<PAGE>

                                                                    Exhibit 10.9
                                                                    ------------











                             PEGASUS COMMUNICATIONS

                              RESTRICTED STOCK PLAN

           (As Amended and Restated Effective As of February 13, 2002,
                     And As Amended Through Amendment No. 4)




[This document is a compilation of the Pegasus Communications Restricted Stock
Plan, as amended and restated effective as of February 13, 2002, and as it has
been amended in part by four subsequent Amendments.]






<PAGE>

                                                 TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                          Page
<S>                                                                                                       <C>
SECTION 1 - Purpose .......................................................................................1

SECTION 2 - Definitions....................................................................................1
     (a)    "Awards".......................................................................................1
     (b)    "Award Agreement"..............................................................................1
     (c)    "Board"........................................................................................1
     (d)    "Code".........................................................................................1
     (e)    "Committee"....................................................................................1
     (f)    "Common Stock".................................................................................2
     (g)    "Company-Wide Location Cash Flow"..............................................................2
     (h)    "Disability"...................................................................................2
     (i)    "Discretionary Awards".........................................................................2
     (j)    "Excess Awards"................................................................................2
     (k)    "Fair Market Value"............................................................................2
     (l)    "Grantee"......................................................................................2
     (m)    "ISO"..........................................................................................2
     (n)    "Management Committee".........................................................................2
     (o)    "NQSO".........................................................................................2
     (p)    "Officers".....................................................................................3
     (q)    "Option".......................................................................................3
     (r)    "PCC"..........................................................................................3
     (s)    "Pegasus"......................................................................................3
     (t)    "Plan".........................................................................................3
     (u)    "Plan Administrator"...........................................................................3
     (v)    "Profit-Sharing Awards"........................................................................3
     (w)    "Savings Plan".................................................................................3
     (x)    "Special Recognition Awards"...................................................................3
     (y)    "Year Over Year Increase in Company-Wide Location Cash Flow"...................................3
     (z)    "Years of Vesting Service".....................................................................3

SECTION 3 - Administration.................................................................................4
     (a)    Special Recognition Awards and Discretionary Awards to Officers................................4
     (b)    Special Recognition Awards and Discretionary Awards to Non-Officer Employees...................4
     (c)    In General.....................................................................................4

SECTION 4 - Eligibility....................................................................................5

SECTION 5 - Stock..........................................................................................5

SECTION 6 - Amount of Award................................................................................5
     (a)    Special Recognition Awards.....................................................................5
     (b)    Discretionary Awards...........................................................................6
</TABLE>



                                                       - i -

<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS
                                                    (continued)
                                                                                                          Page
<S>         <C>                                                                                           <C>
SECTION 7 - Vesting........................................................................................6
     (a)    Special Recognition Awards.....................................................................6
     (b)    Discretionary Awards...........................................................................6
     (c)    Forfeiture.....................................................................................7

SECTION 8 - Election To Receive Option in Lieu of Common Stock Subject to Vesting
             Requirements..................................................................................7
     (a)    Election.......................................................................................7
     (b)    Date of Grant..................................................................................7
     (c)    Number of Shares Subject to Option.............................................................7
     (d)    Type of Option.................................................................................8
     (e)    Terms and Conditions of Options................................................................8
     (f)    Application of Funds..........................................................................11

SECTION 9 - Capital Adjustments...........................................................................11

SECTION 10 - Amendment or Discontinuance of the Plan......................................................12

SECTION 11 - Termination of Plan..........................................................................13

SECTION 12 - Effective Date...............................................................................13

SECTION 13 - Miscellaneous................................................................................13
     (a)     Book-Entry Record of Shares..................................................................13
     (b)     Rights as a Stockholder......................................................................14
     (c)     Award Agreement..............................................................................14
     (d)     Governing Law................................................................................14
     (e)     Rights.......................................................................................14
     (f)     Non-Transferability..........................................................................14
     (g)     Listing and Registration of Shares...........................................................15
     (h)     Withholding and Use of Shares to Satisfy Tax Obligations.....................................15
     (i)     Indemnification of Board and Plan Administrator..............................................15
</TABLE>







                                                      - ii -

<PAGE>


                             PEGASUS COMMUNICATIONS
                              RESTRICTED STOCK PLAN
                              ---------------------

           (As Amended and Restated Effective As of February 13, 2002
                    and Incorporating Amendments 1 through 4)

                    _________________________________________


                                    SECTION 1
                                     Purpose
                                     -------

                  The Pegasus Communications Restricted Stock Plan, as amended
and restated, is intended to provide a means whereby PCC may, through the grant
of Common Stock subject to vesting requirements to employees of Pegasus, attract
and retain such individuals and motivate them to exercise their best efforts on
behalf of Pegasus. With respect to Discretionary Awards, a Grantee may elect to
receive an Option to purchase Common Stock in lieu of all or any part of a grant
of Common Stock subject to vesting requirements. A Grantee who is an Officer may
elect to receive a Discretionary Award in the form of cash (subject to certain
limits) or an Option in lieu of all or any part of a grant of Common Stock
subject to vesting requirements.

