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Exhibit 10.1
 
EMCORE CORPORATION
 
AMENDED AND RESTATED 2000 STOCK OPTION PLAN
Revised February 13, 2006
 
1. Purposes. The purposes of the EMCORE Corporation 2000 Stock Option Plan are
to give officers and other employees, consultants and non-employee directors of
the Company and its Affiliates an opportunity to acquire shares of Stock, to
provide an incentive for such employees, consultants and directors to continue
to promote the best interests of the Company and its Affiliates and enhance its
long-term performance and to provide an incentive for such employees,
consultants and directors to join or remain with the Company and its Affiliates.
Toward these objectives, the Committee may grant Options to such employees,
directors and consultants, all pursuant to the terms and conditions of the Plan.
 
2. Definitions. As used in the Plan, the following capitalized terms shall have
the meanings set forth below:
 
(a) “Affiliate” - other than the Company, (i) any corporation or limited
liability company in an unbroken chain of corporations or limited liability
companies ending with the Company if each corporation or limited liability
company owns stock or membership interests (as applicable) possessing more than
fifty percent (50%) of the total combined voting power of all classes of stock
in one of the other corporations or limited liability companies in such chain;
(ii) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is more than fifty percent (50%)
controlled (whether by ownership of stock, assets or an equivalent ownership
interest or voting interest) by the Company or one of its Affiliates; or (iii)
any other entity, approved by the Committee as an Affiliate under the Plan, in
which the Company or any of its Affiliates has a material equity interest.
 
(b) “Agreement” - a written stock option award agreement evidencing an Option,
as described in Section 3(e).
 
(c) “Award Limit” - 300,000 shares of Stock (as adjusted in accordance with
Section 10).
 
(d) “Beneficial Ownership” - (including correlative terms) shall have the same
meaning given such term in Rule 13d-3 promulgated under the Exchange Act.
 
(e) “Board” - the Board of Directors of the Company.
 
(f) “Change in Control” - the occurrence of any of the following:
 
(i) an acquisition in one transaction or a series of related transactions (other
than directly from the Company or pursuant to Options granted under the Plan or
other similar awards granted by the Company) of any Voting Securities by any
Person, immediately after which such Person has Beneficial Ownership of fifty
percent (50%) or more of 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(f), Voting Securities
which are acquired in a Non-Control Acquisition shall not constitute an
acquisition that would cause a Change in Control;
 
(ii) the individuals who, immediately prior to the Effective Date, are members
of the Board (the “Incumbent Board”), cease for any reason to constitute at
least a majority of the members of the Board; 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 a majority of the Incumbent
Board, such new director shall, for purposes of the 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 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
 
(iii) the consummation of:
 
(A) a merger, consolidation or reorganization involving the Company unless:
 
(1) the stockholders of the Company, immediately before such merger,
consolidation or reorganization, own, directly or indirectly, immediately
following such merger, consolidation or reorganization, more than fifty percent
(50%) of the combined voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or reorganization (the
“Surviving Corporation”) in substantially the same proportion as their ownership
of the Voting Securities immediately before such merger, consolidation or
reorganization,
 
(2) the individuals who were members of the Incumbent Board immediately prior to
the execution of the agreement providing for such merger, consolidation or
reorganization constitute at least a majority of the members of the board of
directors of the Surviving Corporation, or a corporation Beneficially Owning,
directly or indirectly, a majority of the voting securities of the Surviving
Corporation, and
 
(3) no Person, other than (i) the Company, (ii) any Related Entity (as defined
in Section 2(p)), (iii) any employee benefit plan (or any trust forming a part
thereof) that, immediately prior to such merger, consolidation or
reorganization, was maintained by the Company, the Surviving Corporation, or any
Related Entity or (iv) any Person who, together with its Affiliates, immediately
prior to such merger, consolidation or reorganization had Beneficial Ownership
of fifty percent (50%) or more of the then outstanding Voting Securities, owns,
together with its Affiliates, Beneficial Ownership of fifty percent (50%) or
more of the combined voting power of the Surviving Corporation’s then
outstanding voting securities (a transaction described in clauses (1) through
(3) above is referred to herein as a “Non-Control Transaction”);
 
(B) a complete liquidation or dissolution of the Company; or
 
(C) an agreement for the sale or other disposition of all or substantially all
of the assets or business of the Company to any Person (other than a transfer to
a Related Entity 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 fifty percent (50%) or more of the combined voting power of the then
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of 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 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 Voting
Securities in a related transaction or (2) after such share acquisition by the
Company the Subject Person becomes the Beneficial Owner of any new or additional
Voting Securities which in either case increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall be deemed to occur. Solely for purposes of this Section
2(f), (x) “Affiliate” shall mean, with respect to any Person, any other Person
that, directly or indirectly, controls, is controlled by, or is under common
control with, such Person; (y) any “Relative” (for this purpose, “Relative”
means a spouse, child, parent, parent of spouse, sibling or grandchild) of an
individual shall be deemed to be an Affiliate of such individual for this
purpose; and (z) neither the Company nor any Person controlled by the Company
shall be deemed to be an Affiliate of any holder of Common Stock.

(g) “Code” - the Internal Revenue Code of 1986, as it may be amended from time
to time, including regulations and rules thereunder and successor provisions and
regulations and rules thereto.
 
(h) “Committee” - the Compensation Committee of the Board, or such other Board
committee as may be designated by the Board to administer the Plan.
 
(i) “Company” - EMCORE Corporation, a New Jersey corporation, or any successor
entity.
 
(j) “Disqualified Option” - the meaning given such term in Section 10(d).
 
(k) “Disqualifying Disposition” - the meaning given such term in Section 10(d).
 
(l) “Effective Date” - the date on which the Plan is effective, as determined
pursuant to Section 15.
 
