option granted hereunder shall be transferable by
the Optionee to whom it is granted otherwise than by will or by the laws of
descent and distribution or, in the case of an Option other than an Incentive
Stock Option, in the Committee’s sole discretion, pursuant to a domestic
relations order (within the meaning of Rule 16a-12 promulgated under the
Exchange Act) (a “Domestic Relations Transfer”), and, except with respect to an
Option transferred pursuant to a Domestic Relations Transfer, an Option shall be
exercisable during the lifetime of such Optionee only by the Optionee or his or
her guardian or legal representative. Notwithstanding the foregoing, the
Committee may set forth in the Agreement evidencing an Option (other than an
Incentive Stock Option) at the time of grant or thereafter, that the Option may
be transferred to members of the Optionee’s immediate family, to trusts solely
for the benefit of such immediate family members and to partnerships in which
such family members and/or trusts are the only partners. Following transfer, for
purposes of this Plan, a transferee of an Option shall be deemed to be the
Optionee; provided that the Option shall be exercisable by the transferee only
to the extent and for such periods that the Option would have been exercisable
if held by the original Optionee. For this purpose, immediate family means the
Optionee’s spouse, parents, children, stepchildren and grandchildren and the
spouses of such parents, children, stepchildren and grandchildren. The terms of
an Option shall be final, binding and conclusive upon the beneficiaries,
executors, administrators, heirs and successors of the Optionee.

7.3 Method of Exercise.

(a) The exercise of an Option shall be made only by a written notice delivered
in person or by mail to the Secretary of the Company at the Company’s principal
executive office, specifying the number of Shares to be purchased and, to the
extent applicable, accompanied by payment therefor and otherwise in accordance
with such procedures which may be approved by the Committee from time to time,
and in accordance with the Agreement pursuant to which the Option was granted;
provided, however, that Options may not be exercised by an Optionee for twelve
months following a hardship distribution to the Optionee, to the extent such
exercise is prohibited under Treasury Regulation § 1.401(k)-1(d)(2)(iv)(B)(4).
The purchase price for any Shares purchased pursuant to the exercise of an
Option shall be paid, in any of the following forms: (a) cash or (b) the
transfer, either actually or by attestation, to the Company of Shares that have
been held by the Optionee for at least six (6) months (or such lesser period as
may be permitted by the Committee) prior to the exercise of the Option and that
have a Fair Market Value equal in amount to the purchase price, such transfer to
be upon such terms and conditions as determined by the Committee or (c) a
combination of cash and the transfer of Shares, provided, however, that the
Committee, in its sole discretion, may determine in the case of Options that the
purchase price shall be paid only in cash. In addition, Options may be exercised
through a registered broker-dealer pursuant to such cashless exercise procedures
which are, from time to time, deemed acceptable by the Committee. Any Shares
transferred to the Company as payment of the purchase price under an Option
shall be valued at their Fair Market Value on the day preceding the date of
exercise of such Option. If requested by the Committee, the Optionee shall
deliver the Agreement evidencing the Option to the Secretary of the Company who
shall endorse thereon a notation of such

 

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exercise and return such Agreement to the Optionee. No fractional Shares (or
cash in lieu thereof) shall be issued upon exercise of an Option and the number
of Shares that may be purchased upon exercise shall be rounded to the nearest
number of whole Shares.

(b) If the Fair Market Value of the Shares with respect to which the Option is
being exercised exceeds the purchase price of such Option, an Optionee may,
instead of exercising an Option as provided in Section 7.3(a), request that the
Committee authorize payment to the Optionee of the difference between the Fair
Market Value of part or all of the Shares which are the subject of the Option
and the purchase price of the Option, such difference to be determined as of the
date the Committee receives the request from the Optionee. The Committee, in its
sole discretion, may grant or deny such a request from an Optionee with respect
to part or all of the Shares as to which the Option is then exercisable and, to
the extent granted, shall direct the Company to make the payment to the Optionee
either in cash or in Shares or in any combination thereof; provided, however,
that the payment in Shares shall be based upon the Fair Market Value of Shares
as of the date the Committee received the request from the Optionee. An Option
shall be deemed to have been exercised and shall be canceled to the extent that
the Committee grants a request pursuant to this Section 7.3(b).

7.4 Rights of Optionees. No Optionee shall be deemed for any purpose to be the
owner of any Shares subject to any Option unless and until (a) the Option shall
have been exercised pursuant to the terms thereof, (b) the Company shall have
issued and delivered Shares to the Optionee, and (c) the Optionee’s name shall
have been entered as a stockholder of record on the books of the Company.
Thereupon, the Optionee shall have full voting, dividend and other ownership
rights with respect to such Shares, subject to such terms and conditions as may
be set forth in the applicable Agreement.

7.5 Effect of Change in Control.

(a) Notwithstanding anything to the contrary in Section 5, in the event of a
Change in Control, the Plan and the Options shall continue; provided, however,
that the Committee, in its sole discretion and on such terms and conditions as
it deems appropriate, may provide, either by the terms of the applicable
Agreement or by action taken prior to the occurrence of any such Change in
Control, for any or all of the following alternatives (separately or in any
combination):

(i) for the payment in cash upon the surrender to the Company for cancellation
of any Option or portion of an Option to the extent vested and not yet exercised
in an amount equal to the excess, if any, of (a) (i) in the case of a
Nonqualified Stock Option, the greater of (A) the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the Option or portion
thereof surrendered or (B) the Adjusted Fair Market Value of the Shares subject
to the Option or portion thereof surrendered or (ii) in the case of an Incentive
Stock Option, the Fair Market Value, on the date preceding the date of
surrender, of the Shares subject to the Option or portion thereof surrendered,
over (b) the aggregate purchase price for such Shares under the Option or
portion thereof surrendered.

(ii) for the replacement of the Options with other rights or property selected
by the Committee in its sole discretion;

(iii) for the accelerated vesting of all or a portion of the Options;

(iv) for the assumption of the Options by the successor or survivor corporation,
or a parent or subsidiary thereof, or the substitution by such corporation for
such Options of new options covering the stock of the successor or survivor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices; or

(v) for adjustments in the terms and conditions of outstanding Options and/or
the number and type of Shares or other securities or property subject to such
outstanding Options.

