EXHIBIT 10.1

 

TOM BROWN, INC.

 

2003 STOCK OPTION PLAN

 

I.                                         PURPOSE

 

The purpose of the TOM BROWN, INC. 2003 STOCK OPTION PLAN (the “Plan”) is to
provide a means through which TOM BROWN, INC., a Delaware corporation (the
“Company”), and its Affiliates may attract able persons to serve as Directors or
Consultants or to enter the employ of the Company and its Affiliates and to
provide a means whereby those individuals upon whom the responsibilities of the
successful administration and management of the Company and its Affiliates rest,
and whose present and potential contributions to the Company and its Affiliates
are of importance, can acquire and maintain stock ownership, thereby
strengthening their concern for the welfare of the Company and its Affiliates. 
A further purpose of the Plan is to provide such individuals with additional
incentive and reward opportunities designed to enhance the profitable growth of
the Company and its Affiliates.  Accordingly, the Plan provides for granting
Incentive Stock Options, options that do not constitute Incentive Stock Options,
or any combination of the foregoing, as is best suited to the circumstances of
the particular Employee, Consultant or Director as provided herein.

 

II.                                     DEFINITIONS

 

The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:

 

(a)                                  “Affiliate” means any corporation,
partnership, limited liability company or partnership, association, trust or
other organization which, directly or indirectly, controls, is controlled by, or
is under common control with, the Company.  For purposes of the preceding
sentence, “control” (including, with correlative meanings, the terms “controlled
by” and “under common control with”), as used with respect to any entity or
organization, shall mean the possession, directly or indirectly, of the power
(i) to vote more than 50% of the securities having ordinary voting power for the
election of directors of the controlled entity or organization, or (ii) to
direct or cause the direction of the management and policies of the controlled
entity or organization, whether through the ownership of voting securities or by
contract or otherwise.

 

(b)                                 “Board” means the Board of Directors of the
Company.

 

(c)                                  “Code” means the Internal Revenue Code of
1986, as amended.  Reference in the Plan to any section of the Code shall be
deemed to include any amendments or successor provisions to such section and any
regulations under such section.

 

(d)                                 “Committee” means a committee of the Board
that is selected by the Board as provided in Paragraph IV(a).

 

(e)                                  “Common Stock” means the common stock, par
value $0.10 per share, of the Company, or any security into which such common
stock may be changed by reason of any transaction or event of the type described
in Paragraph VIII.

 

(f)                                    “Company” means Tom Brown, Inc., a
Delaware corporation.

 

(g)                                 “Consultant” means any person who is not an
Employee or a Director and who is providing advisory or consulting services to
the Company or any Affiliate.

 

(h)                                 “Director” means an individual elected to
the Board by the stockholders of the Company or by the Board under applicable
corporate law who is serving on the Board on the date the Plan is adopted by the
Board or is elected to the Board after such date.

 

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(i)                                     An “Employee” means any person
(including a Director) in an employment relationship with the Company or any
Affiliate.

 

(j)                                     “Immediate Family” means, with respect
to a Participant, the Participant’s spouse, children, or grandchildren
(including adopted and stepchildren and grandchildren).

 

(k)                                  “Incentive Stock Option” means an incentive
stock option within the meaning of Section 422 of the Code.

 

(l)                                     “Market Value” means, as of any
specified date, the mean of the high and low sales prices of the Common Stock
reported on the stock exchange composite tape on that date, or, if no prices are
reported on that date, on the last preceding date on which such prices of the
Common Stock are so reported.  In the event Common Stock is not publicly traded
at the time a determination of its value is required to be made hereunder, the
determination of its fair market value shall be made by the Committee in such
manner as it deems appropriate.

 

(m)                               “1934 Act” means the Securities Exchange Act
of 1934, as amended.

 

(n)                                 “Option” means an award granted under
Paragraph VII of the Plan and includes both Incentive Stock Options to purchase
Common Stock and Options that do not constitute Incentive Stock Options to
purchase Common Stock.

 

(o)                                 “Option Agreement” means a written agreement
between the Company and a Participant with respect to an Option.

 

(p)                                 “Participant” means an Employee, Consultant,
or Director who has been granted an Option.