                                    SECTION 2
                                   Definitions
                                   -----------

                  Whenever the following terms are used in this Plan, they shall
have the meanings specified below, unless the context clearly indicates to the
contrary:

                  (a) "Awards" shall mean Special Recognition Awards and
Discretionary Awards.

                  (b) "Award Agreement" shall mean the document described in
Section 13(c) evidencing Awards made pursuant to the Plan.

                  (c) "Board" shall mean the Board of Directors of PCC.

                  (d) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

                  (e) "Committee" shall mean the administrator of the Plan with
respect to Special Recognition Awards and Discretionary Awards to Officers,
which shall be a committee of the Board or the Board, in accordance with Section
3(a).





                                       -1-
<PAGE>

                  (f) "Common Stock" shall mean (i) effective for Awards made on
or after June 6, 2003, the Class A common stock of PCC or the non-voting common
stock of PCC, as determined by the Plan Administrator, and (ii) effective for
Awards made prior to June 6, 2003, the Class A common stock of PCC.

                  (g) "Company-Wide Location Cash Flow" shall mean income from
Pegasus operations before management fees, depreciation, amortization (other
than amortization of film contracts), and incentive compensation (including
contributions under the Plan and the Savings Plan).

                  (h) "Disability" shall have the meaning set forth in Article I
of the Savings Plan.

                  (i) "Discretionary Awards" shall mean the discretionary awards
described in Section 6(b).

                  (j) "Excess Awards" shall mean the formula awards described in
Section 6(c) of the Plan as amended and restated generally effective as of
December 18, 1998. The final Excess Awards were made with respect to matching
contributions that could not be made under the Savings Plan for 1999. No Excess
Awards shall be made with respect to calendar years beginning on or after
January 1, 2000. Information concerning Excess Awards granted for calendar years
beginning prior to January 1, 2000 may be found in the Plan as amended and
restated effective as of December 18, 1998, and as amended thereafter.

                  (k) "Fair Market Value" shall mean (i) the closing price of
the Common Stock on a registered securities exchange or on an over-the-counter
market on the last business day prior to the date of grant (or, in the case of
an Option that is amended to reduce the Option price, on the last business day
prior to the date of amendment of the Option) on which Common Stock traded, or
(ii) if (i) is not applicable, then such other method of determining fair market
value as shall be authorized by the Code or the rules and regulations thereunder
and adopted by the Committee.

                  (l) "Grantee" shall mean an individual who has received an
Award under the Plan.

                  (m) "ISO" shall mean an option which, at the time such option
is granted under the Plan, qualifies as an incentive stock option within the
meaning of Section 422 of the Code, unless the Award Agreement states that the
option will not be treated as an ISO.

                  (n) "Management Committee" shall mean the committee authorized
to administer the Plan with respect to Special Recognition Awards and
Discretionary Awards to employees who are not Officers.

                  (o) "NQSO" shall mean an option which, at the time such option
is granted, does not meet the definition of an ISO, whether or not it is
designated as a nonqualified stock option in the Award Agreement.





                                       -2-
<PAGE>

                  (p) "Officers" shall mean employees who are officers, within
the meaning of Rule 16a-1(f) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any successor thereto.

                  (q) "Option" shall mean an ISO or an NQSO granted to an
employee in lieu of Common Stock subject to a vesting schedule, pursuant to the
employee's election under Section 8(a).

                  (r) "PCC" shall mean Pegasus Communications Corporation.

                  (s) "Pegasus" shall mean Pegasus Communications Corporation or
any successor thereto and its direct and indirect subsidiaries, whether in
corporate, partnership or any other form.

                  (t) "Plan" shall mean the Pegasus Communications Restricted
Stock Plan, as set forth in this document and as it may be amended from time to
time.

                  (u) "Plan Administrator" shall mean -

                      (1) With respect to Special Recognition Awards and
             Discretionary Awards to Officers, the Committee; and

                      (2) With respect to Special Recognition Awards and
             Discretionary Awards to employees who are not Officers, the
             Management Committee.

                  (v) "Profit-Sharing Awards" shall mean the formula awards
described in Section 6(b) of the Plan as amended and restated generally
effective as of December 18, 1998. The final Profit-Sharing Awards were made
with respect to the 2000 calendar year. No Profit-Sharing Awards shall be made
with respect to calendar years beginning on or after January 1, 2001.
Information concerning Profit-Sharing Awards granted for calendar years
beginning prior to January 1, 2001 may be found in the Plan as amended and
restated effective as of December 18, 1998, and as amended thereafter.

                  (w) "Savings Plan" shall mean the Pegasus Communications
Savings Plan, effective June 1, 2001, and as it may be amended from time to
time.

                  (x) "Special Recognition Awards" shall mean the awards
described in Section 6(a).

                  (y) "Year Over Year Increase in Company-Wide Location Cash
Flow" shall have the meaning set forth in Article I of the Savings Plan.

                  (z) "Years of Vesting Service" shall have the meaning set
forth in Article I of the Savings Plan; provided, however, that a Grantee shall
not complete a Year of Vesting Service for purposes of this Plan until the last
day of the 12-month computation period in which such Year is being measured.