Any action pursuant to this Section 7.5(a) shall be conditioned upon the
consummation of the Change in Control and shall be effective only immediately
before the consummation of the Change in Control.

 

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(b) Subject to Section 7.5(d) and to the extent set forth in the applicable
Agreement or provided by the Committee, in its sole discretion, subsequent to
the granting of an Option, if, as a result of a Change in Control transaction,
an Option intended to qualify as an Incentive Stock Option fails to so qualify
solely because of the failure to meet the holding requirements of Code
Section 422(a)(1) (a “Disqualifying Disposition”), the Company shall make a cash
payment to the Optionee equal to the amount which will, after taking into
account all taxes imposed on the Disqualifying Disposition and the receipt of
such payment, leave the Optionee in the same after-tax position the Optionee
would have been in had the Code Section 422(a)(1) holding requirements been met
at the time of the Disqualifying Disposition (which after-tax position will
reflect the total taxes, if any, that would have been incurred by the Optionee
had the Disqualifying Disposition been subject to federal income tax at capital
gains rates) provided, however, that no payment described in this Section shall
exceed the Tax Benefit to the Company resulting from deductions relating to
ordinary income recognized by the Optionee as a result of the Disqualifying
Disposition. The payment described in this Section shall be made by the Company
within thirty (30) days of the filing by the Company of the federal tax return
which includes the tax items associated with the income recognized by the
Optionee as a result of the Disqualifying Disposition (or, if the Tax Benefit
described in the preceding sentence is not realized until a later year, within
thirty (30) days of the filing by the Company of the federal tax return with
respect to which such Tax Benefit is realized).

(c) Subject to Section 7.5(d) and to the extent set forth in the applicable
Agreement or provided by the Committee, in its sole discretion, subsequent to
the granting of an Option, and provided that an Optionee is not entitled to
payment under Section 7.5(b) hereof, if, as a result of a Change in Control
transaction, an Option intended to qualify as an Incentive Stock Option fails to
so qualify solely because the vesting of the Option is accelerated pursuant to
Section 7.5(a) and such acceleration causes the aggregate fair market value
(determined at the time the Option is granted) of the Shares with respect to
which Options are exercisable for the first time by an Optionee during the
calendar year in which such vesting occurs to exceed $100,000, within the
meaning of Code Section 422(d) (a “Disqualified Option”), then, upon exercise of
such Disqualified Option, the Company shall make a cash payment to the Optionee
equal to the amount which will, after taking into account all taxes imposed on
the exercise of such Disqualified Option and the receipt of such payment, leave
the Optionee in the same after-tax position the Optionee would have been in had
the Disqualified Option continued to qualify as an Incentive Stock Option on the
date of exercise and the Optionee sold the Shares received upon exercise of the
Option at their Fair Market Value on the date of exercise, provided, however,
that no payment described in this Section shall exceed the Tax Benefit to the
Company resulting from deductions relating to ordinary income recognized by the
Optionee as a result of exercising the Disqualified Option and the receipt of
such payment. The payment described in this Section shall be made by the Company
within thirty (30) days of the filing by the Company of the federal tax return
which includes the tax items associated with the income recognized by the
Optionee as a result of exercising the Disqualified Option (or, if the Tax
Benefit described in the preceding sentence is not realized until a later year,
within thirty (30) days of the filing by the Company of the federal tax return
with respect to which such Tax Benefit is realized).

(d) If more than one Optionee is entitled to a cash payment pursuant to
Section 7.5(b) or Section 7.5(c) in any single tax year and the Tax Benefit
realized by the Company in such year with respect to all such Optionees is less
than the aggregate amount of the payments due to such Optionees hereunder, then
(i) each such Optionee shall receive a portion of such cash payment equal to an
amount determined by multiplying the amount of the Tax Benefit realized by the
Company in such year by a fraction the numerator of which is equal to the amount
of payment due to such Optionee and the denominator of which is equal to the
aggregate amount due to all such Optionees entitled to a payment hereunder, and
(ii) subject to further application of this Section 7.5(d), shall be entitled to
receive the remaining portion within thirty (30) days of the filing by the
Company of the federal tax return with respect to which such Tax Benefit is
realized.

 

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8. Stock Appreciation Rights.

The Committee may in its sole discretion, either alone or in connection with the
grant of an Option, grant Stock Appreciation Rights in accordance with the Plan,
the terms and conditions of which shall be set forth in an Agreement. If granted
in connection with an Option, a Stock Appreciation Right shall cover the same
Shares covered by the Option (or such lesser number of Shares as the Committee
may determine) and shall, except as provided in this Section 8, be subject to
the same terms and conditions as the related Option.

8.1 Time of Grant. A Stock Appreciation Right may be granted (a) at any time if
unrelated to an Option, or (b) if related to an Option, either at the time of
grant, or (except in the case of an Incentive Stock Option) at any time
thereafter during the term of the Option.

8.2 Stock Appreciation Right Related to an Option.

(a) Exercise. Subject to Section 8.9, a Stock Appreciation Right granted in
connection with an Option shall be exercisable at such time or times and only to
the extent that the related Options are exercisable (including, without
limitation, exercisability upon Termination of Employment or a Change in
Control), and will not be transferable except to the extent the related Option
may be transferable. A Stock Appreciation Right granted in connection with an
Incentive Stock Option shall expire no later than the expiration of the related
Incentive Stock Option and shall be exercisable only if the Fair Market Value of
a Share on the date of exercise exceeds the purchase price of the Option
specified in the related Incentive Stock Option Agreement.

(b) Treatment of Related Options and Stock Appreciation Rights Upon Exercise.
Upon the exercise of a Stock Appreciation Right granted in connection with an
Option, the Option shall be canceled to the extent of the number of Shares as to
which the Stock Appreciation Right is exercised, and upon the exercise of an
Option granted in connection with a Stock Appreciation Right, the Stock
Appreciation Right shall be canceled to the extent of the number of Shares as to
which the Option is exercised or surrendered.

