<PAGE>
                                                                    Exhibit 10.1

                                     AS AMENDED AND APPROVED ON NOVEMBER 2, 2006

                                 ALKERMES, INC.

                           1998 EQUITY INCENTIVE PLAN

1. Purpose

          The purpose of the Alkermes, Inc. 1998 Equity Incentive Plan (the
"Plan") is to attract and retain key employees and consultants of the Company
and its Affiliates, to provide an incentive for them to achieve long-range
performance goals, and to enable them to participate in the long-term growth of
the Company by granting Awards with respect to the Company's Common Stock.
Certain capitalized terms used herein are defined in Section 8 below.

2. Administration

          The Plan shall be administered by the Committee. The Committee shall
select the Participants to receive Awards and shall determine the terms and
conditions of the Awards. The Committee shall have authority to adopt, alter and
repeal such administrative rules, guidelines and practices governing the
operation of the Plan as it shall from time to time consider advisable, and to
interpret the provisions of the Plan. The Committee's decisions shall be final
and binding.

3. Eligibility

          All employees and consultants of the Company or any Affiliate capable
of contributing significantly to the successful performance of the Company,
other than a person who has irrevocably elected not to be eligible, are eligible
to be Participants in the Plan. Incentive Stock Options were granted only to
persons eligible to receive such Options under the Code.

4. Stock Available for Awards

          (a) Amount. Subject to adjustment under subsection (b), Awards may be
made under the Plan for up to 591,487 shares of Common Stock, of which shares
Options to purchase 119,474 shares of Common Stock and 53,327 shares of
Restricted Stock were awarded prior to the assumption of the Plan, leaving
418,686 shares of Common Stock available for Awards. If any Award expires or is
terminated unexercised or is forfeited or settled in a manner that results in
fewer shares outstanding than were awarded, the shares subject to such Award, to
the extent of such expiration, termination, forfeiture or decrease, shall again
be available for award under the Plan. Common Stock issued through the
assumption or substitution of outstanding grants from an acquired company shall
not reduce the shares available for Awards under the Plan. Shares issued under
the Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.

          (b) Adjustment. In the event of a stock dividend, cash dividend
declared and paid other than in the ordinary course, stock split,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares or other transaction affecting the

<PAGE>

Common Stock, the Committee shall make equitable or proportionate adjustments in
(i) the maximum aggregate shares of Common Stock that may be issued under the
Plan, (ii) the maximum number of shares with respect to which Options may be
granted to any individual during any year, (iii) the number of shares of Common
Stock subject to outstanding Awards, and (iv) the exercise price of any
outstanding Options; provided, however, that no such adjustment shall be
required if the Committee determines that such action could cause an Award to
fail to satisfy the conditions of any applicable exception from the requirements
of Section 409A of the Code or disqualify any Award intended to be an Incentive
Stock Option. All adjustments made by the Committee shall be final, binding and
conclusive. No fractional share of Common Stock shall be issued from the Plan
resulting from any such adjustment, but the Committee in its discretion may make
a cash payment in lieu of fractional shares.

5. Stock Options

          (a) Grant of Options. Subject to the provisions of the Plan, after the
assumption of the Plan by the Company the Committee may grant options
("Options") to purchase shares of Common Stock not intended to comply with the
requirements of Section 422 of the Code or any successor provision and any
regulations thereunder ("Nonstatutory Stock Options"). The Committee shall
determine the number of shares subject to each Option and the exercise price
therefor. Prior to the date of the assumption of the Plan by the Company,
Options to purchase shares of Common Stock complying with the requirements of
Section 422 of the Code or any successor provision and any regulations
thereunder ("Incentive Stock Options") were granted as authorized under the Plan
and such granted Incentive Stock Options remain in full force and effect.
Incentive Stock Options had or shall have an exercise price of at least 100% of
the Fair Market Value of the Common Stock on the date of grant. No Incentive
Stock Option may be granted hereunder after the effective date of the assumption
of the Plan by the Company.