 

(q)                                 “Plan” means the Tom Brown, Inc. 2003 Stock
Option Plan, as amended from time to time.

 

(r)                                    “Rule 16b-3” means SEC Rule 16b-3
promulgated under the 1934 Act, as such may be amended from time to time, and
any successor rule, regulation or statute fulfilling the same or a similar
function.

 

(s)                                  “Stock Appreciation Right” shall have the
meaning assigned to such term in Paragraph VII(d) of the Plan.

 

III.                                 EFFECTIVE DATE AND DURATION OF THE PLAN

 

The Plan shall become effective upon the date of its adoption by the Board,
provided the Plan is approved by the stockholders of the Company within 12
months thereafter. Notwithstanding any provision in the Plan or in any Option
Agreement, no Option shall be exercisable prior to such stockholder approval. 
No further Options may be granted under the Plan after 10 years from the date
the Plan is adopted by the Board.  The Plan shall remain in effect until all
Options granted under the Plan have been satisfied or expired.

 

IV.                                ADMINISTRATION

 

(a)                                  Composition of Committee.  The Plan shall
be administered by a committee of, and appointed by, the Board that shall be
comprised solely of two or more outside Directors (within the meaning of the
term “outside directors” as used in Section 162(m) of the Code and applicable
interpretive authority thereunder and within the meaning of the term
“Non-Employee Director” as defined in Rule 16b-3).

 

(b)                                 Powers.  Subject to the express provisions
of the Plan, the Committee shall have authority, in its discretion, to determine
which Employees, Consultants, or Directors shall receive an Option, the time or
times when such Option shall be granted, whether an Incentive Stock Option or
nonqualified Option shall be granted, and the number of shares to be subject to
each Option.  In making such determinations, the Committee shall take into
account the nature of the services rendered by the respective Employees,
Consultants, or Directors, their present and

 

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potential contribution to the Company’s success and such other factors as the
Committee in its discretion shall deem relevant.  All decisions and
determinations of the Committee shall be made by a majority of its members.

 

(c)                                  Additional Powers.  The Committee shall
have such additional powers as are delegated to it by the other provisions of
the Plan.  Subject to the express provisions of the Plan, this shall include the
power to construe the Plan and the respective Option Agreements executed
hereunder, to prescribe rules and regulations relating to the Plan, and to
determine the terms, restrictions and provisions of each Option Agreement,
including such terms, restrictions and provisions as shall be requisite in the
judgment of the Committee to cause designated Options to qualify as Incentive
Stock Options, and to make all other determinations necessary or advisable for
administering the Plan.  The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Option Agreement
in the manner and to the extent it shall deem expedient to carry it into
effect.  The determinations of the Committee on the matters referred to in this
Paragraph IV shall be conclusive.

 

V.                                    SHARES SUBJECT TO THE PLAN; OPTION LIMITS;

GRANT OF OPTIONS

 

(a)                                  Shares Subject to the Plan and Option
Limits.  Subject to adjustment in the same manner as provided in Paragraph VIII
with respect to shares of Common Stock subject to Options then outstanding, the
aggregate number of shares of Common Stock that may be issued under the Plan
shall not exceed 1,800,000 shares.  Shares shall be deemed to have been issued
under the Plan only (i) to the extent actually issued and delivered pursuant to
exercise of an Option or (ii) to the extent an Option is settled in cash.  To
the extent that an Option lapses or the rights of its holder terminate, any
shares of Common Stock subject to such Option shall again be available for the
grant of an Option under the Plan.  Notwithstanding any provision in the Plan to
the contrary, the maximum number of shares of Common Stock that may be subject
to Options granted to any one individual during any calendar year may not exceed
1,800,000 shares of Common Stock (as adjusted from time to time in accordance
with the provisions of the Plan).  The limitation set forth in the preceding
sentence shall be applied in a manner that will permit compensation generated
under the Plan to constitute “performance-based” compensation for purposes of
Section 162(m) of the Code, including, without limitation, counting against such
maximum number of shares, to the extent required under Section 162(m) of the
Code and applicable interpretive authority thereunder, any shares subject to
Options that are canceled or repriced.

 

(b)                                 Grant of Options. The Committee may from
time to time grant Options to one or more Employees, Consultants, or Directors
determined by it to be eligible for participation in the Plan in accordance with
the terms of the Plan.