8.3 Stock Appreciation Right Unrelated to an Option.

(a) Terms. Subject to Section 8.9, stock Appreciation Rights unrelated to
Options shall contain such terms and conditions as to exercisability, vesting
and duration as the Committee shall determine, but in no event shall they have a
term of greater than ten (10) years; provided, however, that the Committee may
provide that Stock Appreciation Rights may, upon the death of the Grantee, be
exercised for up to one (1) year following the date of the Grantee’s death even
if such period extends beyond ten (10) years from the date the Stock
Appreciation Right was granted.

(b) Termination. Subject to Section 13 and except as provided in Section 8.9,
and unless otherwise provided by the Committee, in its sole discretion, in the
applicable Agreement, upon a Grantee’s Termination of Employment, a Stock
Appreciation Right shall be exercisable by the Grantee to the same extent that
an Option would be exercisable by an Optionee upon the Optionee’s Termination of
Employment under the provisions of Section 5.5; provided, however, no Stock
Appreciation Right may be exercised after the expiration date specified for the
particular Stock Appreciation Right in the applicable Agreement.

8.4 Amount Payable. Subject to Section 8.7, upon the exercise of a Stock
Appreciation Right, the Grantee shall be entitled to receive an amount
determined by multiplying (x) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
(A) in the case of a Stock Appreciation Right granted in connection with an
Option, the per Share purchase price under the related Option, or (B) in the
case of a Stock Appreciation Right unrelated to an Option, the Fair Market Value
of a Share on the date the Stock Appreciation Right was granted, by (y) the
number of Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.

 

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8.5 Non-Transferability. No Stock Appreciation Right shall be transferable by
the Grantee to whom it was granted otherwise than by will or by the laws of
descent and distribution or, in the Committee’s sole discretion, (except in the
case of a Stock Appreciation Right granted in connection with an Incentive Stock
Option), pursuant to domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act (a “Domestic Relations Transfer”) and, except
with respect to a Stock Appreciation Right transferred pursuant to a Domestic
Relations Transfer, such Stock Appreciation Right shall be exercisable during
the lifetime of such Grantee only by the Grantee or his or her guardian or legal
representative. The terms of such Stock Appreciation Right shall be final,
binding and conclusive upon the beneficiaries, executors, administrators, heirs
and successors of the Grantee.

8.6 Method of Exercise. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice delivered in person or by mail to the Secretary
of the Company at the Company’s principal executive office, specifying the
number of Shares with respect to which the Stock Appreciation Right is being
exercised. If requested by the Committee, the Grantee shall deliver the
Agreement evidencing the Stock Appreciation Right being exercised and the
Agreement evidencing any related Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Grantee.

8.7 Form of Payment. Payment of the amount determined under Section 8.4 may be
made in the sole discretion of the Committee solely in whole Shares in a number
determined at their Fair Market Value on the date preceding the date of exercise
of the Stock Appreciation Right, or solely in cash, or in a combination of cash
and Shares. If the Committee decides to make full payment in Shares and the
amount payable results in a fractional Share, no fractional Shares (or cash in
lieu thereof) shall be issued upon the exercise of the Stock Appreciation Right
and the number of Shares that will be delivered shall be rounded to the nearest
number of whole Shares.

8.8 Modification. No modification of an Award shall adversely alter or impair
any rights or obligations under the Agreement without the Grantee’s consent.

8.9 Effect of Change in Control. Notwithstanding anything contained in this
Section 8 to the contrary, in the event of a Change in Control, the Plan and the
Stock Appreciation Rights shall continue; provided, however, that the Committee,
in its sole discretion and on such terms and conditions as it deems appropriate,
may provide, either by the terms of the applicable Agreement or by action taken
prior to the occurrence of any such Change in Control, for any or all of the
following alternatives (separately or in any combination):

(i) with respect to a Stock Appreciation Right unrelated to an Option, for the
payment in cash upon the surrender to the Company for cancellation of any such
Stock Appreciation Right or portion of a Stock Appreciation Right to the extent
vested and not yet exercised in an amount equal to the excess, if any, of
(A) the greater of (i) the Fair Market Value, on the date preceding the date of
surrender, of the Shares subject to the Stock Appreciation Right or portion
thereof surrendered or (ii) the Adjusted Fair Market Value, on the date
preceding the date of surrender, of the Shares over (B) the aggregate Fair
Market Value, on the date the Stock Appreciation Right was granted, of the
Shares subject to the Stock Appreciation Right or portion thereof surrendered.

(ii) for the replacement of the Stock Appreciation Rights with other rights or
property selected by the Committee in its sole discretion;

(iii) for the accelerated vesting of all or a portion of the Stock Appreciation
Rights;

(iv) for the assumption of the Stock Appreciation Rights by the successor or
survivor corporation, or a parent or subsidiary thereof, or the substitution by
such corporation for such Stock Appreciation Rights of new stock appreciation
rights covering the stock of the successor or survivor corporation, or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices; or

(v) for adjustments in the terms and conditions of outstanding Stock
Appreciation Rights and/or the number and type of Shares or other securities or
property subject to such outstanding Stock Appreciation Rights.

 

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Any action pursuant to this Section 8.9 shall be conditioned upon the
consummation of the Change in Control and shall be effective only immediately
before the consummation of the Change in Control.

9. Dividend Equivalent Rights.

The Committee may in its sole discretion grant Dividend Equivalent Rights to
Eligible Individuals in tandem with an Option or Award or as a separate Award.
The terms and conditions (including, without limitation, terms and conditions
relating to a Change in Control) applicable to each Dividend Equivalent Right
shall be specified in the Agreement under which the Dividend Equivalent Right is
granted. In the sole discretion of the Committee, amounts payable in respect of
Dividend Equivalent Rights may be payable currently or deferred until the
lapsing of restrictions on such Dividend Equivalent Rights or until the vesting,
exercise, payment, settlement or other lapse of restrictions on the Option or
Award to which the Dividend Equivalent Rights relate. In the event that the
amount payable in respect of Dividend Equivalent Rights are to be deferred, the
Committee shall determine whether such amounts are to be held in cash or
reinvested in Shares or deemed (notionally) to be reinvested in Shares. If
amounts payable in respect of Dividend Equivalent Rights are to be held in cash,
there may be credited at the end of each year (or portion thereof) interest on
the amount of the account at the beginning of the year at a rate per annum as
the Committee, in its sole discretion, may determine. In the sole discretion of
the Committee, Dividend Equivalent Rights may be settled in cash or Shares or a
combination thereof, in a single installment or multiple installments. To the
extent necessary for any Dividend Equivalent Right intended to qualify as
Performance-Based Compensation to so qualify, the terms and conditions of the
Dividend Equivalent Right shall be such that payment of the Dividend Equivalent
Right is contingent upon attainment of specified Performance Objectives within
the Performance Cycle, as provided for in Section 11, and such Dividend
Equivalent Right shall be treated as a Performance Award for purposes of
Sections 11 and 16.