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

          (c) Payment. No shares shall be delivered pursuant to any exercise of
an Option until payment in full of the exercise price therefor is received by
the Company. Such payment for shares to be delivered pursuant to any exercise of
an Option may be made in whole or in part in cash or, to the extent permitted by
the Committee at or after the grant of the Option, by delivery of a note or
other commitment satisfactory to the Committee or shares of Common Stock owned
by the optionee, including Restricted Stock, or by retaining shares otherwise
issuable pursuant to the Option, in each case valued at their Fair Market Value
on the date of delivery or retention, or such other lawful consideration,
including a payment commitment of a financial or brokerage institution, as the
Committee may determine. Options may also be exercised by the optionee
delivering to the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company cash or
a check payable and acceptable to the Company for the purchase price; provided
that in the event the optionee chooses to pay the purchase price as so provided,
the optionee and the broker shall comply with such procedures and enter into
such

<PAGE>

agreements of indemnity and other agreements as the Administrator shall
prescribe as a condition of such payment procedure.In the event that the Company
establishes, for itself or using the services of a third party, an automated
system for the exercise of Options, such as a system using an internet website
or interactive voice response, then the paperless exercise of Options may be
permitted through the use of such an automated system.

6. Restricted Stock

          (a) Grant of Restricted Stock. Subject to the provisions of the Plan,
the Committee may grant shares of Common Stock subject to forfeiture
("Restricted Stock") and determine the duration of the period (the "Restricted
Period") during which, and the conditions under which, the shares may be
forfeited to the Company and the other terms and conditions of such Awards.
Shares of Restricted Stock may be issued for no cash consideration, such minimum
consideration as may be required by applicable law or such other consideration
as the Committee may determine.

          (b) Restrictions. Shares of Restricted Stock (may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as permitted by
the Committee, during the Restricted Period. Shares of Restricted Stock shall be
evidenced in such manner as the Committee may determine. Any certificates issued
in respect of shares of Restricted Stock shall be registered in the name of the
Participant and unless otherwise determined by the Committee, deposited by the
Participant, together with a stock power endorsed in blank, with the Company. At
the expiration of the Restricted Period, the Company shall deliver such
certificates to the Participant or if the Participant has died, to the
Participant's Designated Beneficiary.

7. General Provisions Applicable to Awards

          (a) Documentation. Each Award under the Plan shall be evidenced by a
writing, delivered to the Participant specifying the terms and conditions
thereof and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or to comply with applicable tax and regulatory
laws and accounting principles.

          (b) Committee Discretion. Each type of Award may be made alone, in
addition to or in relation to any other Award. The terms of each type of Award
need not be identical, and the Committee need not treat Participants uniformly.
Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Committee at the time
of grant or at any time thereafter.

          (c) Dividends and Cash Awards. In the discretion of the Committee, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable (in cash or in the form of Awards under the Plan) currently
or deferred with or without interest and (ii) cash payments in lieu of or in
addition to an Award.

          (d) Termination of Employment. The Committee shall determine the
effect on an Award of the disability, death, retirement or other termination of
employment of a Participant and

<PAGE>

the extent to which, and the period during which, the Participant's legal
representative, guardian or Designated Beneficiary may receive payment of an
Award or exercise rights thereunder.

          (e) Change in Control. In order to preserve a Participant's rights
under an Award in the event of a "change in control" (as defined by the
Committee) of the Company, the Committee in its discretion may, at the time an
Award is made or at any time thereafter, take one or more of the following
actions: (i) provide for the acceleration of any time period relating to the
exercise or payment of the Award, (ii) provide for payment to the Participant of
cash or other property with a Fair Market Value equal to the amount that would
have been received upon the exercise or payment of the Award had the Award been
exercised or paid upon the change in control, (iii) adjust the terms of the
Award in a manner determined by the Committee to reflect the change in control,
(iv) cause the Award to be assumed, or new rights substituted therefor, by
another entity, or (v) make such other provision as the Committee may consider
equitable to Participants and in the best interests of the Company.

          (f) Loans. The Connate may authorize the making of loans or cash
payments to Participants in connection with the grant or exercise of any Award
under the Plan, which loans may be secured by any security, including Common
Stock, underlying or related to such Award (provided that the loan shall not
exceed the Fair Market Value of the security subject to such Award), and which
may be forgiven upon such terms and conditions as the Committee may establish at
the time of such loan or at any time thereafter.

          (g) Transferability. In the discretion of the Committee, any Award may
be made transferable upon such terms and conditions and to such extent as the
Committee determines, provided that Incentive Stock Options may be transferable
only to the extent permitted by the Code. The Committee may in its discretion
waive any restriction on transferability.

          (h) Withholding Taxes. The Participant shall pay to the Company, or
make provision satisfactory to the Committee for payment of, any taxes required
by law to be withheld in respect of Awards under the Plan no later than the date
of the event creating the tax liability. The Company and its Affiliates may, to
the extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the Participant. In the Committee's discretion, such
tax obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value on the date of delivery. The Company and its Affiliates
may, to the extent permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to the Participant.

          (i) Foreign Nationals. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or to comply with
applicable laws.

          (j) Amendment of Award. The Committee may amend, modify or terminate
any outstanding Award, including substituting therefor another Award of the same
or a different type, changing the date of exercise or realization and converting
an Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required

<PAGE>

unless the Committee determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

8. Certain Definitions

          "Affiliate" means any business entity in which the Company owns
directly or indirectly 50% or more of the total voting power or has a
significant financial interest as determined by the Committee.

          "Award" means any Option or Restricted Stock granted under the Plan,
provided, that after the date of the assumption of the Plan by the Company,
"Award" shall not mean granting of Incentive Stock Options.

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

          "Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor law.

          "Committee" means the Board or one or more committees and/or
subcommittees, each such committee or subcommittee to be comprised of two or
more members of the Board appointed by the Board to administer the Plan or a
specified portion thereof; provided, however, that notwithstanding the
foregoing, the term "Committee" also means a committee and/or a subcommittee
comprised of one or more members of the Board appointed by the Board or such
committee, to which the Board or such committee has delegated the authority to
grant from time to time individual Options to purchase not more than 5,000
shares of Common Stock to any person eligible under Section 3 (who is not
subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended).

          "Common Stock" or "STOCK" means the Common Stock, par value $0.01, of
the Company.

          "Company" means Alkermes, Inc., a Pennsylvania corporation.

          "Covered Employee" means a "covered employee" within the meaning of
Section 162(m) of the Code.

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

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

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

<PAGE>

9. Miscellaneous

          (a) No Right To Employment. No person shall have any claim or right to
be granted an Award. Neither the Plan nor any Award hereunder shall be deemed to
give any employee the right to continued employment or to limit the right of the
Company to discharge any employee at any time.

          (b) No Rights As Shareholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a shareholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.

          (c) Effective Date. The Plan shall be effective as of April 1, 1998.

          (d) Assumption Date. The outstanding Awards granted under the Plan
were assumed by the Company in connection with the merger transaction among the
Company, Advanced Inhalation Research, Inc. and Alkermes Acquisition Sub, Inc.
effective February 1, 1999, and the Plan was assumed by the Company on April 7,
1999.

          (e) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, subject to such shareholder approval as
the Board determines to be necessary or advisable to comply with any tax or
regulatory requirement.

          (f) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of Pennsylvania.
<PAGE>

                                                                     Exhibit L-1

No. ISO-___                                                         _____ Shares

                                 ALKERMES, INC.

                           1998 EQUITY INCENTIVE PLAN

                       INCENTIVE STOCK OPTION CERTIFICATE*

          Alkermes, Inc. (the "Company"), a Pennsylvania corporation, hereby
grants to the person named below an option to purchase shares of Common Stock,
par value $0.01, of the Company (the "Option") under and subject to the
Company's 1998 Equity Incentive Plan (the "Plan") exercisable on the following
terms and conditions and those set forth on the reverse side of this
certificate:

Name of Optionholder: __________________________________________________________
Address: _______________________________________________________________________

Social Security No. ____________________________________________________________

Number of Shares: ______________________________________________________________
Option Price: __________________________________________________________________
Date of Grant: _________________________________________________________________

Exercisability Schedule: ______________________ [to be set at the time of Grant]

Expiration Date: _______________ [not more than ten years from the Date of Grant
                 as stated above]

          This Option is intended to be treated as an Incentive Stock Option
under section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

          By acceptance of this Option, the Optionholder agrees to, the terms
and conditions hereof.

                                        ALKERMES, INC.


                                        By:
                                            ------------------------------------

*    To be used after the assumption of the Plan by the Company only to reflect
     the exchange of Incentive Stock Options of the Company for Incentive Stock
     Options previously granted by Advanced Inhalation Research, Inc. pursuant
     to the Plan.