 

(c)                                  Stock Offered.  Subject to the limitations
set forth in Paragraph V(a), the stock to be offered pursuant to the grant of an
Option may be authorized but unissued Common Stock or Common Stock previously
issued and outstanding and reacquired by the Company.  Any of such shares which
remain unissued and which are not subject to outstanding Options at the
termination of the Plan shall cease to be subject to the Plan but, until
termination of the Plan, the Company shall at all times make available a
sufficient number of shares to meet the requirements of the Plan.

 

VI.                                ELIGIBILITY

 

Options may be granted only to persons who, at the time of grant, are Employees,
Consultants, or Directors.  An Option may be granted on more than one occasion
to the same person, and, subject to the limitations set forth in the Plan, an
award under the Plan may include an Incentive Stock Option, an Option that is
not an Incentive Stock Option, or any combination thereof.

 

VII.                            OPTION TERMS

 

(a)                                  Option Period.  The term of each Option
shall be as specified by the Committee at the date of grant, but in no event
shall an Option be exercisable after the expiration of 10 years from the date of
grant.

 

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(b)                                 Limitations on Exercise of Option.  An
Option shall be exercisable in whole or in such installments and at such times
as determined by the Committee.

 

(c)                                  Special Limitations on Incentive Stock
Options.  An Incentive Stock Option may be granted only to an individual who is
employed by the Company or any parent or subsidiary corporation (as defined in
Section 424 of the Code) of the Company at the time the Option is granted. To
the extent that the aggregate Market Value (determined at the time the
respective Incentive Stock Option is granted) of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by an
individual during any calendar year under all incentive stock option plans of
the Company and its parent and subsidiary corporations exceeds $100,000, such
Incentive Stock Options shall be treated as Options which do not constitute
Incentive Stock Options. The Committee shall determine, in accordance with
applicable provisions of the Code, Treasury Regulations and other administrative
pronouncements, which of a Participant’s Incentive Stock Options will not
constitute Incentive Stock Options because of such limitation and shall notify
the Participant of such determination as soon as practicable after such
determination.  No Incentive Stock Option shall be granted to an individual if,
at the time the Option is granted, such individual owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of its parent or subsidiary corporation, within the meaning of
Section 422(b)(6) of the Code, unless (i) at the time such Option is granted the
option price is at least 110% of the Market Value of the Common Stock subject to
the Option and (ii) such Option by its terms is not exercisable after the
expiration of five years from the date of grant.  An Incentive Stock Option
shall be exercisable during the Participant’s lifetime only by such Participant
or the Participant’s guardian or legal representative.

 

(d)                                 Option Agreement.  Each Option shall be
evidenced by an Option Agreement in such form and containing such provisions not
inconsistent with the provisions of the Plan as the Committee from time to time
shall approve, including, without limitation, provisions to qualify an Incentive
Stock Option under Section 422 of the Code.  Each Option Agreement shall specify
the effect of termination of (i) employment, (ii) the consulting or advisory
relationship, or (iii) membership on the Board, as applicable, on the
exercisability of the Option.  An Option Agreement may provide for the payment
of the option price, in whole or in part, by the delivery of a number of shares
of Common Stock (plus cash if necessary) having a Market Value equal to such
option price.  Moreover, an Option Agreement may provide for a “cashless
exercise” of the Option by establishing procedures satisfactory to the Committee
with respect thereto.  Further, an Option Agreement may provide for the
surrender of the right to purchase shares under the Option in return for a
payment in cash or shares of Common Stock or a combination of cash and shares of
Common Stock equal in value to the excess of the Market Value of the shares with
respect to which the right to purchase is surrendered over the option price
therefor (“Stock Appreciation Rights”), on such terms and conditions as the
Committee in its sole discretion may prescribe.  In the case of any such Stock
Appreciation Right that is granted in connection with an Incentive Stock Option,
such right shall be exercisable only when the Market Value of the Common Stock
exceeds the price specified therefor in the Option or the portion thereof to be
surrendered.  Finally, the Committee (concurrently with the grant of an Option
or subsequent to such grant) may, in its sole discretion, provide in an Option
Agreement respecting an Option that, if the Participant pays the Option exercise
price in shares of Common Stock, upon the date of such payment a new option
shall be granted under this Plan or under another available plan and the number
of shares of Common Stock subject to such new option shall be equal to the
number of shares of Common Stock tendered in payment (plus the number of any
shares of Common Stock respecting the exercised Option retained (not in excess
of the minimum required) to satisfy any tax withholding obligations); provided
that such new option shall not be exercisable in any event after the original
term of the exercised Option.  The terms and conditions of the respective Option
Agreements need not be identical.  Subject to the consent of the Participant and
the provisions of subparagraph (f) below, the Committee may, in its sole
discretion, amend an outstanding Option Agreement from time to time in any
manner that is not inconsistent with the provisions of the Plan (including,
without limitation, an amendment that accelerates the time at which the Option,
or a portion thereof, may be exercisable).