10. Restricted Stock.

10.1 Grant. The Committee may in its sole discretion grant Awards to Eligible
Individuals of Restricted Stock, which shall be evidenced by an Agreement
between the Company and the Grantee. Each Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its sole discretion,
determine and (without limiting the generality of the foregoing) such Agreements
may require that an appropriate legend be placed on Share certificates. Awards
of Restricted Stock shall be subject to the terms and provisions set forth below
in this Section 10.

10.2 Rights of Grantee. Shares of Restricted Stock granted pursuant to an Award
hereunder shall be issued in the name of the Grantee as soon as reasonably
practicable after the Award is granted provided that the Grantee has executed an
Agreement evidencing the Award, the appropriate blank stock powers and, in the
sole discretion of the Committee, an escrow agreement and any other documents
which the Committee may require as a condition to the issuance of such Shares.
If a Grantee shall fail to execute the Agreement evidencing a Restricted Stock
Award, the appropriate blank stock powers, an escrow agreement or any other
documents which the Committee may require within the time period prescribed by
the Committee at the time the Award is granted, the Award shall be null and
void. At the sole discretion of the Committee, Shares issued in connection with
a Restricted Stock Award shall be deposited together with the stock powers with
an escrow agent (which may be the Company) designated by the Committee. Unless
the Committee determines otherwise and as set forth in the Agreement, upon
delivery of the Shares to the escrow agent, the Grantee shall have all of the
rights of a stockholder with respect to such Shares, including the right to vote
the Shares and to receive all dividends or other distributions paid or made with
respect to the Shares.

10.3 Non-transferability. Until all restrictions upon the Shares of Restricted
Stock awarded to a Grantee shall have lapsed in the manner set forth in
Section 10.4, such Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated, nor shall they be
delivered to the Grantee.

10.4 Lapse of Restrictions.

(a) Generally. Subject to Section 10.4(b), restrictions upon Shares of
Restricted Stock awarded hereunder shall lapse at such time or times and on such
terms and conditions as the Committee may

 

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determine; provided, however, that except in the case of Shares of Restricted
Stock issued in full or partial settlement of another Award or other earned
compensation, such restrictions shall not fully lapse prior to the third
anniversary of the date on which such Shares of Restricted Stock were granted.
The Agreement evidencing the Award shall set forth any such restrictions.

(b) Effect of Change in Control. Notwithstanding anything contained in this
Section 10 to the contrary, in the event of a Change in Control, the Plan and
the Awards of Restricted Stock shall continue; provided, however, that the
Committee, in its sole discretion and on such terms and conditions as it deems
appropriate, may provide, either by the terms of the applicable Agreement or by
action taken prior to the occurrence of any such Change in Control, for any or
all of the following alternatives (separately or in any combination): (i) for
the assumption of the shares of Restricted Stock by the successor or survivor
corporation, or a parent or subsidiary thereof, or the substitution by such
corporation for such shares of Restricted Stock of new shares of restricted
stock of the successor or survivor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of shares,
(ii) for the lapse of all restrictions upon all or a portion of the shares of
Restricted Stock, or (iii) for adjustments in the terms and conditions of
outstanding Awards of Restricted Stock. Any action pursuant to this
Section 10.5(b) shall be conditioned upon the consummation of the Change in
Control and shall be effective only immediately before the consummation of the
Change in Control.

10.5 Terms of Restricted Stock.

(a) Forfeiture of Restricted Stock. Subject to Sections 10.4(b), 10.5(b) and 13,
all Restricted Stock shall be forfeited and returned to the Company and all
rights of the Grantee with respect to such Restricted Stock shall terminate
unless the Grantee continues in the service of the Company as an employee or
director until the expiration of the forfeiture period for such Restricted Stock
and satisfies any and all other conditions set forth in the Agreement. The
Committee, in its sole discretion, shall determine the forfeiture period (which
may, but need not, lapse in installments) and any other terms and conditions
applicable with respect to any Restricted Stock Award.

(b) Waiver of Forfeiture Period. Notwithstanding anything contained in this
Section 10 to the contrary, the Committee may, in its sole discretion, waive the
forfeiture period and any other conditions set forth in any Agreement under
appropriate circumstances (including, without limitation, the death, Disability
or retirement of the Grantee or a material change in circumstances arising after
the date of grant) and subject to such terms and conditions (including, without
limitation, forfeiture of a proportionate number of the Restricted Stock) as the
Committee shall deem appropriate, provided that the Grantee shall at that time
have completed at least one (1) year of employment or service after the date of
grant.

10.6 Modification or Substitution. Subject to the terms of the Plan, including,
without limitation, Section 16, the Committee may modify outstanding Awards of
Restricted Stock or accept the surrender of outstanding shares of Restricted
Stock (to the extent the restrictions on such Shares have not yet lapsed) and
grant new Awards in substitution for them. Notwithstanding the foregoing, no
modification of an Award shall adversely alter or impair any rights or
obligations under the Agreement without the Grantee’s consent.

10.7 Treatment of Dividends. At the time an Award of Shares of Restricted Stock
is granted, the Committee may, in its sole discretion, determine that the
payment to the Grantee of dividends, or a specified portion thereof, declared or
paid on such Shares by the Company shall be (a) deferred until the lapsing of
the restrictions imposed upon such Shares and (b) held by the Company for the
account of the Grantee until such time. In the event that dividends are to be
deferred, the Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional Shares of Restricted
Stock) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its sole discretion, may determine. Payment of deferred dividends
in respect of Shares of Restricted Stock (whether held in cash or as additional
Shares of Restricted Stock), together with interest accrued thereon, if any,
shall be made upon the lapsing of restrictions imposed on the Shares in respect
of

 

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which the deferred dividends were paid, and any dividends deferred (together
with any interest accrued thereon) in respect of any Shares of Restricted Stock
shall be forfeited upon the forfeiture of such Shares.