(m) “Exchange Act” - the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
 
(n) “Fair Market Value” - of a share of Stock as of a given date shall be: (i)
if the Stock is listed or admitted to trading on an established stock exchange
(including, for this purpose, the Nasdaq National Market), the mean of the
highest and lowest sale prices for a share of Stock on the composite tape or in
Nasdaq National Market trading as reported in The Wall Street Journal (or, if
not so reported, such other nationally recognized reporting source as the
Committee shall select) for such date, or, if no such prices are reported for
such date, the most recent day for which such prices are available shall be
used; (ii) if the Stock is not then listed or admitted to trading on such a
stock exchange, the mean of the closing representative bid and asked prices for
the Stock on such date as reported by the Nasdaq Small Cap Market or, if not so
reported, by the OTC Bulletin Board (or any successor or similar quotation
system regularly reporting the market value of the Stock in the over-the-counter
market), or, if no such prices are reported for such date, the most recent day
for which such prices are available shall be used; or (iii) in the event neither
of the valuation methods provided for in clauses (i) and (ii) above are
practicable, the fair market value of a share of Stock determined by such other
reasonable valuation method as the Committee shall, in its discretion, select
and apply in good faith as of the given date; provided, however, that for
purposes of paragraphs (a) and (h) of Section 6, such fair market value shall be
determined subject to Section 422(c)(7) of the Code.
 
(o) “ISO” or “Incentive Stock Option” - a right to purchase Stock granted to an
Optionee under the Plan in accordance with the terms and conditions set forth in
Section 6 and which conforms to the applicable provisions of Section 422 of the
Code.
 
(p) “Non-Control Acquisition” - 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 (a “Related Entity”), (ii) the Company or any Related Entity, (iii)
any of Thomas Russell, The AER Trust 1997, Robert Louis-Dreyfus, Gallium
Enterprises, Inc. and Reuben Richards or (iv) any Person in connection with a
Non-Control Transaction.
 
(q) “Notice” - written notice actually received by the Company at its executive
offices on the day of such receipt, if received on or before 1:30 p.m., on a day
when the Company’s executive offices are open for business, or, if received
after such time, such notice shall be deemed received on the next such day,
which notice may be delivered in person to the Company’s Secretary or sent by
facsimile to the Company at (732) 271-9686, or sent by certified or registered
mail or overnight courier, prepaid, addressed to the Company at 394 Elizabeth
Avenue, Somerset, New Jersey 08873, Attention: Secretary.
 
(r) “Option” - a right to purchase Stock granted to an Optionee under the Plan
in accordance with the terms and conditions set forth in Section 6. Options may
be either ISOs or stock options other than ISOs.
 
(s) “Optionee” - an individual who is eligible, pursuant to Section 5, and who
has been selected, pursuant to Section 3(c), to participate in the Plan, and who
holds an outstanding Option granted to such individual under the Plan in
accordance with the terms and conditions set forth in Section 6.
 
(t) “Person” - “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.
 
(u) “Plan” - this EMCORE Corporation 2000 Stock Option Plan.
 
(v) “Predecessor Plan” - the Company’s 1995 Incentive and Non-Statutory Stock
Option Plan.
 
(w) “Securities Act” - the Securities Act of 1933, as it may be amended from
time to time, including the regulations and rules promulgated thereunder and
successor provisions and regulations and rules thereto.
 
(x) “Stock” - the common stock of the Company, without par value.
 
(y) “Subsidiary” - any present or future corporation which is or would be a
“subsidiary corporation” of the Company as the term is defined in Section 424(f)
of the Code.
 
(z) “Voting Securities” - all the outstanding voting securities of the Company
entitled to vote generally in the election of the Board.
 
3. Administration of the Plan. (a) The Committee shall have exclusive authority
to operate, manage and administer the Plan in accordance with its terms and
conditions. Notwithstanding the foregoing, in its absolute discretion, the Board
may at any time and from time to time exercise any and all rights, duties and
responsibilities of the Committee under the Plan, including, but not limited to,
establishing procedures to be followed by the Committee, but excluding matters
which under any applicable law, regulation or rule, including, without
limitation, any exemptive rule under Section 16 of the Exchange Act (including
Rule 16b-3, or any successor rule, as the same may be amended from time to time)
or Section 162(m) of the Code, are required to be determined in the sole
discretion of the Committee. If and to the extent that no Committee exists which
has the authority to administer the Plan, the functions of the Committee shall
be exercised by the Board.
 
(b) The Committee shall be appointed from time to time by the Board, and the
Committee shall consist of not less than three members of the Board. Appointment
of Committee members shall be effective upon their acceptance of such
appointment. Committee members may be removed by the Board at any time either
with or without cause, and such members may resign at any time by delivering
notice thereof to the Board. Any vacancy on the Committee, whether due to action
of the Board or any other reason, shall be filled by the Board.
 
(c) The Committee shall have full authority to grant, pursuant to the terms of
the Plan, Options to those individuals who are eligible to receive Options under
the Plan. In particular, the Committee shall have discretionary authority, in
accordance with the terms of the Plan, to: determine eligibility for
participation in the Plan; select, from time to time, from among those eligible,
the employees, directors and consultants to whom Options shall be granted under
the Plan, which selection may be based upon information furnished to the
Committee by the Company’s or an Affiliate’s management; determine whether an
Option shall take the form of an ISO or an Option other than an ISO; determine
the number of shares of Stock to be included in any Option and the periods for
which Options will be outstanding; establish and administer any terms,
conditions, performance criteria, restrictions, limitations, forfeiture, vesting
or exercise schedule, and other provisions of or relating to any Option; grant
waivers of terms, conditions, restrictions and limitations under the Plan or
applicable to any Option, or accelerate the vesting or exercisability of any
Option; amend or adjust the terms and conditions of any outstanding Option
and/or adjust the number and/or class of shares of Stock subject to any
outstanding Option; at any time and from time to time after the granting of an
Option, specify such additional terms, conditions and restrictions with respect
to any such Option as may be deemed necessary or appropriate to ensure
compliance with any and all applicable laws or rules, including, but not limited
to, terms, restrictions and conditions for compliance with applicable securities
laws, regarding an Optionee’s exercise of Options by tendering shares of Stock
or under any “cashless exercise” program established by the Committee, and
methods of withholding or providing for the payment of required taxes; and, to
the extent permitted under the applicable Agreement, permit the transfer of an
Option or the exercise of an Option by one other than the Optionee who received
the grant of such Option (other than any such a transfer or exercise which would
cause any ISO to fail to qualify as an “incentive stock option” under Section
422 of the Code).
 