                                       -3-
<PAGE>

                                    SECTION 3
                                 Administration
                                 --------------

                  The Plan shall be administered as follows:

                  (a) Special Recognition Awards and Discretionary Awards to
Officers. With respect to Special Recognition Awards and Discretionary Awards to
Officers, the Plan shall be administered:

                      (1) By a committee, which shall consist solely of not
             fewer than two directors of PCC who shall be appointed by, and
             shall serve at the pleasure of, the Board, taking into
             consideration the rules under Section 16(b) of the Exchange Act and
             the requirements of Section 162(m) of the Code; or

                      (2) In the event a committee has not been established in
             accordance with paragraph 1, by the entire Board;

provided, however, that a member of the Board shall not participate in a vote
approving an Award to himself or herself to the extent provided under the laws
of the State of Delaware governing corporate self-dealing. The Plan
Administrator with respect to Special Recognition Awards and Discretionary
Awards to Officers shall hereinafter be referred to as the "Committee." Each
member of the Committee, while serving as such, shall be deemed to be acting in
his capacity as a director of PCC.

                  The Committee shall have full authority, upon consideration of
recommendations by the Management Committee and subject to the terms of the
Plan, to select the Officers to be granted Special Recognition Awards and
Discretionary Awards under the Plan, to grant such Awards on behalf of PCC, and
to set the date of grant and the other terms of such Awards. The Committee shall
also have full authority to make certain determinations with respect to an
Option granted pursuant to an Officer's election, as described in Section 8.

                  (b) Special Recognition Awards and Discretionary Awards to
Non-Officer Employees. With respect to Special Recognition Awards and
Discretionary Awards to employees who are not Officers, the Plan shall be
administered by the Management Committee. The Management Committee shall have
full authority, subject to the terms of the Plan, to select the employees to be
granted Special Recognition Awards and Discretionary Awards under the Plan, to
grant such Awards on behalf of PCC, and to set the date of grant and the other
terms of such Awards. The Management Committee shall also have full authority to
make certain determinations with respect to an Option granted pursuant to the
election of an employee who is not an Officer, as described in Section 8.
Members of the Management Committee may be appointed, removed or replaced by (i)
the Board, or (ii) the Compensation Committee of PCC.

                  (c) In General. The Plan Administrator may correct any defect,
supply any omission and reconcile any inconsistency in the Plan and in any Award
granted hereunder to the extent it shall deem desirable. The Plan Administrator
also shall have the authority to establish such rules and regulations, not
inconsistent with the provisions of the Plan, for the proper administration of





                                       -4-
<PAGE>

the Plan, and to amend, modify, or rescind any such rules and regulations, and
to make such determinations, and interpretations under, or in connection with,
the Plan, as it deems necessary or advisable. All such rules, regulations,
determinations, and interpretations shall be binding and conclusive upon PCC,
its stockholders and all employees, and upon their respective legal
representatives, beneficiaries, successors, and assigns and upon all other
persons claiming under or through any of them.

                  No member of the Board, the Committee or the Management
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Award granted under it.

                                    SECTION 4
                                   Eligibility
                                   -----------

                  All employees of Pegasus shall be eligible to receive Special
Recognition Awards and Discretionary Awards. More than one Award may be granted
to an employee who is eligible to receive an Award under the Plan.

                  Special Recognition Awards shall be made as soon as
practicable after the financial information necessary for determining the amount
of the Award is available (absent extraordinary circumstances, on or before the
March 31 following the year for which the Award is made).

                                    SECTION 5
                                      Stock
                                      -----

                  The maximum number of shares of Common Stock that may be
subject to Awards under the Plan shall be 400,000 shares (subject to adjustment
as hereinafter provided). Common Stock issuable under the Plan may be authorized
but unissued shares or reacquired shares, and PCC may purchase shares required
for this purpose, from time to time, if it deems such purchase to be advisable.

                  Any Common Stock subject to an Award which is forfeited shall
continue to be available for the granting of Awards under the Plan.

                                    SECTION 6
                                 Amount of Award
                                 ---------------

                  (a) Special Recognition Awards. The Plan Administrator, in its
sole discretion, shall determine the amount of the annual Special Recognition
Award, if any, to be made on behalf of an eligible employee; provided, however,
that the Fair Market Value of the Common Stock covered by the annual Special
Recognition Awards for any year to all employees in the aggregate, determined as
of the date the Awards are granted, shall not exceed the sum of (1) five percent
of the Year Over Year Increase in Company-Wide Location Cash Flow, plus (2) the
Year Over Year Increase in Company-Wide Location Cash Flow which could have been
awarded as a Special Recognition Award in the preceding year, and was not.
Special Recognition Awards may be granted for consistency (awarded to a team of
employees), initiative (a team or individual award), problem solving (a team or
individual award), and individual excellence.





                                       -5-
<PAGE>

                  (b) Discretionary Awards. The Plan Administrator, in its sole
discretion, shall determine the amount of the Discretionary Award, if any, to be
made on behalf of an eligible employee.

                      (1) Effective On and After June 6, 2003. Effective June 6,
             2003, with respect to Discretionary Awards granted to a non-Officer
             employee, the Plan Administrator shall designate the amount of the
             Discretionary Award that the non-Officer employee may elect to
             receive in the form of (i) Common Stock subject to vesting
             requirements, and (ii) an Option described in Section 8. With
             respect to Discretionary Awards granted to an Officer, the Plan
             Administrator shall designate the amount of the Discretionary Award
             that the Officer may elect to receive in the form of (i) Common
             Stock subject to vesting requirements, (ii) an Option described in
             Section 8, or (iii) cash.

                      (2) Effective prior to June 6, 2003. Effective prior to
             June 6, 2003, Discretionary Awards are payable in Common Stock
             subject to vesting requirements or, to the extent elected by the
             Grantee under Section 8(a), in the form of an Option. With respect
             to Discretionary Awards granted to an Officer, the Officer may
             elect, before the date of grant and in accordance with procedures
             established by the Plan Administrator or its delegate, to receive
             such an Award in the form of (i) Common Stock subject to vesting
             requirements, (ii) an Option described in Section 8, (iii) cash, or
             (iv) in any combination of the foregoing; provided, however, that
             the amount of cash payable under a Discretionary Award shall not
             exceed 33-1/3% of the Officer's base salary for the year in which
             the Discretionary Award is made.

                  The Officer's vesting percentage under Section 7 shall be
applied to the portions of the Discretionary Award payable in the form of an
Option and Common Stock, but not to the portion of the Discretionary Award
payable in cash. Any cash payable pursuant to such an election shall be payable
as soon as practicable after the Discretionary Award is made.

                                    SECTION 7
                                     Vesting
                                     -------

                  (a) Special Recognition Awards. A Grantee shall be 100% vested
in a Special Recognition Award on the date such Award is made.

                  (b) Discretionary Awards.

                      (1) Death, Disability. A Grantee shall be 100% vested in
             his Discretionary Awards under the Plan when he --

                          (A) Incurs a Disability; or

                          (B) Dies.





                                       -6-
<PAGE>

                      (2) Vesting Schedule. Except as otherwise provided in
             paragraph (1), a Grantee shall be 100% vested in his Discretionary
             Awards under the Plan in accordance with the following schedule --

                                                 Percentage of Shares Subject to
              Years of Vesting Service             Awards That Are 100% Vested
              ------------------------             ---------------------------
                 Fewer than 2                                   0
                 2 but fewer than 3                            34
                 3 but fewer than 4                            67
                 4 or more                                     100

Notwithstanding the foregoing, (A) an Officer shall be 100% vested in any
portion of his Discretionary Award that is payable in cash, and (B) the Plan
Administrator may accelerate the vesting of an Award when granted or at any time
thereafter, in its discretion, if it deems such acceleration to be desirable.

                  (c) Forfeiture. Any shares of Common Stock covered by a
Grantee's Awards that are not vested pursuant to subsection (a) or subsection
(b) shall be immediately forfeited upon the Grantee's voluntary or involuntary
termination of employment by Pegasus.

                                    SECTION 8
                      Election To Receive Option in Lieu of
                  Common Stock Subject to Vesting Requirements
                  --------------------------------------------

                  (a) Election. Effective June 6, 2003, to the extent permitted
by the Plan Administrator, an employee may elect to receive all or any portion
of a Discretionary Award in the form of an Option described in this Section 8 in
lieu of Common Stock subject to vesting requirements. Effective prior to June 6,
2003, an employee may elect to receive all or any portion of a Discretionary
Award in the form of an Option described in this Section 8 in lieu of Common
Stock subject to vesting requirements. The employee's election shall be made
before the date of grant in accordance with procedures established by the Plan
Administrator or its delegate. In no event, however, may an employee elect to
receive Options for more than 5,000 shares (which number gives effect to the
December 31, 2002 reverse stock split) of Common Stock of PCC under this Section
8 (as adjusted pursuant to Section 9) in any calendar year. If an Option is
cancelled, the shares of Common Stock covered by the cancelled Option shall be
counted against the maximum number of shares for which Options may be granted to
a single employee.

                  (b) Date of Grant. The date of grant for an Option granted
pursuant to a Grantee's election under Section 8(a) shall be the date such Award
would have been made under Section 6(b) absent such an election.

                  (c) Number of Shares Subject to Option. The number of shares
of Common Stock subject to an Option granted pursuant to a Grantee's election
under Section 8(a) shall be equal to the total number of shares of Common Stock





                                       -7-
<PAGE>

which would have been covered by the Grantee's Award (determined pursuant to
Section 6(b)) without giving effect to any election to receive the Award in a
form other than Common Stock subject to vesting requirements, multiplied by (i)
the percentage of the Award the Grantee has elected to have paid in the form of
an Option, and (ii) a conversion factor. The conversion factor shall be
determined pursuant to a valuation formula established by the Plan Administrator
or its delegate.

                  (d) Type of Option. Each Option granted under this Section 8
shall, unless the Code otherwise requires or the Plan Administrator otherwise
determines, be an ISO. The aggregate Fair Market Value of the Common Stock with
respect to which ISOs are exercisable for the first time by an employee during
any calendar year (counting ISOs under this Plan and incentive stock options
under any stock option plan of Pegasus) shall not exceed $100,000. If an Option
intended as an ISO is granted to an employee and the Option may not be treated
in whole or in part as an ISO pursuant to the $100,000 limitation, the Option
shall be treated as an ISO to the extent it may be so treated under the
limitation and as an NQSO as to the remainder. For purposes of determining
whether an ISO would cause the limitation to be exceeded, ISOs shall be taken
into account in the order granted. The annual limits set forth above for ISOs
shall not apply to NQSOs.