10.8 Delivery of Shares. Upon the lapse of the restrictions on Shares of
Restricted Stock, the Committee shall cause a stock certificate to be delivered
to the Grantee with respect to such Shares, free of all restrictions hereunder.

11. Performance Awards.

11.1 Performance Objectives

(a) Establishment. Performance Objectives for Performance Awards may be
expressed in terms of (i) earnings per Share, (ii) Share price, (iii) pre-tax
profits, (iv) after-tax profits, (v) operating profits, (vi) sales or expenses,
(vii) net earnings, (viii) return on equity or assets, (ix) revenues, (x) EBITDA
(earnings before interest, taxes, depreciation and amortization), (xi) market
share, or market penetration, (xii) any combination of the foregoing, or
(xiii) confidential business objectives. Performance Objectives may be in
respect of the performance of the Company, any of its Subsidiaries, any of its
Divisions or any combination thereof. Performance Objectives may be absolute or
relative (to prior performance of the Company or to the performance of one or
more other entities or external indices) and may be expressed in terms of a
progression within a specified range. The Performance Objectives with respect to
a Performance Cycle shall be established in writing by the Committee by the
earlier of (x) the date on which a quarter of the Performance Cycle has elapsed
or (y) the date which is ninety (90) days after the commencement of the
Performance Cycle, and in any event while the performance relating to the
Performance Objectives remains substantially uncertain.

(b) Effect of Certain Events. At the time of the granting of a Performance
Award, or at any time thereafter, in either case to the extent permitted under
Section 162(m) of the Code and the regulations thereunder without adversely
affecting the treatment of the Performance Award as Performance-Based
Compensation, the Committee may provide for the manner in which performance will
be measured against the Performance Objectives (or may adjust the Performance
Objectives) to reflect the impact of specified corporate transactions,
accounting or tax law changes and other extraordinary or nonrecurring events.

(c) Determination of Performance. Prior to the vesting, payment, settlement or
lapsing of any restrictions with respect to any Performance Award that is
intended to constitute Performance-Based Compensation made to a Grantee who is
subject to Section 162(m) of the Code, the Committee shall certify in writing
that the applicable Performance Objectives have been satisfied to the extent
necessary for such Award to qualify as Performance-Based Compensation.

11.2 Performance Units. The Committee, in its sole discretion, may grant Awards
of Performance Units to Eligible Individuals, the terms and conditions of which
shall be set forth in an Agreement between the Company and the Grantee.
Performance Units may be denominated in Shares or a specified dollar amount and,
contingent upon the attainment of specified Performance Objectives within the
Performance Cycle, represent the right to receive payment as provided in
Section 11.2(b) of (i) in the case of Share-denominated Performance Units, the
Fair Market Value of a Share on the date the Performance Unit was granted, the
date the Performance Unit became vested or any other date specified by the
Committee, (ii) in the case of dollar-denominated Performance Units, the
specified dollar amount or (iii) a percentage (which may be more than 100%) of
the amount described in clause (i) or (ii) depending on the level of Performance
Objective attainment; provided, however, that, the Committee may at the time a
Performance Unit is granted specify a maximum amount payable in respect of a
vested Performance Unit. Each Agreement shall specify the number of Performance
Units to which it relates, the Performance Objectives which must be satisfied in
order for the Performance Units to vest and the Performance Cycle within which
such Performance Objectives must be satisfied.

(a) Vesting and Forfeiture. Subject to Sections 11.1(c) and 11.4, Performance
Units shall become vested in such installments (which need not be equal) and at
such time or times and on such terms, conditions and satisfaction of Performance
Objectives as the Committee may, in its sole discretion, determine at the time
an Award is granted.

 

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(b) Payment of Awards. Subject to Sections 11.1(c) and 11.4, payment to Grantees
in respect of vested Performance Units shall be made as soon as practicable
after the last day of the Performance Cycle to which such Award relates unless
the Agreement evidencing the Award provides for the deferral of payment, in
which event the terms and conditions of the deferral shall be set forth in the
Agreement. Subject to Section 11.4, such payments may be made entirely in Shares
valued at their Fair Market Value as of the day preceding the date of payment or
such other date specified by the Committee, entirely in cash, or in such
combination of Shares and cash as the Committee in its sole discretion shall
determine at any time prior to such payment; provided, however, that if the
Committee in its sole discretion determines to make such payment entirely or
partially in Shares of Restricted Stock, the Committee must determine the extent
to which such payment will be in Shares of Restricted Stock and the terms of
such Restricted Stock at the time the Award is granted.

(c) Non-transferability. Until the vesting of Performance Units, such
Performance Units shall not be sold, transferred or otherwise disposed of and
shall not be pledged or otherwise hypothecated.

11.3 Performance Shares. The Committee, in its sole discretion, may grant Awards
of Performance Shares to Eligible Individuals, the terms and conditions of which
shall be set forth in an Agreement between the Company and the Grantee. Each
Agreement may require that an appropriate legend be placed on Share
certificates. Awards of Performance Shares shall be subject to the following
terms and provisions:

(a) Rights of Grantee. The Committee shall provide at the time an Award of
Performance Shares is made the time or times at which the actual Shares
represented by such Award shall be issued in the name of the Grantee; provided,
however, that no Performance Shares shall be issued until the Grantee has
executed an Agreement evidencing the Award, the appropriate blank stock powers
and, in the sole discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of such
Performance Shares. If a Grantee shall fail to execute the Agreement evidencing
an Award of Performance Shares, the appropriate blank stock powers, an escrow
agreement and any other documents which the Committee may require within the
time period prescribed by the Committee at the time the Award is granted, the
Award shall be null and void. At the sole discretion of the Committee, Shares
issued in connection with an Award of Performance Shares shall be deposited
together with the stock powers with an escrow agent (which may be the Company)
designated by the Committee. Except as restricted by the terms of the Agreement,
upon delivery of the Shares to the escrow agent, the Grantee shall have, in the
sole discretion of the Committee, all of the rights of a stockholder with
respect to such Shares, including the right to vote the Shares and to receive
all dividends or other distributions paid or made with respect to the Shares.

(b) Non-transferability. Until any restrictions upon the Performance Shares
awarded to a Grantee shall have lapsed in the manner set forth in Sections
11.3(c) or 11.4, such Performance Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated, nor
shall they be delivered to the Grantee. The Committee also may impose such other
restrictions and conditions on the Performance Shares, if any, as it deems
appropriate.

(c) Lapse of Restrictions. Subject to Sections 11.1(c) and 11.4, restrictions
upon Performance Shares awarded hereunder shall lapse and such Performance
Shares shall become vested at such time or times and on such terms, conditions
and satisfaction of Performance Objectives as the Committee may, in its sole
discretion, determine at the time an Award is granted.

(d) Treatment of Dividends. At the time the Award of Performance Shares is
granted, the Committee may, in its sole discretion, determine that the payment
to the Grantee of dividends, or a specified portion thereof, declared or paid on
Shares represented by such Award which have been issued by the Company to the
Grantee shall be (i) deferred until the lapsing of the restrictions imposed upon
such Performance Shares and (ii) held by the Company for the account of the
Grantee until such time. In the event that dividends are to be deferred, the
Committee shall determine whether such dividends are to be reinvested in Shares
(which shall be held as additional Performance Shares) or held in cash. If
deferred dividends are to be held in cash, there may be credited at the end of
each year (or

 

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portion thereof) interest on the amount of the account at the beginning of the
year at a rate per annum as the Committee, in its sole discretion, may
determine. Payment of deferred dividends in respect of Performance Shares
(whether held in cash or in additional Performance Shares), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Performance Shares in respect of which the deferred dividends
were paid, and any dividends deferred (together with any interest accrued
thereon) in respect of any Performance Shares shall be forfeited upon the
forfeiture of such Performance Shares.

(e) Delivery of Shares. Upon the lapse of the restrictions on Performance Shares
awarded hereunder, the Committee shall cause a stock certificate to be delivered
to the Grantee with respect to such Shares, free of all restrictions hereunder.

11.4 Effect of Change in Control. Notwithstanding anything in this Section 11 to
the contrary, in the event of a Change in Control, the Plan and the Performance
Awards shall continue; provided, however, that the Committee, in its sole
discretion and on such terms and conditions as it deems appropriate, may
provide, either by the terms of the applicable Agreement or by action taken
prior to the occurrence of any such Change in Control, for any or all of the
following alternatives (separately or in any combination): (i) for the
assumption of the Performance Awards by the successor or survivor corporation,
or a parent or subsidiary thereof, or the substitution by such corporation for
such Performance Awards of new performance awards of the successor or survivor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the applicable performance objectives and, if necessary, the number and kind
of shares, (ii) for the vesting of all or a portion of the Performance Awards as
if all Performance Objectives had been satisfied at the level specified by the
Committee in its sole discretion and, in the case of Performance Units which
become vested as a result of a Change in Control, for a payment which may be
made entirely in cash, entirely in Shares valued at their Fair Market Value as
of the day preceding the payment, or in such combination of cash and Shares as
the Committee shall determine in its sole discretion at any time prior to such
payment; provided that such payment shall be made within ten (10) business days
after such Change in Control, or (iii) for adjustments in the terms and
conditions of outstanding Performance Awards. Any action pursuant to this
Section 11.4 shall be conditioned upon the consummation of the Change in Control
and shall be effective only immediately before the consummation of the Change in
Control.

11.5 Termination. Subject to Sections 11.4 and 13, and unless otherwise provided
by the Committee, in its sole discretion, in the applicable Agreement, the
following provisions shall apply to Performance Awards upon a Termination of
Employment:

(a) Termination of Employment Prior to End of Performance Cycle. Except as
provided in Sections 11.5(b) and (d), in the case of a Grantee’s Termination of
Employment, prior to the end of a Performance Cycle, the Grantee will not be
entitled to any Performance Awards, and any Performance Shares shall be
forfeited.

(b) Disability, Retirement or Death Prior to End of Performance Cycle. Unless
otherwise provided by the Committee, in its sole discretion, in the Agreement,
if a Grantee’s Disability Date or Termination of Employment by reason of
retirement on or after the Grantee’s Normal Retirement Date or death occurs
following participation in at least one-half (1/2) of the Performance Cycle, but
prior to the end of a Performance Cycle, the Grantee or such Grantee’s
Beneficiary, as the case may be, shall be entitled to receive a pro-rata share
of his or her Performance Award as determined under Subsection (c).

(c) Pro-Rata Payment.

(i) Performance Units. With respect to Performance Units, the amount of any
payment made to a Grantee (or Beneficiary) under circumstances described in
Section 11.5(b) shall be the amount determined by multiplying the amount of the
Performance Units payable in Shares or dollars which would have been earned,
determined at the end of the Performance Cycle, had such employment not been
terminated, by a fraction, the numerator of which is the number of whole months
such Grantee was employed during the Performance Cycle, and the denominator of
which

 

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is the total number of months of the Performance Cycle. Any such payment shall
be made as soon as practicable after the end of the respective Performance
Cycle, and shall relate to attainment of Performance Objectives over the entire
Performance Cycle.

(ii) Performance Shares. With respect to Performance Shares, the amount of
Performance Shares held by a Grantee (or Beneficiary) with respect to which
restrictions shall lapse under circumstances described in Section 11.5(b) shall
be the amount determined by multiplying the amount of the Performance Shares
with respect to which restrictions would have lapsed, determined at the end of
the Performance Cycle, had such employment not been terminated, by a fraction,
the numerator of which is the number of whole months such Grantee was employed
during the Performance Cycle, and the denominator of which is the total number
of months of the Performance Cycle. The Committee shall determine the amount of
Performance Shares with respect to which restrictions shall lapse under this
Section 11.5(c)(ii) as soon as practicable after the end of the respective
Performance Cycle, and such determination shall relate to attainment of
Performance Objectives over the entire Performance Cycle. At that time, all
Performance Shares relating to that Performance Cycle with respect to which
restrictions shall not lapse shall be forfeited.