<PAGE>

                    ALKERMES, INC. 1998 EQUITY INCENTIVE PLAN

                   INCENTIVE STOCK OPTION TERMS AND CONDITIONS

          1. Plan Incorporated by Reference. This option is issued pursuant to
the terms of the Plan and may be amended as provided in the Plan. Capitalized
terms used and not otherwise defined in this certificate have the meanings given
to them in the Plan. This certificate does not set forth all of the terms and
conditions of the Plan, which are incorporated herein by reference. The
Committee administers the Plan and its determinations regarding the operation of
the Plan are final and binding. Copies of the Plan may be obtained upon written
request without charge from the Company.

          2. Option Price. The price to be paid for each share of Common Stock
issued upon exercise of the whole or any part of this Option is the Option Price
set forth on the face of this certificate.

          3. Exercisability Schedule. This Option may be exercised at any time
and from time to time for the number of shares and in accordance with the
exercisability schedule set forth on the face of this certificate, but only for
the purchase of whole shares. This Option may not be exercised as to any shares
after the Expiration Date.

          4. Method of Exercise. To exercise this Option. the Optionholder shall
deliver written notice of exercise to the Company specifying the number of
shares with respect to which the Option is being exercised accompanied by
payment of the Option Price for such shares in cash, by certified check or in
such other form, including shares of Common Stock of the Company valued at their
Fair Market Value on the date of delivery or a payment commitment of a financial
or brokerage institution. Options may also be exercised by the optionee
delivering to the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company cash or
a check payable and acceptable to the Company for the purchase price; provided
that in the event the optionee chooses to pay the purchase price as so provided,
the optionee and the broker shall comply with such procedures and enter into
such agreements of indemnity and other agreements as the Administrator shall
prescribe as a condition of such payment procedure.

In the event that the Company establishes, for itself or using the services of a
third party, an automated system for the exercise of Options, such as a system
using an internet website or interactive voice response, then the paperless
exercise of Options may be permitted through the use of such an automated
system. Promptly following such notice, the Company will deliver to the
Optionholder a certificate representing the number of shares with respect to
which the Option is being exercised.

          5. Rights as a Shareholder or Employee. The Optionholder shall not
have any rights in respect of shares as to which the Option shall not have been
exercised and payment made as provided above. The Optionholder is an
employee-at-will unless, and only to the extent, provided in a separate written
agreement executed by the chief executive officer of the Company or his duly
authorized designee, and neither the Plan nor the grant of this Option shall be
deemed to give the Optionholder the right to continued employment or to limit
the right of the Company to discharge the Optionholder at any time.

          6. Recapitalization, Mergers, Etc. As provided in the Plan, in the
event of corporate transactions affecting the Company's outstanding Common
Stock, the Committee shall equitably adjust the number and kind of shares
subject to this Option and the exercise price hereunder or make provision for a
cash payment. If such transaction involves a consolidation or merger of the
Company with another entity, the sale, lease or exchange of all or substantially
all of the assets of the Company or a reorganization or liquidation of the
Company, then in lieu of the foregoing, the Committee may upon written notice to
the Optionholder provide that this Option may terminate on a date not less than
20 days after the date of such notice unless theretofore exercised. In
connection with such notice the Committee may accelerate or waive any deferred
exercise period.

          7. Option Not Transferable. This Option is not transferable by the
Optionholder otherwise than by will or the laws of descent and distribution, and
is exercisable, during the Optionholder's lifetime, only by the Optionholder.
The naming of a Designated Beneficiary does not constitute a transfer.

          8. Exercise of 0ption After Termination of Employment. If the
Optionholder's employment with (a) the Company, (b) an Affiliate, or (c) a
corporation (or parent or subsidiary corporation of such corporation) issuing or
assuming a stock option in a transaction to which section 424(a) of the Code
applies, is terminated for any reason other than by disability (within the
meaning of section 22(e)(3) of the Code) or death, the Optionholder may exercise
the rights which were available to the Optionholder at the time of such
termination only within three months from the date of termination. If the
Optionholder's employment is terminated as a result of disability, such rights
may be exercised within twelve months from the date of termination. Upon the
death of the Optionholder, his or her Designated Beneficiary shall have the
right, at any time within twelve months after the date of death, to exercise in
whole or in part any rights that were available to the Optionholder at the time
of death. Notwithstanding the foregoing, no rights under this Option may be
exercised after the Expiration Date.

          9. Compliance with Securities Laws. lt shall be a condition to the
Optionholder's right to purchase shares of Common Stock hereunder that the
Company may, in its discretion, require (a) that the shares of Common Stock
reserved for issue upon the exercise of this Option shall have been duly listed,
upon official notice of issuance, upon any national securities exchange or
automated quotation system on which the Company's Common Stock may then be
listed or quoted, (b) that either (i) a registration statement under the
Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in
the opinion of counsel for the Company, the proposed purchase shall be exempt
from registration under that Act and the Optionholder shall have made such
undertakings and agreements with the Company as the Company may reasonably
require, and (c) that such other steps, if any, as counsel for the Company shall
consider necessary to comply with any laws applicable to the issue of such
shares by the Company shall have been taken by the Company or the Optionholder,
or both. The certificates representing the shares purchased under this Option
may contain such legends as counsel for the Company shall consider necessary to
comply with any applicable law.

          10. Payment of Taxes. The Optionholder shall pay to the Company, or
make provision satisfactory to the Company for payment of, any taxes required by
law to be withheld with respect to the exercise of this Option. The Committee
may, in its discretion, require any other Federal or state taxes imposed on the
sale of the shares to be paid by the Optionholder. In the Committee's
discretion, such tax

<PAGE>

obligations may be paid in whole or in part in shares of Common Stock, including
shares retained from the exercise of this Option, valued of their Fair Market
Value on the date of delivery. The Company and its Affiliates may, to the extent
permitted by law, deduct any such tax obligations from any payment of any kind
otherwise due to the Optionholder.

          11. Notice of Sale of Shares Required. The Optionholder agrees to
notify the Company in writing within 30 days of the disposition of any shares
purchased upon exercise of this Option if such disposition occurs within two
years of the date of the grant of this Option or within one year after such
purchase.

<PAGE>

No. NSO-____                                                        _____ Shares

                                 ALKERMES, INC.

                           1998 EQUITY INCENTIVE PLAN

                      NONSTATUTORY STOCK OPTION CERTIFICATE

Alkermes, Inc. (the "Company"), a Pennsylvania corporation, hereby grants to the
person named below an option to purchase shares of Common Stock, par value
$0.01, of the Company (the "Option") under and subject to the Company's 1998
Equity Incentive Plan (the "Plan") exercisable on the following terms and
conditions and those set forth on the reverse side of this certificate:

Name of Optionholder: __________________________________________________________
Address: _______________________________________________________________________

[Social Security No. __________________________________________________________]

Number of Shares: ______________________________________________________________
Option Price: __________________________________________________________________
Date of Grant: _________________________________________________________________

Exercisability Schedule: ______________________ [to be set at the time of Grant)

Expiration Date: _______________ [not more than ten years from the Date of Grant
                 as stated above)

          This Option shall not be treated as an Incentive Stock Option under
section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

          By acceptance of this Option, the Optionholder agrees to the terms and
conditions hereof.

                                        ALKERMES, INC.


                                        By:
                                            ------------------------------------

<PAGE>

                    ALKERMES, INC. 1998 EQUITY INCENTIVE PLAN

                 NONSTATUTORY STOCK OPTION TERMS AND CONDITIONS

          1. Plan Incorporated by Reference. This Option is issued pursuant to
the terms of the Plan and may be amended as provided in the Plan. Capitalized
terms used and not otherwise defined in this certificate have the meanings given
to them in the Plan. This certificate does not set forth all of the terms and
conditions of the Plan, which are incorporated herein by reference. The
Committee administers the Plan and its determinations regarding the operation of
the Plan are final and binding. Copies of the Plan may be obtained upon written
request without charge from the Company.

          2. Option Price. The price to be paid for each share of Common Stock
issued upon exercise of the whole or any part of this Option is the Option Price
set forth on the face of this certificate.

          3. Exercisability Schedule. This Option may be exercised at any time
and from time to time for the number of shares and in accordance with the
exercisability schedule set forth on the face of this certificate, but only for
the purchase of whole shares. This Option may not be exercised as to any shares
after the Expiration Date.

          4. Method of Exercise. To exercise this Option, the Optionholder shall
deliver written notice of exercise to the Company specifying the number of
shares with respect to which the Option is being exercised accompanied by
payment of the Option Price for such shares in cash, by certified check or in
such other form. including shares of Common Stock of the Company valued at their
Fair Market Value on the date of delivery or a payment commitment of a financial
or brokerage institution. Options may also be exercised by the optionee
delivering to the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company cash or
a check payable and acceptable to the Company for the purchase price; provided
that in the event the optionee chooses to pay the purchase price as so provided,
the optionee and the broker shall comply with such procedures and enter into
such agreements of indemnity and other agreements as the Administrator shall
prescribe as a condition of such payment procedure.

In the event that the Company establishes, for itself or using the services of a
third party, an automated system for the exercise of Options, such as a system
using an internet website or interactive voice response, then the paperless
exercise of Options may be permitted through the use of such an automated
system. Promptly following such notice, the Company will deliver to the
Optionholder a certificate representing the number of shares with respect to
which the Option is being exercised.

          5. Rights as a Shareholder or Employee. The Optionholder shall not
have any rights in respect of shares as to which the Option shall not have been
exercised and payment made as provided above. The Optionholder is an
employee-at-will unless, and only to the extent, provided in a separate written
agreement executed by the chief executive officer of the Company or his duly
authorized designee, and neither the Plan nor the grant of this Option shall be
deemed to give the Optionholder the right to continued employment or to limit
the right of the Company to discharge the Optionholder at any time.

          6. Recapitalization, Mergers, Etc. As provided in the Plan, in the
event of corporate transactions affecting the Company's outstanding Common
Stock, the number and kind of shares subject to this Option and the exercise
price hereunder shall be equitably adjusted. If such transaction involves a
consolidation or merger of the Company with another entity, the sale, lease or
exchange of all or substantially all of the assets of the Company or a
reorganization or liquidation of the Company, then in lieu of the foregoing, the
Committee may upon written notice to the Optionholder provide that this Option
may terminate on a date not less than 20 days after the date of such notice
unless theretofore exercised. In connection with such notice, the Committee may
accelerate or waive any deferred exercise period.

          7. Option Not Transferable. This Option is not transferable by the
Optionholder otherwise than to the extent permitted by the Plan, and is
exercisable, during the Optionholder's lifetime, only by the Optionholder or the
Optionholder's immediate transferee as permitted by the Plan. The naming of a
Designated Beneficiary does not constitute a transfer.

          8. Exercise of Option After Termination of Employment. If the
Optionholder's status as an employee or consultant of (a) the Company, (b) an
Affiliate, or (c) a corporation (or parent or subsidiary corporation of such
corporation) issuing or assuming a stock option in a transaction to which
section 424(a) of the Code applies, is terminated for any reason other than by
disability (within the meaning of section 22(e) (3) of the Code) or death, the
Optionholder may exercise the rights which were available to the Optionholder at
the time of such termination only within three months from the date of
termination. If such status is terminated as a result of disability, such rights
may be exercised within twelve months from the date of termination. Upon the
death of the Optionholder, his or her Designated Beneficiary shall have the
right, at any time within twelve months after the date of death, to exercise in
whole or in part any rights that were available to the Optionholder at the time
of death. Notwithstanding the foregoing, no rights under this Option may be
exercised after the Expiration Date.

     9. Compliance with Securities Laws. It shall be a condition to the
Optionholder's right to purchase shares of Common Stock hereunder that the
Company may, in its discretion. require (a) that the shares of Common Stock
reserved for issue upon the exercise of this Option shall have been duty listed,
upon official notice of issuance, upon any national securities exchange or
automated quotation system on which the Company's Common Stock may then be
listed or quoted, (b) that either (i) a registration statement under the
Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in
the opinion of counsel for the Company, the proposed purchase shall be exempt
from registration under that Act and the Optionholder shall have made such
undertakings and agreements with the Company as the Company may reasonably
require, and (c) that such other steps, if any, as counsel for the Company shall
consider necessary to comply with any law applicable to the issue of such shares
by the Company shall have been taken by the Company or the Optionholder, or
both. The certificates representing the shares purchased under this Option may
contain such legends as counsel for the Company shall consider necessary to
comply with any applicable law.

          10. Payment of Taxes. The Optionholder shall pay to the Company, or
make provision satisfactory to the Company for payment of, any taxes required by
law to be withheld with respect to the

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exercise of this Option. The Committee may, in its discretion, require any other
Federal or state taxes imposed on the sale of the shares to be paid by the
Optionholder. In the Committee's discretion, such tax obligations may be paid in
whole or in part in shares of Common Stock, including shares retained from the
exercise of this Option, valued at their Fair Market Value on the date of
delivery. The Company and its Affiliates may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to
the Optionholder.