TELLABS, INC



TELLABS, INC.

2001 STOCK OPTION PLAN


 

Article 1.

Establishment, Objectives, and Duration


1.1Establishment of the Plan.  Tellabs, Inc., a Delaware corporation (hereinafter referred to
as the "Company"), hereby establishes the incentive compensation plan to be known as the Tellabs, Inc. 2001
Stock Option Plan (hereinafter referred to as the "Plan").


Subject to approval by the Company's stockholders, the Plan shall become effective as of  January 24,
2001 (the "Effective Date") and shall remain in effect as provided in Section 1.3 hereof.


1.2Purpose of the Plan.  The purpose of this Plan is to benefit the Company and its
subsidiaries and affiliated companies by enabling the Company to offer to certain employees stock based incentives
and other equity interests in the Company, thereby giving them a stake in the growth and prosperity of the Company
and encouraging the continuance of their services with the Company or subsidiaries or affiliated companies.


1.3Duration of the Plan.  The Plan shall commence on the Effective Date and shall remain in
effect, subject to the right of the Board of Directors to amend or terminate the Plan at any time pursuant to
Article 11 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan's
provisions.


 

Article 2.

Definitions


Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is
intended, the initial letter of the word shall be capitalized:


"Award" means, individually or collectively, a grant under this Plan of Nonqualified Stock
Options, Incentive Stock Options or Stock Appreciation Rights.


"Award Date" means the date an Award is granted to the Participant.


"Award Agreement" means a writing provided by the Company to each Participant setting forth the
terms and provisions applicable to Awards granted under this Plan.  The Participant's acceptance of the terms of the
Award Agreement shall be evidenced by his or her continued employment without written objection before any exercise or
payment of the Award.  If the Participant objects in writing, the grant of the Award shall be revoked.


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



"Change in Control" means the first to occur of:


(a)Any "person" (as defined in Section 13(d) and 14(d) of the Exchange Act), excluding for
this purpose, the Company or any Subsidiary of the Company, or any employee benefit plan of the Company or any
Subsidiary of the Company, or any person or entity organized, appointed or established by the Company for or pursuant
to the terms of any such plan which acquires beneficial ownership of voting securities of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly of
securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's
then outstanding securities; provided, however, that no Change in Control will be deemed to have occurred as a result
of a change in ownership percentage resulting solely from an acquisition of securities by the Company; and provided
further that no Change in Control will be deemed to have occurred if a person inadvertently acquires an ownership
interest of twenty percent (20%) or more but then promptly reduces that ownership interest below twenty percent (20%);



(b)During any two (2) consecutive years (not including any period beginning prior to the Effective Date),
individuals who at the beginning of such two (2) year period constitute the Board of Directors of the Company and any
new director (except for a director designated by a person who has entered into an agreement with the Company to effect
a transaction described elsewhere in this definition of Change in Control) whose election by the Board or nomination
for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose election or nomination for election was
previously so approved (such individuals and any such new director, the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;


(c)Consummation of a reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following
such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial
owners of outstanding voting securities of the Company immediately prior to such Business Combination beneficially own,
directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case may be, of the company resulting from
such Business Combination (including, without limitation, a company which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such Business Combination of the
outstanding voting securities of the Company; (ii) no person (excluding any company resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or such company resulting from such Business
Combination) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then
combined voting power of the then outstanding voting securities of such company except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the company
resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination;


(d)Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company;
or


(e)A tender offer (for which a filing has been made with the Securities and Exchange Commission
("SEC")) which purports to comply with the requirements of Section 14(d) of the Securities Exchange Act of
1934 and the corresponding SEC rules) is made for the outstanding voting securities of the Company, then the first to
occur of:

(1)Any time during the offer when the person making the offer owns or has accepted for payment
securities of the Company representing twenty-five percent (25%) or more of the combined  voting power of the Company's
then outstanding securities, or


(2)Three business days before the offer is to terminate unless the offer is withdrawn first if the
person making the offer could own, by the terms of the offer plus any securities owned by such person, securities of
the Company representing fifty percent (50%) or more of the combined voting power of the Company's then outstanding
securities when the offer terminates.




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


"Committee" means the Committee as specified in Article 3 herein appointed by the Board to
administer the Plan with respect to grants of Awards.


"Common Stock" means the common stock, $.01 par value per share, of the Company.



"Company" means Tellabs, Inc., a Delaware corporation, as well as any successor to such entity
as provided in Article 13 herein.


"Director" means any individual who is a member of the Board of Directors of the Company.