(d) Other Events. Except to the extent a Performance Award is intended to
qualify as Performance-Based Compensation, the Committee may, in its sole
discretion, determine to pay all or any portion of a Performance Award to a
Grantee who has a Termination of Employment prior to the end of a Performance
Cycle under certain circumstances (including, without limitation, a material
change in circumstances arising after the date of grant) and subject to such
terms and conditions as the Committee shall deem appropriate, provided that the
Grantee shall have completed at his or her date of Termination of Employment at
least one (1) year of employment after the date of grant.

(e) Termination of Employment After End of Performance Cycle. Subject to
Sections 11.4 and 11.5(f), in the case of a Grantee’s Termination of Employment
after the end of a Performance Cycle in which the applicable Performance
Objectives have been satisfied, the Grantee shall not be entitled to any
Performance Awards that have not yet vested as of the date of the Grantee’s
Termination of Employment.

(f) Waiver of Forfeiture. Notwithstanding anything to the contrary in
Section 11(e), in the case of a Grantee’s Termination of Employment after the
end of a Performance Cycle in which the applicable Performance Objectives have
been satisfied, the Committee may, in its sole discretion, waive the forfeiture
of Performance Awards and any other conditions set forth in any Agreement under
appropriate circumstances (including, without limitation, the death, Disability,
or retirement of the Grantee or a material change in circumstances arising after
the date of grant) and subject to such terms and conditions as the Committee
shall deem appropriate.

11.6 Modification or Substitution. Subject to the terms of the Plan, including,
without limitation, Section 16, the Committee may modify outstanding Performance
Awards or accept the surrender of outstanding Performance Awards and grant new
Performance Awards in substitution for them. Notwithstanding the foregoing, no
modification of a Performance Award shall adversely alter or impair any rights
or obligations under the Agreement without the Grantee’s consent.

12. Other Share Based Awards.

12.1 Share Awards. The Committee, in its sole discretion, may grant a Share
Award to any Eligible Individual on such terms and conditions as the Committee
may determine. Share Awards may be made as additional compensation for services
rendered by the Eligible Individual or may be in lieu of cash or other
compensation to which the Eligible Individual is entitled from the Company.

12.2 Phantom Stock Awards.

(a) Grant. The Committee, in its sole discretion, may grant shares of Phantom
Stock to any Eligible Individual. Such Phantom Stock shall be subject to the
terms and conditions established by the Committee and set forth in the
applicable Agreement.

 

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(b) Payment of Awards. Upon the vesting of a Phantom Stock Award, the Grantee
shall be entitled to receive a cash payment in respect of each share of Phantom
Stock which shall be equal to the Fair Market Value of a Share as of the date
the Phantom Stock Award was granted, or such other date as determined by the
Committee at the time the Phantom Stock Award was granted. The Committee may, at
the time a Phantom Stock Award is granted, provide a limitation on the amount
payable in respect of each share of Phantom Stock. In lieu of a cash payment,
the Committee, in its sole discretion, may settle Phantom Stock Awards with
Shares having a Fair Market Value on the date of vesting equal to the cash
payment to which the Grantee has become entitled.

13. Employment Agreement Governs Termination of Employment.

An employment agreement, if applicable, between an Optionee or Grantee and the
Company shall govern with respect to the terms and conditions applicable to such
Option or Award upon a termination or change in the status of the employment of
the Optionee or Grantee, to the extent that such employment agreement provides
for terms and conditions that differ from the terms and conditions provided for
in the applicable Agreement or the Plan; provided, however, that to the extent
necessary for an Option or Award intended to qualify as Performance-Based
Compensation to so qualify, the terms of the applicable Agreement or the Plan
shall govern the Option or Award; and, provided further, that the Committee
shall have reviewed and, in its sole discretion, approved the employment
agreement.

14. Adjustment Upon Changes in Capitalization.

(a) In the event of a Change in Capitalization, the Committee shall conclusively
determine the appropriate adjustments, if any, to (i) the maximum number and
class of Shares or other stock or securities with respect to which Options or
Awards may be granted under the Plan, (ii) the maximum number and class of
Shares or other stock or securities that may be issued upon exercise of
Incentive Stock Options; (iii) the number and class of Shares or other stock or
securities which are subject to outstanding Options or Awards granted under the
Plan and the purchase price therefor, if applicable, (iv) the Performance
Objectives.

(b) Any such adjustment in the Shares or other stock or securities (i) subject
to outstanding Incentive Stock Options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a modification
as defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code or (ii) subject to outstanding
Options or Awards that are intended to qualify as Performance-Based Compensation
shall be made in such a manner as not to adversely affect the treatment of the
Options or Awards as Performance-Based Compensation.

(c) If, by reason of a Change in Capitalization, a Grantee of an Award shall be
entitled to, or an Optionee shall be entitled to exercise an Option with respect
to, new, additional or different shares of stock or securities of the Company or
any other corporation, such new, additional or different shares shall thereupon
be subject to all of the conditions, restrictions and performance criteria which
were applicable to the Shares subject to the Award or Option, as the case may
be, prior to such Change in Capitalization.

15. Effect of Certain Transactions.

Subject to Sections 7.5, 8.9, 10.4(b) and 11.4 or as otherwise provided in an
Agreement, in the event of (a) the liquidation or dissolution of the Company or
(b) a merger or consolidation of the Company (a “Transaction”), the Plan and the
Options and Awards issued hereunder shall continue in effect in accordance with
their respective terms, except that following a Transaction either (i) each
outstanding Option or Award shall be treated as provided for in the agreement
entered into in connection with the Transaction or (ii) if not so provided in
such agreement, each Optionee and Grantee shall be entitled to receive in
respect of each Share subject to any outstanding Options or Awards, as the case
may be, upon exercise of any Option or payment or transfer in respect of any
Award, the same number and kind of stock, securities, cash, property or other
consideration that each holder of a Share was entitled to receive in the
Transaction in respect of a Share; provided, however, that such stock,
securities, cash, property, or other consideration shall remain subject to all
of the conditions,

 

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restrictions and performance criteria which were applicable to the Options and
Awards prior to such Transaction. The treatment of any Option or Award as
provided in this Section 15 shall be conclusively presumed to be appropriate for
purposes of Section 11.