(d) The Committee shall have all authority that may be necessary or helpful to
enable it to discharge its responsibilities with respect to the Plan. Without
limiting the generality of the foregoing sentence or Section 3(a), and in
addition to the powers otherwise expressly designated to the Committee in the
Plan, the Committee shall have the exclusive right and discretionary authority
to interpret the Plan and the Agreements; construe any ambiguous provision of
the Plan and/or the Agreements and decide all questions concerning eligibility
for and the amount of Options granted under the Plan. The Committee may
establish, amend, waive and/or rescind rules and regulations and administrative
guidelines for carrying out the Plan and may correct any errors, supply any
omissions or reconcile any inconsistencies in the Plan and/or any Agreement or
any other instrument relating to any Options. The Committee shall have the
authority to adopt such procedures and subplans and grant Options on such terms
and conditions as the Committee determines necessary or appropriate to permit
participation in the Plan by individuals otherwise eligible to so participate
who are foreign nationals or employed outside of the United States, or otherwise
to conform to applicable requirements or practices of jurisdictions outside of
the United States; and take any and all such other actions it deems necessary or
advisable for the proper operation and/or administration of the Plan. The
Committee shall have full discretionary authority in all matters related to the
discharge of its responsibilities and the exercise of its authority under the
Plan. Decisions and actions by the Committee with respect to the Plan and any
Agreement shall be final, conclusive and binding on all persons having or
claiming to have any right or interest in or under the Plan and/or any
Agreement.
 
(e) Each Option shall be evidenced by an Agreement, which shall be executed by
the Company and the Optionee to whom such Option has been granted, unless the
Agreement provides otherwise; two or more Options granted to a single Optionee
may, however, be combined in a single Agreement. An Agreement shall not be a
precondition to the granting of an Option; no person shall have any rights under
any Option, however, unless and until the Optionee to whom the Option shall have
been granted (i) shall have executed and delivered to the Company an Agreement
or other instrument evidencing the Option, unless such Agreement provides
otherwise, and (ii) has otherwise complied with the applicable terms and
conditions of the Option. The Committee shall prescribe the form of all
Agreements, and, subject to the terms and conditions of the Plan, shall
determine the content of all Agreements. Any Agreement may be supplemented or
amended in writing from time to time as approved by the Committee; provided that
the terms and conditions of any such Agreement as supplemented or amended are
not inconsistent with the provisions of the Plan.
 
(f) A majority of the members of the entire Committee shall constitute a quorum
and the actions of a majority of the members of the Committee in attendance at a
meeting at which a quorum is present, or actions by a written instrument signed
by all members of the Committee, shall be the actions of the Committee.
 
(g) The Committee may consult with counsel who may be counsel to the Company.
The Committee may, with the approval of the Board, employ such other attorneys
and/or consultants, accountants, appraisers, brokers and other persons as it
deems necessary or appropriate. In accordance with Section 12, the Committee
shall not incur any liability for any action taken in good faith in reliance
upon the advice of such counsel or other persons.
 
(h) In serving on the Committee, the members thereof shall be entitled to
indemnification as directors of the Company, and to any limitation of liability
and reimbursement as directors with respect to their services as members of the
Committee.
 
(i) Except to the extent prohibited by applicable law, including, without
limitation, the requirements applicable under Section 162(m) of the Code to any
Option intended to be “qualified performance-based compensation,” or the
requirements for any Option granted to an officer or director to be covered by
any exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3,
or any successor rule, as the same may be amended from time to time), or the
applicable rules of a stock exchange, the Committee may, in its discretion,
allocate all or any portion of its responsibilities and powers under this
Section 3 to any one or more of its members and/or delegate all or any part of
its responsibilities and powers under this Section 3 to any person or persons
selected by it; provided, however, that the Committee may not delegate its
authority to correct errors, omissions or inconsistencies in the Plan. Any such
authority delegated or allocated by the Committee under this paragraph (i) of
Section 3 shall be exercised in accordance with the terms and conditions of the
Plan and any rules, regulations or administrative guidelines that may from time
to time be established by the Committee, and any such allocation or delegation
may be revoked by the Committee at any time.
 
4. Shares of Stock Subject to the Plan. (a) The shares of stock subject to
Options granted under the Plan shall be shares of Stock. Such shares of Stock
subject to the Plan may be either authorized and unissued shares (which will not
be subject to preemptive rights) or previously issued shares acquired by the
Company or any Subsidiary. The total number of shares of Stock that may be
delivered pursuant to Options granted under the Plan is 9,350,000, plus any
shares of Stock subject to a stock option granted under the Predecessor Plan
which for any reason expires or is terminated or canceled without having been
fully exercised by delivery of shares of Stock; provided, however, that the
total number of shares of Stock that may be delivered pursuant to Incentive
Stock Options under the Plan is 9,350,000, without application of paragraph (d)
of this Section 4.
 
(b) Notwithstanding any of the foregoing limitations set forth in this Section
4, the numbers of shares of Stock specified in this Section 4 shall be adjusted
as provided in Section 10.
 
(c) Any shares of Stock subject to an Option which for any reason expires or is
terminated or canceled without having been fully exercised by delivery of shares
of Stock may again be granted pursuant to an Option under the Plan, subject to
the limitations of this Section 4.
 
(d) If the option exercise price of an Option granted under the Plan or a stock
option granted under the Predecessor Plan is paid by tendering to the Company
shares of Stock already owned by the holder of such option (or such holder and
his or her spouse jointly), only the number of shares of Stock issued net of the
shares of Stock so tendered shall be deemed delivered for purposes of
determining the total number of shares of Stock that may be delivered under the
Plan.
 
(e) Any shares of Stock delivered under the Plan in assumption or substitution
of outstanding stock options, or obligations to grant future stock options,
under plans or arrangements of an entity other than the Company or an Affiliate
in connection with the Company or an Affiliate acquiring such another entity, or
an interest in such an entity, or a transaction otherwise described in Section
6(j), shall not reduce the maximum number of shares of Stock available for
delivery under the Plan.
 
5. Eligibility. Executive employees and other employees, including officers, of
the Company and the Affiliates, directors (whether or not also employees), and
consultants of the Company and the Affiliates, shall be eligible to become
Optionees and receive Options in accordance with the terms and conditions of the
Plan, subject to the limitations on the granting of ISOs set forth in Section
6(h).
 
6. Terms and Conditions of Stock Options. All Options to purchase Stock granted
under the Plan shall be either ISOs or Options other than ISOs. To the extent
that any Option does not qualify as an Incentive Stock Option (whether because
of its provisions or the time or manner of its exercise or otherwise), such
Option, or the portion thereof which does not so qualify, shall constitute a
separate Option other than an Incentive Stock Option. Each Option shall be
subject to all the applicable provisions of the Plan, including the following
terms and conditions, and to such other terms and conditions not inconsistent
therewith as the Committee shall determine and which are set forth in the
applicable Agreement. Options need not be uniform as to all grants and
recipients thereof.
 
(a) The option exercise price per share of shares of Stock subject to each
Option shall be determined by the Committee and stated in the Agreement;
provided, however, that, subject to paragraph (h)(iii) and/or (j) of this
Section 6, if applicable, such price applicable to any ISO shall not be less
than one hundred percent (100%) of the Fair Market Value of a share of Stock at
the time that the Option is granted.
 
(b) Each Option shall be exercisable in whole or in such installments, at such
times and under such conditions as may be determined by the Committee, in its
discretion in accordance with the Plan, and stated in the Agreement, and, in any
event, over a period of time ending not later than ten (10) years from the date
such Option was granted, subject to paragraph (h)(iii) of this Section 6.
 
(c) An Option shall not be exercisable with respect to a fractional share of
Stock or the lesser of one hundred (100) shares and the full number of shares of
Stock then subject to the Option. No fractional shares of Stock shall be issued
upon the exercise of an Option.
 
(d) Each Option may be exercised by giving Notice to the Company specifying the
number of shares of Stock to be purchased, which shall be accompanied by payment
in full including applicable taxes, if any, in accordance with Section 9.
Payment shall be in any manner permitted by applicable law and prescribed by the
Committee, in its discretion, and set forth in the Agreement, including, in the
Committee’s discretion, and subject to such terms, conditions and limitations as
the Committee may prescribe, payment in accordance with a “cashless exercise”
arrangement established by the Committee and/or in Stock owned by the Optionee
or by the Optionee and his or her spouse jointly and acquired more than six (6)
months prior to such tender.
 
(e) No Optionee or other person shall become the beneficial owner of any shares
of Stock subject to an Option, nor have any rights to dividends or other rights
of a shareholder with respect to any such shares until he or she has exercised
his or her Option in accordance with the provisions of the Plan and the
applicable Agreement.
 
(f) An Option may be exercised only if at all times during the period beginning
with the date of the granting of the Option and ending on the date of such
exercise, the Optionee was an employee, director or consultant of the Company or
an Affiliate, as applicable. Notwithstanding the preceding sentence, the
Committee may determine in its discretion that an Option may be exercised prior
to expiration of such Option following termination of such continuous
employment, directorship or consultancy, whether or not exercisable at the time
of such termination, to the extent provided in the applicable Agreement.
 
(g) Subject to the terms and conditions and within the limitations of the Plan,
the Committee may modify, extend or renew outstanding Options granted under the
Plan, or accept the surrender of outstanding Options (up to the extent not
theretofore exercised) and authorize the granting of new Options in substitution
therefor (to the extent not theretofore exercised).
 
(h) (i) Each Agreement relating to an Option shall state whether such Option
will or will not be treated as an ISO. No ISO shall be granted unless such
Option, when granted, qualifies as an “incentive stock option” under Section 422
of the Code. No ISO shall be granted to any individual otherwise eligible to
participate in the Plan who is not an employee of the Company or a Subsidiary on
the date of granting of such Option. Any ISO granted under the Plan shall
contain such terms and conditions, consistent with the Plan, as the Committee
may determine to be necessary to qualify such Option as an “incentive stock
option” under Section 422 of the Code. Any ISO granted under the Plan may be
modified by the Committee to disqualify such Option from treatment as an
“incentive stock option” under Section 422 of the Code.
 
(ii) Notwithstanding any intent to grant ISOs, an Option granted under the Plan
will not be considered an ISO to the extent that it, together with any other
“incentive stock options” (within the meaning of Section 422 of the Code, but
without regard to subsection (d) of such Section) under the Plan and any other
“incentive stock option” plans of the Company, any Subsidiary and any “parent
corporation” of the Company within the meaning of Section 424(e) of the Code,
are exercisable for the first time by any Optionee during any calendar year with
respect to Stock having an aggregate Fair Market Value in excess of $100,000 (or
such other limit as may be required by the Code) as of the time the Option with
respect to such Stock is granted. The rule set forth in the preceding sentence
shall be applied by taking Options into account in the order in which they were
granted.
 
(iii) No ISO shall be granted to an individual otherwise eligible to participate
in the Plan who owns (within the meaning of Section 424(d) of the Code), at the
time the Option is granted, more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or a Subsidiary or any
“parent corporation” of the Company within the meaning of Section 424(e) of the
Code. This restriction does not apply if at the time such ISO is granted the
Option exercise price per share of Stock subject to the Option is at least 110%
of the Fair Market Value of a share of Stock on the date such ISO is granted,
and the ISO by its terms is not exercisable after the expiration of five years
from such date of grant.
 
(i) An Option and any shares of Stock received upon the exercise of an Option
shall be subject to such other transfer and/or ownership restrictions and/or
legending requirements as the Committee may establish in its discretion and
which are specified in the Agreement and may be referred to on the certificates
evidencing such shares of Stock. The Committee may require an Optionee to give
prompt Notice to the Company concerning any disposition of shares of Stock
received upon the exercise of an ISO within: (i) two (2) years from the date of
granting such ISO to such Optionee or (ii) one (1) year from the transfer of
such shares of Stock to such Optionee or (iii) such other period as the
Committee may from time to time determine. The Committee may direct that an
Optionee with respect to an ISO undertake in the applicable Agreement to give
such Notice described in the preceding sentence, at such time and containing
such information as the Committee may prescribe, and/or that the certificates
evidencing shares of Stock acquired by exercise of an ISO refer to such
requirement to give such Notice.
 
(j) In the event that a transaction described in Section 424(a) of the Code
involving the Company or a Subsidiary is consummated, such as the acquisition of
property or stock from an unrelated corporation, individuals who become eligible
to participate in the Plan in connection with such transaction, as determined by
the Committee, may be granted Options in substitution for stock options granted
by another corporation that is a party to such transaction. If such substitute
Options are granted, the Committee, in its discretion and consistent with
Section 424(a) of the Code, if applicable, and the terms of the Plan, though
notwithstanding paragraph (a) of this Section 6, shall determine the option
exercise price and other terms and conditions of such substitute Options.
 
(k) Notwithstanding any other provision contained in the Plan to the contrary,
the maximum number of shares of Stock which may be subject to Options granted
under the Plan to any Optionee in any twelve (12) month period shall not exceed
the Award Limit. To the extent required by Section 162(m) of the Code, shares of
Stock subject to Options which are canceled shall continue to be counted against
the Award Limit and if, after the grant of an Option, the price of shares
subject to such Option is reduced and the transaction is treated as a
cancellation of the Option and a grant of a new Option, both the Option deemed
to be canceled and the Option deemed to be granted shall be counted against the
Award Limit.
 
7. Transfer, Leave of Absence. A transfer of an employee from the Company to an
Affiliate (or, for purposes of any ISO granted under the Plan, a Subsidiary), or
vice versa, or from one Affiliate to another (or in the case of an ISO, from one
Subsidiary to another), and a leave of absence, duly authorized in writing by
the Company or a Subsidiary or Affiliate, shall not be deemed a termination of
employment of the employee for purposes of the Plan or with respect to any
Option (in the case of ISOs, to the extent permitted by the Code).
 
8. Rights of Employees and Other Persons. (a) No person shall have any rights or
claims under the Plan except in accordance with the provisions of the Plan and
the applicable Agreement.
 
(b) Nothing contained in the Plan or in any Agreement shall be deemed to (i)
give any employee or director the right to be retained in the service of the
Company or any Affiliate nor restrict in any way the right of the Company or any
Affiliate to terminate any employee’s employment or any director’s directorship
at any time with or without cause or (ii) confer on any consultant any right of
continued relationship with the Company or any Affiliate, or alter any
relationship between them, including any right of the Company or an Affiliate to
terminate its relationship with such consultant.
 
(c) The adoption of the Plan shall not be deemed to give any employee of the
Company or any Affiliate or any other person any right to be selected to
participate in the Plan or to be granted an Option.
 
(d) Nothing contained in the Plan or in any Agreement shall be deemed to give
any employee the right to receive any bonus, whether payable in cash or in
Stock, or in any combination thereof, from the Company or any Affiliate, nor be
construed as limiting in any way the right of the Company or any Affiliate to
determine, in its sole discretion, whether or not it shall pay any employee
bonuses, and, if so paid, the amount thereof and the manner of such payment.
 
9. Tax Withholding Obligations. (a) The Company and/or any Affiliate are
authorized to take whatever actions are necessary and proper to satisfy all
obligations of Optionees (including, for purposes of this Section 9, any other
person entitled to exercise an Option pursuant to the Plan or an Agreement) for
the payment of all Federal, state, local and foreign taxes in connection with
any Options (including, but not limited to, actions pursuant to the following
paragraph (b) of this Section 9).
 
(b) Each Optionee shall (and in no event shall Stock be delivered to such
Optionee with respect to an Option until), no later than the date as of which
the value of the Option first becomes includible in the gross income of the
Optionee for income tax purposes, pay to the Company in cash, or make
arrangements satisfactory to the Company, as determined in the Committee’s
discretion, regarding payment to the Company of, any taxes of any kind required
by law to be withheld with respect to the Stock or other property subject to
such Option, and the Company and any Affiliate shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to such Optionee. Notwithstanding the above, the Committee may, in
its discretion and pursuant to procedures approved by the Committee, permit the
Optionee to (i) elect withholding by the Company of Stock otherwise deliverable
to such Optionee pursuant to his or her Option (provided, however, that the
amount of any Stock so withheld shall not exceed the amount necessary to satisfy
required Federal, state, local and foreign withholding obligations using the
minimum statutory rate) and/or (ii) tender to the Company Stock owned by such
Optionee (or by such Optionee and his or her spouse jointly) and acquired more
than six (6) months prior to such tender in full or partial satisfaction of such
tax obligations, based, in each case, on the Fair Market Value of the Stock on
the payment date as determined by the Committee.
 
10. Changes in Capital. (a) The existence of the Plan and any 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 capital
structure or its business, any merger or consolidation of the Company or an
Affiliate, any issue of debt, preferred or prior preference stock ahead of or
affecting Stock, the authorization or issuance of additional shares of Stock,
the dissolution or liquidation of the Company or its Affiliates, any sale or
transfer of all or part of its assets or business or any other corporate act or
proceeding.
 
(b)(i) Upon changes in the outstanding Stock by reason of a stock dividend,
stock split, reverse stock split, subdivision, recapitalization,
reclassification, merger, consolidation (whether or not the Company is a
surviving corporation), combination or exchange of shares of Stock, separation,
or reorganization, or in the event of an extraordinary dividend, “spin-off,”
liquidation, other substantial distribution of assets of the Company or
acquisition of property or stock or other change in capital of the Company, or
the issuance by the Company of shares of its capital stock without receipt of
full consideration therefor, or rights or securities exercisable, convertible or
exchangeable for shares of such capital stock, or any similar change affecting
the Company’s capital structure, the aggregate number, class and kind of shares
of stock available under the Plan as to which Options may be granted, the Award
Limit, and the number, class and kind of shares under each outstanding Option
and the exercise price per share applicable to any such Options shall be
appropriately adjusted by the Committee in its discretion to preserve the
benefits or potential benefits intended to be made available under the Plan or
with respect to any outstanding Options or otherwise necessary to reflect any
such change.
 
(ii) Fractional shares of Stock resulting from any adjustment in Options
pursuant to Section 10(b)(i) shall be aggregated until, and eliminated at, the
time of exercise of the affected Options. Notice of any adjustment shall be
given by the Committee to each Optionee whose Option has been adjusted and such
adjustment (whether or not such Notice is given) shall be effective and binding
for all purposes of the Plan.
 
(c) In the event of a Change in Control:
 
(i) Immediately prior thereto, all outstanding Options shall be accelerated and
become immediately exercisable as to all of the shares of Stock covered thereby,
notwithstanding anything to the contrary in the Plan or the Agreement.
 
(ii) In its discretion, and on such terms and conditions as it deems
appropriate, the Committee may provide, either by the terms of the Agreement
applicable to any Option or by resolution adopted prior to the occurrence of the
Change in Control, that any outstanding Option shall be adjusted by substituting
for Stock subject to such Option stock or other securities of the surviving
corporation or any successor corporation to the Company, or a parent or
subsidiary thereof, or that may be issuable by another corporation that is a
party to the transaction resulting in the Change in Control, whether or not such
stock or other securities are publicly traded, in which event the aggregate
exercise price shall remain the same and the amount of shares or other
securities subject to the Option shall be the amount of shares or other
securities which could have been purchased on the closing date or expiration
date of such transaction with the proceeds which would have been received by the
Optionee if the Option had been exercised in full (or with respect to a portion
of such Option, as determined by the Committee, in its discretion) prior to such
transaction or expiration date and the Optionee exchanged all of such shares in
the transaction.
 
(iii) In its discretion, and on such terms and conditions as it deems
appropriate, the Committee may provide, either by the terms of the Agreement
applicable to any Option or by resolution adopted prior to the occurrence of the
Change in Control, that any outstanding Option shall be converted into a right
to receive cash on or following the closing date or expiration date of the
transaction resulting in the Change in Control in an amount equal to the highest
value of the consideration to be received in connection with such transaction
for one share of Stock, or, if higher, the highest Fair Market Value of the
Stock during the thirty (30) consecutive business days immediately prior to the
closing date or expiration date of such transaction, less the per share exercise
price of such Option, multiplied by the number of shares of Stock subject to
such Option, or a portion thereof.
 
(iv) The Committee may, in its discretion, provide that an Option cannot be
exercised after such a Change in Control, to the extent that such Option is or
becomes fully exercisable on or before such Change in Control or is subject to
any acceleration, adjustment or conversion in accordance with the foregoing
paragraphs (i), (ii) or (iii) of this Section 10.
 
No Optionee shall have any right to prevent the consummation of any of the
foregoing acts affecting the number of shares of Stock available to such
Optionee. Any actions or determinations of the Committee under this subsection
10(c) need not be uniform as to all outstanding Options, nor treat all Optionees
identically. Notwithstanding the foregoing adjustments, in no event may any
Option be exercised after ten (10) years from the date it was originally
granted, and any changes to ISOs pursuant to this Section 10 shall, unless the
Committee determines otherwise, only be effective to the extent such adjustments
or changes do not cause a “modification” (within the meaning of Section
424(h)(3) of the Code) of such ISOs or adversely affect the tax status of such
ISOs.
 
(d) If, as a result of a Change in Control transaction, an ISO fails to qualify
as an “incentive stock option,” within the meaning of Section 422 of the Code,
either because of the failure of the Optionee to meet the holding period
requirements of Code Section 422(a)(1) (a “Disqualifying Disposition”) or the
exercisability of such Option is accelerated pursuant to Section 10(c)(i), or
any similar provision of the applicable Agreement, in connection with such
Change in Control and such acceleration causes the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Stock with
respect to which such Option, together with any other “incentive stock options,”
as provided in Section 6(h)(ii), are exercisable for the first time by such
Optionee during the calendar year in which such accelerated exercisability
occurs to exceed the limitations set forth in Section 6(h)(ii) (a “Disqualified
Option”); or any other exercise, payment, acceleration, adjustment or conversion
of an Option in connection with a Change in Control transaction results in any
additional taxes imposed on an Optionee, then the Company may, in the discretion
of the Committee, make a cash payment to or on behalf of the Optionee who holds
any such Option equal to the amount that will, after taking into account all
taxes imposed on the Disqualifying Disposition or other exercise, payment,
acceleration, adjustment or conversion of the Option, as the case may be, and
the receipt of such payment, leave such Optionee in the same after-tax position
the Optionee would have been in had the Code Section 422(a)(1) holding period
requirements been met at the time of the Disqualifying Disposition or had the
Disqualified Option continued to qualify as an “incentive stock option,” within
the meaning of Code Section 422 on the date of such exercise or otherwise
equalize the Optionee for any such taxes; provided, however, that the amount,
timing and recipients of any such payment or payments shall be subject to such
terms, conditions and limitations as the Committee shall, in its discretion,
determine. Without limiting the generality of the proviso contained in the
immediately preceding sentence, in determining the amount of any such payment or
payments referred to therein, the Committee may adopt such methods and
assumptions as it considers appropriate, and the Committee shall not be required
to examine or take into account the individual tax liability of any Optionee.
 
11. Prohibition on Repricing and Reload Grants. Other than in connection with a
change in the Company’s capitalization (e.g., stock splits, recapitalizations,
etc., as described in Section 10 of the Plan), without stockholder approval (i)
the exercise price of an Option may not be reduced, (ii) no Option may be
amended or cancelled for the purpose of repricing, replacing or regranting such
Option with an exercise price that is less than the original exercise price of
such Option, and (iii) the Committee shall not offer to buy out an Option
previously granted for cash or other consideration.
 
12. Miscellaneous Provisions. (a) 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 assets to assure the issuance of shares of Stock or the payment
of cash upon exercise or payment of any Option. Proceeds from the sale of shares
of Stock pursuant to Options granted under the Plan shall constitute general
funds of the Company.
 
(b) Except as otherwise provided in this paragraph (b) of Section 12 or by the
Committee, an Option by its terms shall be personal and may not be sold,
transferred, pledged, assigned, encumbered or otherwise alienated or
hypothecated otherwise than by will or by the laws of descent and distribution
and shall be exercisable during the lifetime of an Optionee only by him or her.
An Agreement may permit the exercise or payment of an Optionee’s Option (or any
portion thereof) after his or her death by or to the beneficiary most recently
named by such Optionee in a written designation thereof filed with the Company,
or, in lieu of any such surviving beneficiary, as designated by the Optionee by
will or by the laws of descent and distribution. In the event any Option is
exercised by the executors, administrators, heirs or distributees of the estate
of a deceased Optionee, or such an Optionee’s beneficiary, or the transferee of
an Option, in any such case pursuant to the terms and conditions of the Plan and
the applicable Agreement and in accordance with such terms and conditions as may
be specified from time to time by the Committee, the Company shall be under no
obligation to issue Stock thereunder unless and until the Committee is satisfied
that the person or persons exercising such Option is the duly appointed legal
representative of the deceased Optionee’s estate or the proper legatee or
distributee thereof or the named beneficiary of such Optionee, or the valid
transferee of such Option, as applicable.
 
(c) (i) If at any time the Committee shall determine, in its discretion, that
the listing, registration and/or qualification of shares of Stock upon any
securities exchange or under any state, Federal or foreign law, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the sale or purchase of shares of Stock
hereunder, no Option may be granted, exercised or paid in whole or in part
unless and until such listing, registration, qualification, consent and/or
approval shall have been effected or obtained, or otherwise provided for, free
of any conditions not acceptable to the Committee.
 
(ii) If at any time counsel to the Company shall be of the opinion that any sale
or delivery of shares of Stock pursuant to an Option is or may be in the
circumstances unlawful or result in the imposition of excise taxes on the
Company or any Affiliate under the statutes, rules or regulations of any
applicable jurisdiction, the Company shall have no obligation to make such sale
or delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act, or otherwise with
respect to shares of Stock or Options and the right to exercise any Option shall
be suspended until, in the opinion of such counsel, such sale or delivery shall
be lawful or will not result in the imposition of excise taxes on the Company or
any Affiliate.
 
(iii) Upon termination of any period of suspension under this Section 12(c), any
Option affected by such suspension which shall not then have expired or
terminated shall be reinstated as to all shares available before such suspension
and as to the shares which would otherwise have become available during the
period of such suspension, but no suspension shall extend the term of any
Option.
 
(d) The Committee may require each person receiving Stock in connection with any
Option under the Plan to represent and agree with the Company in writing that
such person is acquiring the shares of Stock for investment without a view to
the distribution thereof. The Committee, in its absolute discretion, may impose
such restrictions on the ownership and transferability of the shares of Stock
purchasable or otherwise receivable by any person under any Option as it deems
appropriate. Any such restrictions shall be set forth in the applicable
Agreement, and the certificates evidencing such shares may include any legend
that the Committee deems appropriate to reflect any such restrictions.
 
(e) By accepting any benefit under the Plan, each Optionee and each person
claiming under or through such Optionee shall be conclusively deemed to have
indicated their acceptance and ratification of, and consent to, all of the terms
and conditions of the Plan and any action taken under the Plan by the Committee,
the Company or the Board, in any case in accordance with the terms and
conditions of the Plan.
 
(f) In the discretion of the Committee, an Optionee may elect irrevocably (at a
time and in a manner determined by the Committee) prior to exercising an Option
that delivery of shares of Stock upon such exercise shall be deferred until a
future date and/or the occurrence of a future event or events, specified in such
election. Upon the exercise of any such Option and until the delivery of any
deferred shares, the number of shares otherwise issuable to the Optionee shall
be credited to a memorandum account in the records of the Company or its
designee and any dividends or other distributions payable on such shares shall
be deemed reinvested in additional shares of Stock, in a manner determined by
the Committee, until all shares of Stock credited to such Optionee’s memorandum
account shall become issuable pursuant to the Optionee’s election.
 
(g) The Committee may, in its discretion, extend one or more loans to Optionees
who are directors, key employees or consultants of the Company or an Affiliate
in connection with the exercise or receipt of an Option granted to any such
individual. The terms and conditions of any such loan shall be established by
the Committee.
 