"Disability" shall have the meaning ascribed to such term in the long-term disability plan
which governs any such benefits to which Participant may be or may become entitled.  If no long term disability plan
is in place with respect to a Participant, then with respect to that Participant, Disability shall mean:  for the first
twenty-four (24) months of disability, that the Participant is unable to perform his or her job; thereafter, that the
Participant is unable to perform any and every duty of any gainful occupation for which the Participant is reasonably
suited by training, education or experience.


"Effective Date" shall have the meaning ascribed to such term in Section 1.1 hereof.



"Employee" means any employee of the Company or any Subsidiary and any individual who has
accepted employment with the Company or any Subsidiary; but shall not include any individual while such individual is
providing services to the Company or any Subsidiary in the capacity of, or is or was designated by the Company or a
Subsidiary as, an independent contractor.


"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any
successor act thereto.


"Fair Market Value" shall mean an amount equal to the closing price on the applicable date for
sales of shares of Common Stock made and reported through the National Market System of the National Association of
Securities Dealers, Inc. or such national stock exchange on which the Common Stock may then be listed and which
constitutes the principal market for the Common Stock, or, if no sales of Common Stock shall have been reported with
respect to that date, on the next preceding date with respect to which sales were reported.


"Freestanding SAR" means a stock appreciation right that is granted independently of any
Options, as described in Article 7 herein.


"Incentive Stock Option" or "ISO" means an option to purchase Shares granted
under Article 6 herein and which is designated as an Incentive Stock Option and which is intended to meet the
requirements of Code Section 422.


"Nonqualified Stock Option" or "NQSO" means an option to purchase Shares
granted under Article 6 herein and which is not intended to meet the requirements of Code Section 422.



"Option" means an Incentive Stock Option or a Nonqualified Stock Option, as described in
Article 6 herein.


"Option Price" means the price at which a Share may be purchased by a Participant pursuant to
an Option.


"Participant" means any individual who has outstanding an Award granted under the Plan.



"Shares" means shares of Common Stock of the Company.


"Stock Appreciation Right" or "SAR" means an Award, granted alone or in
connection with a related Option, designated as an SAR, pursuant to the terms of Article 7 herein.


"Subsidiary" means any Company, partnership, joint venture, affiliate, or other entity in which
the Company is the direct or indirect beneficial owner of not less than twenty percent (20%) of all issued and
outstanding equity interests.


"Tandem SAR" means an SAR that is granted in connection with a related Option pursuant to
Article 7 herein, the exercise of which shall require forfeiture of the right to purchase a Share under the
related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be forfeited).


Article 3.

Administration


3.1The Committee.  The Plan shall be administered by the Compensation Committee of the Board,
or by any other Committee appointed by the Board.  If, and to the extent that, no Committee exists that has the
authority to administer the Plan, the functions of the Committee shall be exercised by the full Board.


3.2Authority of the Committee.  Except as limited by law or by the Certificate of
Incorporation or Bylaws of the Company, and subject to the provisions herein, the Committee shall have full power to
select Employees and others who shall participate in the Plan; determine the sizes and types of Awards; determine the
terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreement
or instrument entered into under the Plan; establish, amend, or waive rules and regulations for the Plan's
administration; and (subject to the provisions of Article 11 herein) amend the terms and conditions of any
outstanding Award to the extent such terms and conditions are within the discretion of the Committee as provided in the
Plan.  Further, the Committee shall make all other determinations which may be necessary or advisable for the
administration of the Plan.  As permitted by law, the Committee may delegate the authority granted to it herein.


3.3Decisions Binding.  All determinations and decisions made by the Committee pursuant to the
provisions of the Plan and all related orders and resolutions of the Board shall be final, conclusive and binding on
all persons, including the Company, its stockholders, Employees, Participants, and their estates and beneficiaries.



 

Article 4.