 

(e)                                  Option Price and Payment.  The price at
which a share of Common Stock may be purchased upon exercise of an Option shall
be determined by the Committee but, subject to adjustment as provided in
Paragraph VIII, such purchase price shall not be less than the Market Value of a
share of Common Stock on the date such Option is granted.  The Option or portion
thereof may be exercised by delivery of an irrevocable notice of exercise to the
Company, as specified by the Committee.  The purchase price of the Option or
portion thereof shall be paid in full in the manner prescribed by the
Committee.  Separate stock certificates shall be issued by the

 

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Company for those shares acquired pursuant to the exercise of an Incentive Stock
Option and for those shares acquired pursuant to the exercise of any Option that
does not constitute an Incentive Stock Option.

 

(f)                                    Restrictions on Repricing of Options. 
Except as provided in Paragraph VIII, the Committee may not, without approval of
the stockholders of the Company, amend any outstanding Option Agreement to lower
the option price or cancel and replace any outstanding Option Agreement with
Option Agreements having a lower option price unless the cancellation occurs in
connection with a merger, acquisition or other similar corporate transaction.

 

(g)                                 Stockholder Rights and Privileges.  The
Participant shall be entitled to all the privileges and rights of a stockholder
only with respect to such shares of Common Stock as have been purchased under
the Option and for which certificates of stock have been registered in the
Participant’s name.

 

(h)                                 Options and Rights in Substitution for
Options Granted by Other Employers.  Options and Stock Appreciation Rights may
be granted under the Plan from time to time in substitution for options held by
individuals providing services to corporations or other entities who become
Employees, Consultants, or Directors as a result of a merger or consolidation or
other business transaction with the Company or any Affiliate.

 

VIII.                        RECAPITALIZATION OR REORGANIZATION

 

(a)                                  No Effect on Right or Power.  The existence
of the Plan and the Options granted hereunder shall not affect in any way the
right or power of the Board or the stockholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other change in
the Company’s or any Affiliate’s capital structure or its business, any merger
or consolidation of the Company or any Affiliate, any issue of debt or equity
securities ahead of or affecting Common Stock or the rights thereof, the
dissolution or liquidation of the Company or any Affiliate or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.

 

(b)                                 Subdivision or Consolidation of Shares;
Stock Dividends.  The shares with respect to which Options may be granted are
shares of Common Stock as presently constituted, but if, and whenever, prior to
the expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of consideration by the Company, the
number of shares of Common Stock with respect to which such Option may
thereafter be exercised (i) in the event of an increase in the number of
outstanding shares shall be proportionately increased, and the purchase price
per share shall be proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding shares shall be proportionately reduced, and the
purchase price per share shall be proportionately increased.  Any fractional
share resulting from such adjustment shall be rounded up to the next whole
share.