(h) Except with respect to Incentive Stock Options granted under the Predecessor
Plan (within the meaning of the Predecessor Plan) and outstanding on the
Effective Date, subject to approval of the Plan by the Company’s shareholders,
in accordance with Section 15, the provisions of the Plan shall apply to and
govern all stock options granted under the Predecessor Plan and, unless
otherwise determined by the Committee, such stock options granted under the
Predecessor Plan shall be deemed to be amended to provide any additional rights
applicable to Options hereunder, subject to the right of any affected
participant in the Predecessor Plan to refuse to consent to such amendment
pursuant to the terms and conditions of the Predecessor Plan and the applicable
option or award agreement between the Company and such participant.
 
(i) Neither the adoption of the Plan nor anything contained herein shall affect
any other compensation or incentive plans or arrangements of the Company or any
Affiliate (other than the Predecessor Plan, as provided in paragraph (h) of this
Section 12), or prevent or limit the right of the Company or any Affiliate to
establish any other forms of incentives or compensation for their directors,
employees or consultants or grant or assume options or other rights otherwise
than under the Plan.
 
(j) The Plan shall be governed by and construed in accordance with the laws of
the State of New Jersey, without regard to such state’s conflict of law
provisions, and, in any event, except as superseded by applicable Federal law.
 
(k) The words “Section,” “subsection” and “paragraph” herein shall refer to
provisions of the Plan, unless expressly indicated otherwise. Wherever any words
are used in the Plan or any Agreement in the masculine gender they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used herein in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply.
 
(l) The Company shall bear all costs and expenses incurred in administering the
Plan, including expenses of issuing Stock pursuant to any Options granted
hereunder.
 
13. Limits of Liability. (a) Any liability of the Company or an Affiliate to any
Optionee with respect to any Option shall be based solely upon contractual
obligations created by the Plan and the Agreement.
 
(b) None of the Company, any Affiliate, any member of the Committee or the Board
or any other person participating in any determination of any question under the
Plan, or in the interpretation, administration or application of the Plan, shall
have any liability, in the absence of bad faith, to any party for any action
taken or not taken in connection with the Plan, except as may expressly be
provided by statute.
 
14. Limitations Applicable to Certain Options Subject to Exchange Act Section 16
and Code Section 162(m). Unless stated otherwise in the Agreement,
notwithstanding any other provision of the Plan, any Option granted to an
officer or director of the Company who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including Rule
16b-3, or any successor rule, as the same may be amended from time to time) that
are requirements for the application of such exemptive rule, and the Plan and
applicable Agreement shall be deemed amended to the extent necessary to conform
to such limitations. Furthermore, unless stated otherwise in the Agreement,
notwithstanding any other provision of the Plan, any Option granted to an
employee of the Company or an Affiliate intended to qualify as “other
performance-based compensation” as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code or any regulations or rulings issued thereunder (including any
amendment to any of the foregoing) that are requirements for qualification as
“other performance-based compensation” as described in Section 162(m)(4)(C) of
the Code, and the Plan and applicable Agreement shall be deemed amended to the
extent necessary to conform to such requirements.
 
15. Amendments and Termination. The Board may, at any time and with or without
prior notice, amend, alter, suspend or terminate the Plan, retroactively or
otherwise; provided, however, unless otherwise required by law or specifically
provided herein, no such amendment, alteration, suspension or termination shall
be made which would impair the previously accrued rights of any holder of an
Option theretofore granted without his or her written consent, or which, without
first obtaining approval of the stockholders of the Company (where such approval
is necessary to satisfy (i) any applicable requirements under the Code relating
to ISOs or for exemption from Section 162(m) of the Code; (ii) the
then-applicable requirements of Rule 16b-3 promulgated under the Exchange Act,
or any successor rule, as the same may be amended from time to time; or (iii)
any other applicable law, regulation or rule), would:
 

 
(a)
except as is provided in Section 10, increase the maximum number of shares of
Stock which may be sold or awarded under the Plan or increase the limitations
set forth in Section 6(k) on the maximum of shares of Stock that may be subject
to Options granted to an Optionee;

 

 
(b)
except as is provided in Section 10, decrease the minimum option exercise price
requirements of Section 6(a);

 

 
(c)
change the class of persons eligible to receive Options under the Plan;

 

 
(d)
extend the duration of the Plan or the period during which Options may be
exercised under Section 6(b); or

 

 
(e)
other than in connection with a change in the Company’s capitalization (e.g.,
stock splits, recapitalizations, etc., as described in Section 10 of the Plan),
(i) reduce the exercise price of an Option, (ii) amend or cancel any Option for
the purpose of repricing, replacing or regranting such Option with an exercise
price that is less than the original exercise price of such Option or (iii)
permit the Committee to buy out an Option previously granted for cash or other
consideration.

 
The Committee may amend the terms of any Option theretofore granted, including
any Agreement, retroactively or prospectively, but no such amendment shall
materially impair the previously accrued rights of any Optionee without his or
her written consent.
 
16. Duration. Following the adoption of the Plan by the Board, the Plan shall
become effective as of the date on which it is approved by the holders of a
majority of the Company's outstanding Stock which is present and voted at a
meeting, or by written consent in lieu of a meeting (the “Effective Date”),
which approval must occur within the period ending twelve (12) months after the
date the Plan is adopted by the Board. The Plan shall terminate upon the
earliest to occur of:
 

 
(a)
the effective date of a resolution adopted by the Board terminating the Plan;

 

 
(b)
the date all shares of Stock subject to the Plan are delivered pursuant to the
Plan's provisions; or

 

 
(c)
ten (10) years from the Effective Date.

 
No Option may be granted under the Plan after the earliest to occur of the
events or dates described in the foregoing paragraphs (a) through (c) of this
Section 15; however, Options theretofore granted may extend beyond such date.
 
No such termination of the Plan shall affect the previously accrued rights of
any Optionee hereunder and all Options previously granted hereunder shall
continue in force and in operation after the termination of the Plan, except as
they may be otherwise terminated in accordance with the terms of the Plan or the
Agreement.
 

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