Shares Subject to the Plan and Maximum Awards


4.1Shares Available for Awards.  The aggregate number of Shares which may be delivered for
purposes of this Plan with respect to Awards shall not exceed 38,000,000 Shares (subject to adjustment as provided in
Section 4.3), which may be either authorized and unissued Shares or Shares held in or acquired for the treasury of the
Company.  Of the aggregate number of Shares, up to all of such Shares may be issued with respect to Incentive Stock
Option Awards or Nonqualified Stock Option awards.  In addition, up to an aggregate of 1,000,000 Freestanding SARs may
be granted under the Plan.  Upon:



(a)a cancellation, termination, expiration, forfeiture, or lapse for any reason (with the exception of
the termination of a Tandem SAR upon exercise of the related Options, or the termination of a related Option upon
exercise of the corresponding Tandem SAR) of any Award, then the number of Shares or SARs covered by the Award shall
not be deemed to have been delivered or used for purposes of determining the maximum number of Shares which may be
delivered or Freestanding SARs which may be granted under the Plan; or 


(b)payment of an  Option Price with previously-acquired shares  and/or payment of any taxes arising upon
exercise of an Option with previously acquired Shares or by withholding Shares which otherwise would be acquired on
exercise, then only the number of Shares issued net of the number of Shares tendered or withheld shall be deemed
delivered for purposes of determining the maximum number of Shares which may be delivered under the Plan.


4.2Individual Participant Limitations.  The following rules shall apply to grants of Awards
under the Plan:


(a)Subject to adjustment as provided in Section 4.3 herein and subsection (b) below, the maximum
aggregate number of Shares which may be issuable under Option Awards and  used for reference purposes for Awards of
Freestanding SARs that may be granted in any one (1) fiscal year to a Participant shall be 250,000.


(b)Notwithstanding the foregoing and subject to adjustment as provided in Section 4.3 herein, the
maximum aggregate number of Shares which may be issuable under Option Awards and used for reference purposes for Awards
of Freestanding SARs that may be granted to a Participant in the first (1st) fiscal year of the Participant's employment
with the Company shall be 500,000.


4.3Adjustments in Authorized Shares.  In the event of any change in corporate capitalization,
such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off,
or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes
within the definition of such term in Code Section 368) or any partial or complete liquidation of the Company,
such adjustment shall be made in the number and class of Shares available for Awards, the number and class of and/or
price of Shares subject to outstanding Awards granted under the Plan and the number of Shares set forth in
Sections 4.1 and 4.2, as may be determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights; provided, however, that the number of Shares subject to any
Award shall always be a whole number.


 

Article 5.

Eligibility and Participation


5.1Eligibility.  Persons eligible to participate in this Plan include all officers and other
Employees of the Company and its Subsidiaries, as determined by the Committee, including Employees who are members of
the Board and Employees who reside in countries other than the United States of America.  The Committee may, at its
discretion, permit the participation in the Plan by those individuals who have accepted employment with the Company or
a Subsidiary,  but as of the date of their initial Awards have not yet commenced employment; provided, however, that in
no event shall an ISO be granted to any Employee prior to the date such Employee commences employment with the Company
or a Subsidiary.  


5.2Actual Participation.  Subject to the provisions of the Plan, the Committee may, from time
to time, select from all eligible Employees as described in Section 5.1 hereinabove those to whom Awards shall be
granted and shall determine the nature and amount of each Award.


 

Article 6.

Stock Options


6.1Grant of Options.  Subject to the terms and provisions of the Plan, Options may be granted
to one or more Participants in such number, and upon such terms, and at any time and from time to time as shall be
determined by the Committee.  The Committee may grant Nonqualified Stock Options or Incentive Stock Options; provided,
however, that (a) no ISO may be granted more than ten (10) years after the Effective Date of the Plan, (b) the Option
Price with respect to any ISO granted to a Participant who is a ten percent (10%) stockholder within the meaning of
Section 422 of the Code shall be not less than one hundred ten percent (110%) of the Fair Market Value of the Shares
on the date of grant and such ISO shall not be exercisable after the expiration of five (5) years from the date of
grant, and (c) the aggregate Fair Market Value (determined on the date  the ISO is granted) of the Shares subject each
installment becoming exercisable for the first time in any calendar year under ISOs granted under all plans of the
Company and any Subsidiary, including this Plan, to a Participant shall not exceed $100,000 (provided, that to the
extent that the aggregate Fair Market Value (determined on the date of grant of the ISO) of the Shares subject to ISOs
becoming exercisable for the first time in a calendar year exceeds $100,000 due to the acceleration of the
exercisability of such installments, that portion of the ISOs  (determined by taking ISOs into account in the order in
which they were granted) in excess of such $100,000 amount shall be treated as Nonqualified Stock Options. The
Committee shall have complete discretion in determining the number of Options granted to each Participant (subject to
Article 4 herein).


6.2Award Agreement.  Each Option grant shall be evidenced by an Award Agreement that shall
specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other
provisions as the Committee shall determine.  The Award Agreement with respect to the Option also shall specify whether
the Option is intended to be an ISO within the meaning of Code Section 422, or an NQSO whose grant is intended not
to fall under the provisions of Code Section 422; provided, that the absence of any specification shall mean the
Option is an NQSO.