 

(c)                                  Recapitalizations and Corporate Changes. 
If the Company recapitalizes, reclassifies its capital stock, or otherwise
changes its capital structure (a “recapitalization”), the number and class of
shares of Common Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the Participant would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the Participant had been the holder of record of the number of
shares of Common Stock then covered by such Option.  Notwithstanding any
provision in an Option Agreement or the Plan to the contrary, upon the
occurrence of a Change in Control (as defined in clause (i), (ii),  (iii) or
(iv) below), each Option then outstanding that is held by an individual who is
an Employee, Consultant or Director immediately prior to such Change in Control
shall become fully vested and exercisable in full immediately prior to such
Change in Control (or at such earlier time as may be specified by the
Committee).  Moreover, effective as of a date (selected by the Committee) within
ten days after the approval by the stockholders of the Company of a Change in
Control (as defined in clause (ii), (iii) or (iv) below), or within thirty days
of a Change in Control (as defined in clause (i) below), the Committee, acting
in its sole discretion without the consent or approval of any Participant, may
effect one or more of the following alternatives with respect to the then
outstanding Options held by Employees, Consultants or Directors which may vary
among individual Participants and which may vary among Options held by any
individual Participant: (1) accelerate the time at which such Options may be
exercised or adjust the time period during which such Options may be exercised
so that such Options may be exercised for a period of time on or before a
specified date (before or after such Change in Control)

 

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fixed by the Committee, after which specified date all unexercised Options and
all rights of Participants thereunder shall terminate, (2) require the mandatory
surrender to the Company by Participants of some or all of such Options
(irrespective of whether such Options are then exercisable under the provisions
of the Plan) as of a date, before or after such Change in Control, specified by
the Committee, in which event the Committee shall thereupon cancel such Options
and pay (or cause to be paid) to each Participant an amount of cash per share
equal to the excess of the amount calculated in Subparagraph (d) below (the
“Change in Control Value”) of the shares subject to such Option over the
exercise price(s) under such Options for such shares, (3) make such adjustments
to such Options as the Committee deems appropriate to reflect such Change in
Control (provided, however, that the Committee may determine in its sole
discretion that no adjustment is necessary to such Options) or (4) provide that,
upon any exercise of an Option theretofore granted, the Participant shall be
entitled to purchase under such Option, in lieu of the number of shares of
Common Stock as to which such Option shall then be exercisable, the number and
class of shares of stock or other securities or property (including, without
limitation, cash) to which the Participant would have been entitled pursuant to
the terms of the agreement effecting such Change in Control if, immediately
prior to such Change in Control the Participant had been the holder of record of
the number of shares of Common Stock as to which such Option is then
exercisable.  For purposes of Subparagraphs VIII(c) and VIII(d), a “Change in
Control” shall mean: (i) the acquisition, directly or indirectly, by any
individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2)
of the 1934 Act (a “Person”), except for an underwriter or group of underwriters
in connection with a public offering of common stock, of beneficial ownership
(within the meaning of Rule 13d—3 promulgated under the 1934 Act) of 50% or more
of either (x) the then-outstanding shares of Common Stock of the Company
calculated in accordance with Rule 13d-3 (the “Outstanding Common Stock”) or (y)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
“Outstanding Voting Securities”), in each case other than acquisitions of
beneficial ownership by (I) the Company and its subsidiaries, (II) any employee
benefit plan sponsored or maintained by the Company or any Person organized,
established or appointed pursuant to the terms of any such employee benefit plan
or (III) any acquisition by any Person pursuant to a transaction that complies
with items (x), (y) and (z) of clause (ii) below; (ii) consummation of a merger
of the Company with another entity, a consolidation involving the Company, a
share exchange involving the Company, or the sale, lease or exchange of all or
substantially all of the assets of the Company (each a “Business Combination”)
unless, in any such case, immediately following such Business Combination, (x)
the Persons who were the beneficial owners, respectively, of the Outstanding
Common Stock and Outstanding Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50%,
respectively, of the then outstanding equity securities and 50% of the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors (or comparable governing body), as the
case may be, of the Resulting Person (as defined below) of such Business
Combination in substantially the same proportions as their beneficial ownership
immediately prior to such Business Combination; provided, however, that for
purposes of this item (x), any shares of equity securities or voting securities
of the Resulting Person received or otherwise owned by such beneficial owners in
such Business Combination other than as a result of such beneficial ownership of
Outstanding Common Stock or Outstanding Voting Securities immediately prior to
such Business Combination shall not be considered to be owned by such beneficial
owners for the purposes of calculating their percentage of ownership of the
outstanding equity securities and voting power of the Resulting Person, (y) no
Person (excluding any Resulting Person from such Business Combination or any
employee benefit plan sponsored or maintained by the Company or such Resulting
Person or any Person organized, established or appointed pursuant to the terms
of any such employee benefit plan) beneficially owns, directly or indirectly,
30% or more, respectively, of the then-outstanding equity securities of the
Resulting Person or the combined voting power of the then-outstanding voting
securities of the Resulting Person unless such ownership existed immediately
prior to the Business Combination and (z) immediately following such Business
Combination at least a majority of the members of the Board of Directors (or
comparable governing body) of the Resulting Person were members of the Incumbent
Board (as defined in clause (iii) below) at the time of the execution of the
initial agreement or other action by the Board providing for such Business
Combination; (iii) as a result of or in connection with a contested election of
the Board, individuals who constituted the Board before such event (the
“Incumbent Board”) (provided that any individual becoming a director subsequent
to such date whose appointment or whose nomination for election by the Company’s
stockholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board), shall cease for any reason to constitute
at least a majority of the Board; or (iv) approval by the stockholders of the
Company of a complete liquidation or dissolution of the Company pursuant to the
corporation laws of its jurisdiction of incorporation.  For purposes of the
preceding sentence, “Resulting Person” in the context of a Business Combination
that is a merger or consolidation shall mean the surviving Person unless the
surviving