16. Interpretation.

Following the required registration of any equity security of the Company
pursuant to Section 12 of the Exchange Act:

(a) The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and the Committee shall interpret and administer the provisions of
the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.

(b) Unless otherwise expressly stated in the relevant Agreement, each Option,
Stock Appreciation Right and Performance Award granted under the Plan is
intended to be Performance-Based Compensation. The Committee shall not be
entitled to exercise any discretion otherwise authorized hereunder with respect
to such Options or Awards if the ability to exercise such discretion or the
exercise of such discretion itself would cause the compensation attributable to
such Options or Awards to fail to qualify as Performance-Based Compensation.
Notwithstanding anything to the contrary in the Plan, the provisions of the Plan
may at any time be bifurcated by the Board or the Committee in any manner so
that certain provisions of the Plan or any Performance Award intended (or
required in order) to satisfy the applicable requirements of Section 162(m) of
the Code are only applicable to persons whose compensation is subject to
Section 162(m).

17. [Reserved]

18. Effective Date, Termination and Amendment of the Plan.

18.1 Effective Date. The original effective date of this Plan was March 12, 2001
(the “Original Effective Date”). The effective date of this amended and restated
Plan shall be March 28, 2007 (the “Restatement Effective Date”), subject only to
the approval of the stockholders of the Company.

18.2 Plan Amendment or Termination. The Plan shall terminate on the day prior to
the tenth anniversary of the Restatement Effective Date, and no Option or Award
may be granted thereafter. The Board may sooner terminate the Plan and the Board
may at any time and from time to time amend, modify or suspend the Plan;
provided, however, that:

(a) no such amendment, modification, suspension or termination shall impair or
adversely alter any Options or Awards theretofore granted under the Plan, except
with the consent of the Optionee or Grantee, nor shall any amendment,
modification, suspension or termination deprive any Optionee or Grantee of any
Shares which he or she may have acquired through or as a result of the Plan; and

(b) to the extent necessary under any applicable law, regulation or exchange
requirement, no amendment shall be effective unless approved by the stockholders
of the Company in accordance with applicable law, regulation or exchange
requirement.

19. Non-Exclusivity of the Plan.

The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.

 

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20. Limitation of Liability.

As illustrative of the limitations of liability of the Company, but not intended
to be exhaustive thereof, nothing in the Plan shall be construed to:

(a) give any person any right to be granted an Option or Award other than at the
sole discretion of the Committee;

(b) give any person any rights whatsoever with respect to Shares except as
specifically provided in the Plan;

(c) interfere with or limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any time for any reason
whatsoever, with or without good cause; or

(d) be evidence of any agreement or understanding, expressed or implied, that
the Company will employ any person at any particular rate of compensation or for
any particular period of time.

21. Regulations and Other Approvals; Governing Law.

21.1 Except as to matters of federal law, the Plan and the rights of all persons
claiming hereunder shall be construed and determined in accordance with the laws
of the State of Delaware without giving effect to conflicts of laws principles
thereof.

21.2 The obligation of the Company to sell or deliver Shares with respect to
Options and Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

21.3 The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or to obtain
for Eligible Individuals granted Incentive Stock Options the tax benefits under
the applicable provisions of the Code and regulations promulgated thereunder.

21.4 Each Option and Award is subject to the requirement that, if at any time
the Committee determines, in its sole discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or Award or the
issuance of Shares, no Options or Awards shall be granted or payment made or
Shares issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.

21.5 Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the “Securities Act”), and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act and Rule 144 or other regulations
thereunder. The Company may place on any certificate representing any such
Shares any legend deemed desirable by the Company’s counsel to comply with
federal or state securities laws and the Committee may require any individual
receiving Shares pursuant to an Option or Award granted under the Plan, as a
condition precedent to receipt of such Shares, to represent and warrant to the
Company in writing that the Shares acquired by such individual are acquired
without a view to any distribution thereof and will not be sold or transferred
other than pursuant to an effective registration thereof under said Act or
pursuant to an exemption applicable under the Securities Act or the rules and
regulations promulgated thereunder.

22. Miscellaneous.

22.1 Multiple Agreements. The terms of each Option or Award may differ from
other Options or Awards granted under the Plan at the same time, or at some
other time. The Committee may also grant more

 

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than one Option or Award to a given Eligible Individual during the term of the
Plan, either in addition to, or in substitution for, one or more Options or
Awards previously granted to that Eligible Individual.

22.2 Captions. The use of captions in this Plan or any Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Agreement.

22.3 Severability. Whenever possible, each provision of the Plan or an Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Plan or an Agreement shall be held
by a court of competent jurisdiction to be prohibited by or invalid or
unenforceable under applicable law, then (a) such provision shall be deemed to
be amended to accomplish the objectives of the provision as originally written
to the fullest extent permitted by law and (b) all other provisions of the Plan
or an Agreement shall remain in full force and effect.

22.4 Withholding of Taxes.

(a) At such times as an Optionee or Grantee recognizes taxable income in
connection with the receipt of Shares or cash hereunder (a “Taxable Event”), the
Optionee or Grantee shall pay to the Company an amount equal to the federal,
state and local income taxes and other amounts as may be required by law to be
withheld by the Company in connection with the Taxable Event (the “Withholding
Taxes”) prior to the issuance, or release from escrow, of such Shares or the
payment of such cash. The Company shall have the right to deduct from any
payment of cash to an Optionee or Grantee an amount equal to the Withholding
Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee or Grantee may make a written election (the “Tax Election”), which may
be accepted or rejected in the sole discretion of the Committee, to have
withheld a portion of the Shares then issuable to him or her having an aggregate
Fair Market Value equal to the Withholding Taxes.

(b) If an Optionee makes a disposition, within the meaning of Section 424(c) of
the Code and regulations promulgated thereunder, of any Share or Shares issued
to such Optionee pursuant to the exercise of an Incentive Stock Option within
the two-year period commencing on the day after the date of the grant or within
the one-year period commencing on the day after the date of transfer of such
Share or Shares to the Optionee pursuant to such exercise, the Optionee shall,
within ten (10) days of such disposition, notify the Company thereof, by
delivery of written notice to the Company at its principal executive office.

22.5 [Reserved]

 

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