6.3Option Price.  The Committee shall designate the Option Price for each grant of an Option
under this Plan which Option Price shall be at least equal to one hundred percent (100%) of the Fair Market Value of a
Share on the date the Option is granted, and which Option Price may not be subsequently changed by the Committee except
pursuant to Section 4.3 hereof or to the extent provided in the Award Agreement. 



6.4Duration of Options.  Each Option granted to an Employee shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that unless otherwise designated by the Committee
at the time of grant, no Option shall be exercisable later than the tenth (10th) anniversary date of its grant.

6.5Exercise of Options.  Options granted under this Article 6 shall be exercisable at
such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which
need not be the same for each grant or for each Participant.  Unless the Award Agreement  expressly provides otherwise,
the Options shall be exercisable in accordance with the following schedule:


	Years After	Exercisable Percentage
	Award Date	of Shares
	Less than 1	0%
	1 but less than 2	25%
	2 but less than 3	50%
	3 but less than 4	75%
	4 but less than 10	100%



6.6Notice of Exercise and Payment.  Options granted under this Article 6 shall be
exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for the Shares.  The Option Price upon
exercise of any Option shall be payable to the Company in full either:


(a)in cash or its equivalent (included for this purpose, the proceeds from a cashless exercise as
permitted under Federal Reserve Board's Regulation T),


(b)by tendering (either actually or by attestation of ownership) previously acquired Shares (Shares
acquired on the open market or which have been held for at least six (6) months) having an aggregate Fair Market Value
at the time of exercise equal to the total Option Price, 


(c)by any other means which the Committee determines to be consistent with the Plan's purpose and
applicable law, or


(d)by any combination of (a), (b), and (c).


As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall
deliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).


6.7Restrictions on Share Transferability.  The Committee may impose such restrictions on any
Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable,
including, without limitation, restrictions under applicable Federal securities laws, under the requirements of any
stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state
securities laws applicable to such Shares.


6.8Termination of Employment.  Except as set forth in Article 10 with respect to the effect of
a Change in Control or except as the Committee may otherwise expressly provide in the Award Agreement evidencing an
Option, the following rules shall apply upon termination of the Participant's employment with the Company and all
Subsidiaries:


(a)Except as set forth in subsections (b), (c), and (d) below, in the event a Participant ceases to be
an Employee for any reason, any Option or unexercised portion thereof granted under this Plan may be exercised, to the
extent such Option would have been exercisable by the Participant hereunder on the date on which the Participant ceased
to be an Employee, within three (3) months of such date (seven (7) months in the event such termination occurs after
the occurrence of a Change in Control), but in no event later than the date of the expiration of the term of the Option.



(b)In the event of termination of employment due to the death of the Participant, each Option held by
the Participant shall become exercisable in full and may be exercised at any time prior to the expiration date of the
Option or within one (1) year after the date of the Participant's death, whichever period is shorter.


(c)In the event of termination of employment due to the Disability of  the Participant, each Option held
by the Participant may, to the extent exercisable at the time of such termination, be exercised at any time prior to
the expiration date of the Option or within three (3) years after the date of the Participant's termination of
employment, whichever period is shorter.


(d)In the event of termination of employment due to the retirement of the Participant on or after
attaining age 55, all or a portion of each Option held by the Participant, to the extent not then exercisable, shall
become exercisable in accordance with the schedule set forth below based upon one point for the Participant's attained
age and one point for each year of continuous service with the Company or its Subsidiaries as of the date of retirement
(including for this purpose, continuous service with an entity prior to the date such entity was acquired by the
Company or an affiliate of the Company, but excluding any service prior to January 1, 1975), 


	      At least 70 but less than 80 points	50% of each unvested option shall vest
	      At least 80 but less than 90 points	75% of each unvested option shall vest
	      At least 90 points	100% of each unvested option shall vest





and all Options held by the Participant to the extent then exercisable may be exercised at any time prior to the
expiration date of the Option or within three (3) years after the date of the Participant's retirement, whichever
period is shorter.


(e)Notwithstanding anything in this Plan to the contrary, any ISO which is exercised after the
expiration of three (3) months following the cessation of employment for any reason other than Disability or death or
one (1) year after the date of termination of employment due to Disability or death, shall be treated as a NQSO.