                  (e) Terms and Conditions of Options. Options granted under
this Section 8 in lieu of Common Stock subject to vesting requirements shall
include expressly or by reference the following terms and conditions --

                      (1) Number and Type of Shares. The Option shall state the
             number and type of shares of Common Stock to which the Option
             pertains.

                      (2) Price. The Option price of each Option granted under
             this Section 8 shall be the higher of 100 percent (110 percent in
             the case of an ISO granted to a more-than-10-percent stockholder,
             as provided in Section 8(e)(10)) of the Fair Market Value of the
             optioned shares of Common Stock, or the par value thereof.

                      (3) Term. Subject to earlier termination as provided in
             Section 8(e)(5), (6) and (7) and in Section 9 hereof, the term of
             each Option granted under this Section 8 shall be ten years (five
             years in the case of an ISO granted to a more-than-ten-percent
             stockholder, as discussed in Section 8(e)(10)) from the date of
             grant, or such lesser term as the Plan Administrator, in its sole
             discretion, shall permit the Grantee to elect on or before the date
             of grant.

                      (4) Exercise. Each Option granted under this Section 8
             shall become exercisable in accordance with the following schedule:

                                                 Percentage of Shares Subject
                  Years of Vesting Service       to Option That Are Exercisable
                  ------------------------       ------------------------------
                      fewer than 2                             0
                      2 but fewer than 3                      34%
                      3 but fewer than 4                an additional 33%
                      4 or more                         an additional 33%




                                       -8-
<PAGE>

         If the Grantee has completed four or more Years of Vesting Service on
         the date of grant, the Option shall be fully exercisable on the date of
         grant.

                           Notwithstanding the foregoing, an Option granted
         under this Section 8 shall become fully exercisable upon the Grantee's
         death or Disability while in the employ of Pegasus. In addition, the
         Plan Administrator may accelerate the exercise date of any Option when
         granted or at any time thereafter, in its discretion, if it deems such
         acceleration to be desirable.

                           Any exercisable Options may be exercised at any time
         up to the expiration or termination of the Option. Exercisable Options
         may be exercised, in whole or in part and from time to time, by giving
         notice in accordance with procedures established by PCC, specifying the
         number of shares to be purchased and accompanied by payment in full of
         the aggregate Option exercise price for such shares (or payment as soon
         as practicable after the exercise, in the case of an exercise
         arrangement described in paragraph (C) below). Only full shares shall
         be issued under the Plan, and any fractional share which might
         otherwise be issuable upon exercise of an Option granted hereunder
         shall be forfeited.

                  The Option price shall be payable --

                          (A) in cash or its equivalent;

                          (B) in shares of Common Stock previously acquired by
                  the Grantee; provided that (i) if such shares of Common Stock
                  were acquired through the exercise of an ISO and are used to
                  pay the Option price for an ISO, such shares have been held by
                  the Grantee for a period of not less than the holding period
                  described in Section 422(a)(1) of the Code on the date of
                  exercise, (ii) if such shares of Common Stock were acquired
                  through the exercise of an NQSO (and are used to pay the
                  Option price for an ISO or an NQSO) or acquired through the
                  exercise of an ISO (and are used to pay the Option price for
                  an NQSO), such shares have been held by the Grantee for a
                  period of not less than six months on the date of exercise,
                  and (iii) if such shares of Common Stock were acquired through
                  the vesting of a restricted stock award, such shares shall
                  have vested in the Grantee at least six months prior to the
                  date of exercise;

                          (C) by delivering a properly executed notice of
                  exercise of the Option to Pegasus and a broker, with
                  irrevocable instructions to the broker promptly to deliver to
                  Pegasus the amount of sale or loan proceeds necessary to pay
                  the exercise price of the Option; or

                          (D) in any combination of (A), (B) and (C) above.

                          In the event the Option price is paid, in whole or in
                  part, with shares of Common Stock, the portion of the Option
                  price so paid shall be equal to the aggregate fair market
                  value (determined under Section 2(k), with reference to the
                  date of exercise of the Option, rather than the date of grant)
                  of the Common Stock so surrendered in payment of the Option
                  price.




                                       -9-
<PAGE>

                      (5) Termination of Employment. If a Grantee's employment
             by Pegasus is terminated by either party prior to the expiration
             date fixed for his Option for any reason other than death or
             Disability, such Option may be exercised, to the extent of the
             number of shares with respect to which the Grantee could have
             exercised it on the date of such termination, by the Grantee any
             time prior to the earliest of (i) the expiration date specified in
             such Option, (ii) three months after such termination of
             employment, or (iii) termination of such Option under Section 9.

                      (6) Exercise upon Disability of Grantee. If a Grantee
             becomes Disabled during his employment and prior to the expiration
             date fixed for his Option, such Option may be exercised, to the
             extent of the number of shares with respect to which the Grantee
             could have exercised it on the date of such termination by the
             Grantee at any time prior to the earliest of (i) the expiration
             date specified in such Option, (ii) one year after such termination
             of employment, or (iii) termination of such Option under Section 9.
             In the event of the Grantee's legal disability, such Option may be
             exercised by the Grantee's legal representative.

                      (7) Exercise upon Death of Grantee. If a Grantee dies
             during his employment, and prior to the expiration date fixed for
             his Option, or if a Grantee whose employment is terminated for any
             reason, dies following his termination of employment but prior to
             the earliest of (A) the expiration date fixed for his Option, (B)
             the expiration of the period determined under paragraphs (5) and
             (6) above, or (C) in the case of an ISO, three months following
             termination of employment, such Option may be exercised, to the
             extent of the number of shares with respect to which the Grantee
             could have exercised it on the date of his death, by the Grantee's
             estate, personal representative or beneficiary who acquired the
             right to exercise such Option by bequest or inheritance or by
             reason of the death of the Grantee. Such post-death exercise may
             occur at any time prior to the earliest of (i) the expiration date
             specified in such Option, (ii) one year after the date of death, or
             (iii) termination of such Option under Section 9.

                      (8) Non-Transferability. No Option granted under this
             Section 8 shall be assignable or transferable by the Grantee other
             than by will or by the laws of descent and distribution. During the
             lifetime of the Grantee, all Options granted under this Section 8
             shall be exercisable only by the Grantee, or, in the event of the
             Grantee's legal disability, by the Grantee's guardian or legal
             representative. If the Grantee is married at the time of exercise
             and if the Grantee so requests at the time of exercise, the
             certificate or certificates shall be registered in the name of the
             Grantee and the Grantee's spouse, jointly, with right of
             survivorship.

                      (9) Withholding and Use of Shares to Satisfy Tax
             Obligations. The obligation of PCC to deliver shares of Common
             Stock upon the exercise of any Option shall be subject to
             applicable federal, state and local tax withholding requirements.





                                      -10-
<PAGE>

             If the exercise of any Option granted under this Section 8 is
             subject to the withholding requirements of applicable tax law, the
             Grantee may satisfy the federal, state and local withholding tax,
             in whole or in part, by electing to have PCC withhold shares of
             Common Stock subject to the exercise (or by returning previously
             acquired shares of Common Stock to PCC). PCC may not withhold
             shares in excess of the number necessary to satisfy the minimum
             federal, state and local tax withholding requirements. Shares of
             Common Stock shall be valued, for purposes of this paragraph, at
             their fair market value determined under Section 2(k), with
             reference to the date the amount attributable to the exercise of
             the Option is includable in income by the Grantee under the Code
             (the "Determination Date"), rather than the date of grant.

                      If shares of Common Stock acquired by the exercise of an
             ISO are used to satisfy the withholding requirement described
             above, such shares of Common Stock must have been held by the
             Grantee for a period of not less than the holding period described
             in Section 422(a)(1) of the Code as of the Determination Date.

                      The Plan Administrator shall adopt such withholding rules
             as it deems necessary to carry out the provisions of this
             paragraph.

                      (10) Ten Percent Stockholder. If an employee owns more
             than ten percent of the total combined voting power of all classes
             of stock of PCC or of its parent or subsidiary corporation at the
             time an ISO is granted to him (taking into account the attribution
             rules of Section 424(d) of the Code, the Option price for the ISO
             shall be 110 percent of the Fair Market Value of the optioned
             shares of Common Stock on the date the ISO is granted, and such
             ISO, by its terms, shall not be exercisable after the expiration of
             five years from the date the ISO is granted. The conditions set
             forth in this paragraph shall not apply to NQSOs.

                  (f) Application of Funds. The proceeds received from the sale
of Common Stock pursuant to Options granted under the Plan shall be used for
general corporate purposes. Any cash received in payment for shares upon
exercise of an Option shall be added to the general funds of PCC and shall be
used for its corporate purposes. Any Common Stock received in payment for shares
upon exercise of an Option shall become treasury stock.

                                    SECTION 9
                               Capital Adjustments
                               -------------------

                  The number and the type or class of shares which may be issued
under the Plan and the number of shares of Common Stock issuable upon the
vesting of outstanding Awards shall be adjusted to reflect any stock dividend,
stock split, share combination, or similar change in the capitalization of PCC.
The maximum number of shares with respect to which Options may be granted to any
employee in any calendar year (as stated in Section 8(a)) and the number and the
type or class of shares issuable upon exercise of outstanding Options under the
Plan (as well as the Option Price per share under such outstanding Options)
shall be adjusted, as may be deemed appropriate by the Plan Administrator, to
reflect any stock dividend, stock split, spin-off, share combination, or similar
change in the capitalization of PCC; provided, however, that no such adjustment





                                      -11-
<PAGE>

shall be made to an outstanding ISO if such adjustment would constitute a
modification under Section 424(h) of the Code, unless the Grantee consents to
such adjustment. In the event any such change in capitalization cannot be
reflected in a straight mathematical adjustment of the number of shares issuable
upon the vesting of outstanding Awards or the exercise of outstanding Options
(as well as the Option price), the Plan Administrator shall make such
adjustments as are appropriate to reflect most nearly such straight mathematical
adjustment. Such adjustments shall be made only as necessary to maintain the
proportionate interests of Grantees and preserve, without exceeding, the value
of Awards.

                  In the event of a corporate transaction (as that term is
described in Section 424(a) of the Code and the Treasury Regulations issued
thereunder as, for example, a merger, consolidation, acquisition of property or
stock, separation, reorganization, or liquidation), each outstanding Award shall
be assumed by the surviving or successor corporation; provided, however, that,
in the event of a proposed corporate transaction, the Plan Administrator may
terminate all or a portion of the outstanding Options if it determines that such
termination is in the best interests of PCC. If the Plan Administrator desires
to terminate outstanding Options, the Plan Administrator shall give each
Optionee holding an Option to be terminated not less than seven days' notice
prior to any such termination, and any Option which is to be so terminated may
be exercised (if and only to the extent that it is then exercisable) up to, and
including the date immediately preceding such termination. Further as provided
in Section 8(e), the Plan Administrator, in its discretion, may accelerate, in
whole or in part, the date on which any or all Options become exercisable.

                  The Plan Administrator also may, in its discretion, change the
terms of any outstanding Option to reflect any such corporate transaction,
provided that, in the case of ISOs, such change does not constitute a
"modification" under Section 424(h) of the Code unless the Option holder
consents to the change.

                                   SECTION 10
                     Amendment or Discontinuance of the Plan
                     ---------------------------------------

                  At any time, the Board may suspend or terminate the Plan. The
Plan Administrator may amend any outstanding Awards in any respect whatsoever,
including amendments that reprice (or decrease the Option price of) outstanding
Options under the Plan or result in the cancellation of outstanding Options in
exchange for cash or the grant of new Options, shares of Common Stock subject to
vesting requirements, or another type of equity award. At any time and from time
to time, the Plan may be amended by resolution of (i) the Board, or (ii) the
Compensation Committee of the Board, except that the following amendments shall
require the approval of stockholders:

                  (a) Any amendment which would increase the number of shares of
Common Stock authorized under the Plan;

                  (b) Any amendment for which stockholder approval is required
under the rules of an exchange or market on which Common Stock is listed;






                                      -12-
<PAGE>

                  (c) Any amendment which would change the class of employees
eligible to receive ISOs; and

                  (d) Any amendment requiring stockholder approval pursuant to
Treas. Reg. ss.1.162-27(e)(4)(iv) or any successor thereto (to the extent
compliance with Section 162(m) of the Code is desired).

                  Notwithstanding the foregoing, no such suspension,
discontinuance or amendment shall materially impair the rights of any holder of
an outstanding Award without the consent of such holder.

                  The approval of stockholders must be (i) by a method and in a
degree that would be treated as adequate under applicable state law in the case
of an action requiring stockholder approval (i.e., an action on which
stockholders would be entitled to vote if the action were taken at a duly held
stockholders' meeting), or (ii) by a majority of the votes cast at a duly held
stockholders' meeting at which a quorum representing a majority of all
outstanding voting stock is, either in person or by proxy, present and voting on
the Plan.

                                   SECTION 11
                               Termination of Plan
                               -------------------

                  Unless earlier terminated as provided in the Plan, the Plan
and all authority granted hereunder shall terminate absolutely at 12:00 midnight
on September 29, 2006, and no Awards hereunder shall be granted thereafter.
Nothing contained in this Section 11, however, shall terminate or affect the
continued existence of rights created under Awards issued hereunder and
outstanding on September 29, 2006 which by their terms extend beyond such date.

                                   SECTION 12
                                 Effective Date
                                 --------------

                  This Plan became effective on September 30, 1996 (the date the
Plan was adopted by the Board). As amended and restated, this Plan became
effective as of February 13, 2002.

                                   SECTION 13
                                  Miscellaneous
                                  -------------

                  (a) Book-Entry Record of Shares. This Section 13(a) shall not
apply to the portion of any Award with respect to which the Grantee has made an
election to receive an Option pursuant to Section 8(a). Upon the granting of an
Award, book-entry record of the shares of Common Stock covered by the Award
shall be made with PCC's share transfer agent in the name of the Grantee (or in
the name of the Grantee and the Grantee's spouse, if the Grantee so requests --
see subsection (f)), unless the Grantee requests that share certificates be
issued directly to him or her. Share certificates issued directly to the Grantee
shall be issued in the name of the Grantee (or in the name of the Grantee and
the Grantee's spouse -- see subsection (f)). With respect to any shares subject
to the Award in which the Grantee is not vested on the date the Award is made,
however, no certificates shall be issued until the Grantee is vested in such
shares. Only full shares shall be issued, and any fractional shares which might
otherwise be issuable pursuant to an Award shall be forfeited.





                                      -13-
<PAGE>

                  (b) Rights as a Stockholder. With respect to any shares of
Common Stock in which the Grantee is not vested on the date an Award is granted
(other than shares for which the Grantee has made an election pursuant to
Section 8(a) to receive an Option), the Grantee shall have the right to vote
such shares to the extent the shares possess voting rights and shall be entitled
to receive dividends paid on such shares; provided, however, that any dividends
paid in a form other than cash shall be subject to the vesting schedule that
applies to the Award with respect to which such dividend is made. However, the
shares subject to the Award will revert to PCC in accordance with Section 7(c)
to the extent not vested on the Grantee's voluntary or involuntary termination
of employment by Pegasus.

                  With respect to the portion of any Award for which the Grantee
has made an election under Section 8(a), the Option issued pursuant thereto
shall not entitle the holder thereof to any rights as a stockholder of PCC prior
to the exercise of such Option and the issuance of the shares pursuant thereto.

                  (c) Award Agreement. Awards under the Plan shall be evidenced
by documents in such form as the Plan Administrator shall, from time to time,
approve, which Award Agreements shall contain such provisions, not inconsistent
with the provisions of the Plan, as the Plan Administrator shall deem advisable.
Each Grantee shall enter into, and be bound by the terms of, the Award
Agreement.

                  (d) Governing Law. The Plan, and the Award Agreements entered
into and Awards granted thereunder, shall be governed by the Code provisions to
the extent applicable. Otherwise, the operation of, and the rights of eligible
individuals under, the Plan, the Award Agreements, and the Awards shall be
governed by applicable federal law and otherwise by the laws of the State of
Delaware, without reference to principles of conflicts of law.

                  (e) Rights. Neither the adoption of the Plan nor any action of
the Board or the Plan Administrator shall be deemed to give any individual any
right to be granted an Award, or any other right hereunder, unless and until the
Plan Administrator shall have granted such individual an Award, and then his
rights shall be only such as are provided by the Plan and the Award Agreement.

                  Further, notwithstanding any provisions of the Plan or any
Award Agreement with a Grantee, but subject to any employment agreement, Pegasus
shall have the right, in its discretion, to retire an employee at any time
pursuant to its retirement rules or otherwise to terminate his employment at any
time for any reason whatsoever.

                  (f) Non-Transferability. This Section 13(f) shall not apply to
the portion of an Award with respect to which the Grantee has made an election
to receive an Option pursuant to Section 8(a). Except as otherwise provided in
any Award Agreement, Awards which have not vested shall not be assignable or
transferable by the Grantee otherwise than by will or by the laws of descent and
distribution. If a Grantee is married on the date an Award is granted, and if
the Grantee so requests, book entry-record shall be made (or the share
certificates issued shall be registered) in the name of the Grantee and the
Grantee's spouse, jointly, with right of survivorship.




                                      -14-
<PAGE>

                  (g) Listing and Registration of Shares. Each Award shall be
subject to the requirement that, if at any time the Plan Administrator shall
determine, in its discretion, that the listing, registration, or qualification
of the Common Stock covered thereby upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
granting of such Award or the vesting of Common Stock thereunder, or that action
by PCC or by the Grantee should be taken in order to obtain an exemption from
any such requirement, no shares of Common Stock shall be received pursuant to an
Award, unless and until such listing, registration, qualification, consent,
approval, or action shall have been effected, obtained, or taken under
conditions acceptable to the Plan Administrator. Without limiting the generality
of the foregoing, each Grantee or his legal representative or beneficiary may
also be required to give satisfactory assurance that shares received pursuant to
an Award will be held as an investment and not with a view to distribution, and
certificates representing such shares may be legended accordingly.

                  (h) Withholding and Use of Shares to Satisfy Tax Obligations.
This Section 13(h) shall not apply to the portion of an Award with respect to
which the Grantee made an election to receive an Option pursuant to Section
8(a). The obligation of PCC to deliver Common Stock pursuant to any Award shall
be subject to applicable federal, state and local tax withholding requirements.
If the vesting of any Award is subject to the withholding requirements of
applicable tax law, the Plan Administrator, in its discretion, may permit or
require the Grantee to satisfy the federal, state and local withholding tax, in
whole or in part, by electing to have PCC withhold shares of Common Stock
subject to the Award (or by returning previously acquired shares of Common Stock
to PCC). PCC may not withhold shares in excess of the number necessary to
satisfy the minimum federal, state and local income tax withholding
requirements. Shares of Common Stock shall be valued, for purposes of this
paragraph, at their fair market value, determined under Section 2(k), with
reference to the date the amount attributable to the vesting of the Award is
includable in income by the Grantee under the Code (the "Vesting Date"). If
shares of Common Stock acquired by the exercise of an ISO are used to satisfy
the withholding requirement described above, such shares of Common Stock must
have been held by the Grantee for a period of not less than the holding period
described in Section 422(a)(1) of the Code as of the Vesting Date. The Plan
Administrator shall adopt such withholding rules as it deems necessary to carry
out the provisions of this paragraph.

                  (i) Indemnification of Board and Plan Administrator. Without
limiting any other rights of indemnification which they may have from Pegasus,
the members of the Board, the Committee and the Management Committee shall be
indemnified by PCC against all costs and expenses reasonably incurred by them in
connection with any claim, action, suit, or proceeding to which they or any of
them may be a party by reason of any action taken or failure to act under, or in
connection with, the Plan, or any Award granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by legal counsel selected by PCC) or paid by them in satisfaction of a judgment
in any such action, suit, or proceeding, except a judgment based upon a finding
of willful misconduct or recklessness on their part. Upon the making or
institution of any such claim, action, suit, or proceeding, the Board, Committee
or Management Committee member shall notify PCC in writing, giving PCC an
opportunity, at its own expense, to handle and defend the same before such
Board, Committee or Management Committee member undertakes to handle it on his
own behalf.




                                      -15-