 

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Person is or shall become a subsidiary of another Person and the holders of
Outstanding Common Stock or Outstanding Voting Securities receive securities of
such other Person in such Business Combination, in which event the Resulting
Person shall be such other Person.

 

(d)                                 Change in Control Value.  For the purposes
of clause (2) in Subparagraph (c) above, the “Change in Control Value” shall
equal the amount determined in clause (i), (ii) or (iii), whichever is
applicable, as follows: (i) the per share price offered to stockholders of the
Company in any merger, consolidation, share exchange or sale, lease or exchange
of all or substantially all of the assets of the Company, complete liquidation
or dissolution of the Company, (ii) the price per share offered to stockholders
of the Company in any tender offer or exchange offer whereby a Change in Control
takes place, or (iii) if such Change in Control occurs other than pursuant to a
tender or exchange offer, the fair market value per share of the shares into
which such Options being surrendered are exercisable, as determined by the
Committee as of the date determined by the Committee to be the date of
cancellation and surrender of such Options.  In the event that the consideration
offered to stockholders of the Company in any transaction described in this
Subparagraph (d) or Subparagraph (c) above consists of anything other than cash,
the Committee shall determine the fair cash equivalent of the portion of the
consideration offered which is other than cash.

 

(e)                                  Other Changes in the Common Stock.  In the
event of changes in the outstanding Common Stock by reason of recapitalizations,
reorganizations, mergers, consolidations, combinations, split-ups, split-offs,
spin-offs, exchanges or other relevant changes in capitalization or
distributions to the holders of Common Stock occurring after the date of the
grant of any Option and not otherwise provided for by this Paragraph VIII, such
Option and the related Option Agreement shall be subject to adjustment by the
Committee at its discretion as to the number and price of shares of Common Stock
or other consideration subject to such Option.  In the event of any such change
in the outstanding Common Stock or distribution to the holders of Common Stock,
or upon the occurrence of any other event described in this Paragraph VIII, the
aggregate number of shares available under the Plan and the maximum number of
shares that may be subject to Options granted to any one individual shall be
appropriately adjusted to the extent, if any, determined by the Committee, whose
determination shall be conclusive.

 

(f)                                    Stockholder Action.  Any adjustment
provided for in the above Subparagraphs shall be subject to any required
stockholder action with respect to the event causing the adjustment.

 

(g)                                 No Adjustments unless Otherwise Provided. 
Except as hereinbefore expressly provided, the issuance by the Company of shares
of stock of any class or securities convertible into shares of stock of any
class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to Options theretofore granted or the purchase
price per share.

 

IX.                                AMENDMENT AND TERMINATION OF THE PLAN

 

The Board in its discretion may terminate the Plan at any time with respect to
any shares of Common Stock for which Options have not theretofore been granted. 
The Board shall have the right to alter or amend the Plan or any part thereof
from time to time; provided that no change in the Plan may be made that would
impair the rights of a Participant with respect to an Option theretofore granted
without the consent of the Participant, and provided, further, that the Board
may not, without approval of the stockholders of the Company, (a) amend the Plan
to increase the maximum aggregate number of shares that may be issued under the
Plan or change the class of individuals eligible to receive Options under the
Plan, or (b) amend or delete Paragraph VII(f).

 

X.                                    MISCELLANEOUS

 

(a)                                  No Right To An Option.  Neither the
adoption of the Plan nor any action of the Board or of the Committee shall be
deemed to give an Employee, Consultant, or Director any right to be granted an
Option or any other rights hereunder except as may be evidenced by an Option
Agreement duly executed on behalf of the Company, and then only to the extent
and on the terms and conditions expressly set forth therein.  The Plan shall be
unfunded.  The Company shall not be required to establish any special or
separate fund or to make any other segregation of funds or assets to assure the
performance of its obligations under any Option Agreement.

 

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(b)                                 No Employment/Membership Rights Conferred. 
Nothing contained in the Plan shall (i) confer upon any Employee or Consultant
any right with respect to continuation of employment or of a consulting or
advisory relationship with the Company or any Affiliate or (ii) interfere in any
way with the right of the Company or any Affiliate to terminate his or her
employment or consulting or advisory relationship at any time.  Nothing
contained in the Plan shall confer upon any Director any right with respect to
continuation of membership on the Board.

 

(c)                                  Other Laws; Withholding.  The Company shall
not be obligated to issue any Common Stock pursuant to any Option granted under
the Plan at any time when the shares covered by such Option have not been
registered under the Securities Act of 1933, as amended, and such other state
and federal laws, rules and regulations as the Company or the Committee deems
applicable and, in the opinion of legal counsel for the Company, there is no
exemption from the registration requirements of such laws, rules and regulations
available for the issuance and sale of such shares.  No fractional shares of
Common Stock shall be delivered, nor shall any cash in lieu of fractional shares
be paid.  The Company shall have the right to deduct in connection with all
Options any taxes required by law to be withheld and to require any payments
required to enable it to satisfy its withholding obligations.  The Committee may
determine the manner in which such tax withholding may be satisfied, and may
permit shares of Common Stock (together with cash, as appropriate) to be used to
satisfy required tax withholding based on the Market Value per Share of any such
shares of Common Stock, as of the date of delivery of shares in satisfaction of
the applicable Option; provided that election by any participant who is subject
to Section 16 of the Exchange Act may only be made during the permissible
trading period pursuant to applicable Company policy.

 

(d)                                 No Restriction on Corporate Action.  Nothing
contained in the Plan shall be construed to prevent the Company or any Affiliate
from taking any action which is deemed by the Company or such Affiliate to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any Option.  No Participant, beneficiary or other
person shall have any claim against the Company or any Affiliate as a result of
any such action.

 

(e)                                  Restrictions on Transfer.  An Incentive
Stock Option shall not be transferable otherwise than by will or the laws of
descent and distribution.  An Option that does not constitute an Incentive Stock
Option shall not be transferable otherwise than (i) by will or the laws of
descent and distribution, (ii) pursuant to a qualified domestic relations order
as defined by the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder, (iii) with respect to Options
other than Incentive Stock Options, if such transfer is permitted in the sole
discretion of the Committee, by transfer by a Participant to a member of the
Participant’s Immediate Family, to a trust solely for the benefit of the
Participant and the Participant’s Immediate Family, or to a partnership or
limited liability company whose only partners or shareholders are the
Participant and members of the Participant’s Immediate Family, with the consent
of the Committee, or (iv) with the consent of the Committee.

 

(f)                                    Section 162(m).  It is intended that the
Plan comply fully with and meet all the requirements of Section 162(m) of the
Code so that Options granted hereunder shall constitute ‘‘performance-based’’
compensation within the meaning of such section.  If any provision of the Plan
would disqualify the Plan or would not otherwise permit the Plan to comply with
Section 162(m) as so intended, such provision shall be construed or deemed
amended to conform to the requirements or provisions of Section 162(m); provided
that no such construction or amendment shall have an adverse effect on the
economic value to a Participant of any Option previously granted hereunder.

 

(g)                                 Governing Law.  The Plan shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without
regard to conflicts of law principles thereof.

 

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