6.9Limited Transferability of Options.  Except as provided below, no Option granted under the
Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than by will or by
the laws of descent and distribution.  Further, all Options granted to a Participant under the Plan shall be
exercisable during his lifetime only by such Participant.  Notwithstanding the foregoing, the Committee may, in its
discretion, authorize all or a portion of the Options (other than Incentive Stock Options) granted to a Participant
to be on terms which permit transfer by such Participant to:


(a)the spouse, children or grandchildren of the Participant ("Immediate Family Members");


(b)a trust or trusts for the exclusive benefit of such Immediate Family Members; or


(c)a partnership in which such Immediate Family Members are the only partners, provided that:

(1)there may be no consideration for any such transfer;


(2)the Award Agreement pursuant to which such Options are granted expressly provides for transferability
in a manner consistent with this Section 6.9; and


(3)subsequent transfers of transferred Options shall be prohibited except those in accordance with
Article 8. 




Following transfer, any such Options shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for purposes of Article 8 hereof the term "Participant" shall
be deemed to refer to the transferee.  The provisions of Section 6 relating to the period of exercisability and
expiration of the Option shall continue to be applied with respect to the original Participant, and the Options shall
be exercisable by the transferee only to the extent, and for the periods, set forth in said Section 6. 


 

Article 7.

Stock Appreciation Rights


7.1Grant of SARs.  Subject to the terms and conditions of the Plan, SARs may be granted to
Participants at any time and from time to time as shall be determined by the Committee.  The Committee may grant
Freestanding SARs, Tandem SARs, or any combination of these forms of SARs.  The Committee shall have complete
discretion in determining the number of SARs granted to each Participant (subject to Article 4 herein) and,
consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.  The
Committee shall designate, at the time of grant, the grant price of a Freestanding SAR which grant price shall at
least equal the Fair Market Value of a Share on the date of grant of the SAR.  The grant price of Tandem SARs shall
equal the Option Price of the related Option.  Grant prices of SARs shall not subsequently be changed by the Committee
except pursuant to Section 4.3 hereof.


7.2Exercise of Tandem SARs.  Tandem SARs may be exercised for all or part of the Shares
subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related
Option.  A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then
exercisable.  Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in
connection with an ISO:  (i) the Tandem SAR will expire no later than the expiration of the underlying ISO;
(ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of
the difference between the Option Price of the underlying ISO and the Fair Market Value of the Shares subject to the
underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair
Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO.


7.3Exercise of Freestanding SARs.  Freestanding SARs granted under this Article 7 shall
be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance
approve, which need not be the same for each grant or for each Participant.  Unless the Award Agreement executed by the
Participant expressly provides otherwise, the Freestanding SARs shall be exercisable in accordance with the following
schedule:


	Years After	Exercisable Percentage
	Award Date	of SARs
	Less than 1	0%
	1 but less than 2	25%
	2 but less than 3	50%
	3 but less than 4	75%
	4 but less than 10	100%



7.4SAR Agreement.  Each SAR grant shall be evidenced by an Award Agreement that shall specify
the grant price, the term of the SAR, and such other provisions as the Committee shall determine.


7.5Term of SARs.  The term of an SAR granted under the Plan shall be determined by the
Committee, in its sole discretion; provided, however, that unless otherwise designated by the Committee, such term
shall not exceed ten (10) years.


7.6Notice of Exercise and Payment of SAR Amount.  An SAR granted under this Article 7
shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares
with respect to which the SAR is to be exercised. Upon exercise of an SAR, a Participant shall be entitled to receive
payment from the Company in an amount determined by multiplying:


(a)The excess of the Fair Market Value of a Share on the date of exercise over the grant price; by



(b)The number of Shares with respect to which the SAR is exercised.


At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or
in some combination thereof.


7.7Termination of Employment.  Except as set forth in Article 10 with respect to the effect of
a Change in Control or except as the Committee may otherwise expressly provide in the Award Agreement evidencing the
SAR, the following rules shall apply upon termination of the Participant's employment with the Company and all
Subsidiaries:


(a)Except as set forth in subsections (b), (c), and (d) below, in the event a Participant ceases to be
an Employee for any reason, any SAR or unexercised portion thereof granted under this Plan may be exercised, to the
extent such SAR would have been exercisable by the Participant hereunder on the date on which the Participant ceased
to be an Employee, within three (3) months of such date (seven (7) months in the event such termination occurs after
the occurrence of a Change in Control), but in no event later than the date of the expiration of the term of the SAR.



(b)In the event of termination of employment due to the death of the Participant, each SAR held by the
Participant shall become exercisable in full and may be exercised at any time prior to the expiration date of the SAR
or within one (1) year after the date of the Participant's death, whichever period is shorter.


(c)In the event of termination of employment due to the Disability of  the Participant, each SAR held
by the Participant may, to the extent exercisable at the time of such termination, be exercised at any time prior to
the expiration date of the SAR or within three (3) years after the date of the Participant's termination of employment,
whichever period is shorter.


(d)In the event of termination of employment due to the retirement of the Participant on or after
attaining age 55, all or a portion of each SAR held by the Participant, to the extent not then exercisable, shall
become exercisable in accordance with the schedule set forth below based upon one point for the Participant's attained
age and one point for each year of continuous service with the Company or its Subsidiaries as of the date of retirement
(including for this purpose, continuous service with an entity prior to the date such entity was acquired by the
Company or an affiliate of the Company, but excluding any service prior to January 1, 1975), 



	      At least 70 but less than 80 points	50% of each unvested SAR shall vest
	      At least 80 but less than 90 points	75% of each unvested SAR shall vest
	      At least 90 points	100% of each unvested SAR shall vest



and all SARs held by the Participant to the extent then exercisable may be exercised at any time prior to the
expiration date of the SAR or within three (3) years after the date of the Participant's retirement, whichever period
is shorter.


7.8Nontransferability of SARs.  Except as otherwise provided in a Participant's Award
Agreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution without the express written consent of the
Committee.  Further, except as otherwise provided in a Participant's Award Agreement, all SARs granted to a Participant
under the Plan shall be exercisable during his or her lifetime only by such Participant.


 

Article 8.

Beneficiary Designation


Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit.  Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in
writing with the Secretary of the Company, or such other person or entity designated by the Company, during the
Participant's lifetime.  In the absence of any such designation, benefits remaining unpaid at the Participant's death
shall be paid to the Participant's estate.


Article 9.

Rights of Employees


9.1Employment.


(a)Nothing in the Plan shall interfere with or limit in any way the right of the Company to
terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ
of the Company or any Subsidiary.


(b)For purposes of this Plan, absence from employment because of illness, vacation, approved leaves of
absence, and transfers of employment among the Company and its Subsidiaries, shall not be considered to terminate
employment or to interrupt continuous employment.  


9.2Participation.  No Employee shall have the right to be selected to receive an Award under
this Plan, or, having been so selected, to be selected to receive a future Award.


 

Article 10.

Change in Control


10.1Effect of Change in Control.  Upon the occurrence of a Change in Control, any and all
Options and SARs granted hereunder shall become immediately exercisable and remain exercisable until such Options and
SARs expire or terminate under the provisions of this Plan

10.2Change in Control Not Approved by Incumbent Board.  Upon the occurrence of a Change in
Control not approved by the Incumbent Board, any and all Options and SARs granted hereunder shall become immediately
exercisable and shall remain exercisable throughout their entire term without regard to termination of employment
subsequent to such Change in Control.  


Article 11.

Amendment, Modification, and Termination


11.1Amendment, Modification, and Termination.  The Board may at any time, and from time to
time, alter, amend, suspend or terminate the Plan in whole or in part, subject to any requirement of stockholder
approval imposed by applicable law, rule or regulation.


11.2Awards Previously Granted.  No termination, amendment, or modification of the Plan shall
adversely affect in any material way any Award previously granted under the Plan, without the written consent of the
Participant holding such Award.


 

Article 12.

Withholding


12.1Tax Withholding.  The Company shall have the power and the right to deduct or withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes,
domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result
of the Plan.


12.2Share Withholding.  With respect to withholding required upon the exercise of Options or
SARs, or upon any other taxable event arising as a result of Awards granted hereunder, Participants may elect, subject
to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total
tax which would be imposed on the transaction.  All such elections shall be irrevocable, made in writing, signed by the
Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems
appropriate.


 

Article 13.

Successors


All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any
successor to the Company, whether the existence of such successor is the result of a direct or indirect merger,
consolidation, purchase of all or substantially all of the business and/or assets of the Company or otherwise.



 

Article 14.

Legal Construction


14.1Gender and Number.  Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine; the plural shall include the singular and the singular shall include the
plural.


14.2Severability.  In the event any provision of the Plan shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not been included.


14.3Requirements of Law.  The granting of Awards and the issuance of Shares under the Plan
shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.


14.4Securities Law Compliance. Transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act.  To the extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.


14.5Governing Law.  To the extent not preempted by Federal law, the Plan, and all agreements
hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware.