ex10-5





	 	 	 	 	 
	Service		Assurance		Consulting
	
		
		

			
and implementation & monitoring services,
including the implementation of
solutions such as PKI, Single Sign-On,
and Information Security technologies.
		internal controls expertise be required.
	
	
	
	

			
Assurance may contract with consulting
providers to provide technical services
to ensure integration of these services
into the client’s overall technical and
application architecture where
required.
	
	
	
	

	• Systems Controls		
Assurance provides systems controls
services to clients implementing ERP or
other large systems initiatives.
These services tend to be functional in
nature and focus on internal control
issues such as data integrity,
security, operations, and business
controls.
		Consulting may contract with assurance providers whereby
assurance providers will provide functional systems
control services on ERP and other large systems
integration projects.
	
	
	
	

			
Assurance may contract with consulting
providers should the implementation of
these controls require systems
integration support.











Exhibit 10.5


KPMG CONSULTING, INC.


2000 LONG-TERM INCENTIVE PLAN


(as amended through March 30, 2001)


I. INTRODUCTION


      1.1 Purposes. The purposes of the 2000 Long-Term Incentive Plan (this
“Plan”) of KPMG Consulting, Inc., a Delaware corporation (the “Company”), are
(i) to align the interests of the Company’s stockholders and the recipients of
awards under this Plan by providing a means to increase the proprietary
interest of such recipients in the Company’s growth and success, (ii) to
advance the interests of the Company by increasing its ability to attract and
retain highly competent officers, other employees, non-employee directors and
consultants and (iii) to motivate such persons to act in the long-term best
interests of the Company and its stockholders.


      1.2 Certain Definitions.


      “Affiliate” shall mean (i) any subsidiary corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, as
described in Section 424(f) of the Code and (ii) any other entity in which the
Company has an equity interest or with which the Company has a significant
business relationship.


      “Agreement” shall mean the written agreement evidencing an award hereunder
between the Company and the recipient of such award.


      “Board” shall mean the Board of Directors of the Company.


      “Bonus Stock” shall mean shares of Common Stock which are not subject to a
Restriction Period or Performance Measures.


      “Bonus Stock Award” shall mean an award of Bonus Stock under this Plan.


      “Change in Control” shall have the meaning set forth in Section 6.8(b).


      “Code” shall mean the Internal Revenue Code of 1986, as amended.


      “Committee” shall mean the committee designated by the Board which,
following an IPO, shall consist of two or more members of the Board, each of
whom may be a “Non-Employee Director” within the meaning of Rule 16b-3 under
the Exchange Act.


      “Common Stock” shall mean the common stock, $0.01 par value, of the
Company.


      “Company” shall have the meaning set forth in Section 1.1.







      “Disability” shall mean the inability of the recipient of an award to
perform substantially such recipient’s duties and responsibilities for a
continuous period of at least six months, as determined solely by the
Committee.


      “Discretionary Director Options” shall have the meaning set forth in
Section 5.4.


      “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.


      “Fair Market Value” shall mean the last sale price of a share of Common
Stock as reported on the Nasdaq National Market on the date as of which such
value is being determined or, if there shall be no reported transactions on
such date, on the next preceding date for which a transaction was reported;
provided, however, that if the Common Stock is not traded on the Nasdaq
National Market, Fair Market Value may be determined by the Committee by
whatever means or method as the Committee, in the good faith exercise of its
discretion, shall at such time deem appropriate.


      “Free-Standing SAR” shall mean an SAR which is not issued in tandem with,
or by reference to, an option, which entitles the holder thereof to receive,
upon exercise, shares of Common Stock (which may be Restricted Stock), cash or
a combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of such SARs which are exercised.


      “Incentive Stock Option” shall mean an option to purchase shares of Common
Stock that meets the requirements of Section 422 of the Code, or any successor
provision, which is intended by the Committee to constitute an Incentive Stock
Option.


      “Incumbent Board” shall have the meaning set forth in Section 6.8(b)(3).


      "IPO” shall mean an initial public offering of Common Stock pursuant to an
effective registration statement under the Securities Act of 1933, as amended.


      “Mature Shares” shall mean previously-acquired shares of Common Stock for
which the holder thereof has good title, free and clear of all liens and
encumbrances and which such holder either (i) has held for at least six months
or (ii) has purchased on the open market.


      “Non-Employee Director” shall mean any director of the Company who is not
an officer or employee of the Company or any subsidiary of the Company and who
is not a partner, principal or employee of KPMG LLP.


      “Non-Statutory Stock Option” shall mean an option to purchase shares of
Common Stock which is not an Incentive Stock Option.


      “Performance Measures” shall mean the criteria and objectives, established
by the Committee, which shall be satisfied or met (i) as a condition to the
exercisability of all or a portion of an option or SAR, (ii) as a condition to
the grant of a Stock Award or (iii) during the applicable Restriction Period or
Performance Period as a condition to the holder’s receipt, in the case of a
Restricted Stock Award, of the shares of Common Stock subject to such award,
or, in


2








the case of a Performance Share Award, of the shares of Common Stock
subject to such award and/or of payment with respect to such award. Such
criteria and objectives may include one or more of the following: the
attainment by a share of Common Stock of a specified Fair Market Value for a
specified period of time, earnings per share, return to stockholders (including
dividends), return on equity, earnings of the Company, revenues, market share,
cash flow or cost reduction goals, or any combination of the foregoing. In the
sole discretion of the Committee, the Committee may amend or adjust the
Performance Measures or other terms and conditions of an outstanding award in
recognition of unusual or nonrecurring events affecting the Company or its
financial statements or changes in law or accounting principles.


      “Performance Period” shall mean any period designated by the Committee
during which the Performance Measures applicable to a Performance Share Award
shall be measured.


      “Performance Share” shall mean a right, contingent upon the attainment of
specified Performance Measures within a specified Performance Period, to
receive one share of Common Stock, which may be Restricted Stock or, in lieu of
all or a portion thereof, the Fair Market Value of such share of Common Stock
in cash.


      “Performance Share Award” shall mean an award of Performance Shares under
this Plan.


      “Person” shall have the meaning set forth in Section 6.8(b)(3).


      “Restricted Stock” shall mean shares of Common Stock which are subject to
a Restriction Period.


      “Restricted Stock Award” shall mean an award of Restricted Stock under
this Plan.


      “Restriction Period” shall mean any period designated by the Committee
during which the Common Stock subject to a Restricted Stock Award may not be
sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such
award.


      “Retirement” shall mean termination of employment with or service to the
Company by reason of retirement on or after age 65.


      “SAR” shall mean a stock appreciation right which may be a Free-Standing
SAR or a Tandem SAR.


      “Stock Award” shall mean a Restricted Stock Award or a Bonus Stock Award.


      “Tandem SAR” shall mean an SAR which is granted in tandem with, or by
reference to, an option (including a Non-Statutory Stock Option granted prior
to the date of grant of the SAR), which entitles the holder thereof to receive,
upon exercise of such SAR and surrender for cancellation of all or a portion of
such option, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price

3









of such SAR, multiplied by the number of shares of Common Stock subject to
such option, or portion thereof, which is surrendered.


      “Tax Date” shall have the meaning set forth in Section 6.5.


      “Ten Percent Holder” shall have the meaning set forth in Section 2.1(a).


      1.3 Administration. This Plan shall be administered by the Committee.
Any one or a combination of the following awards may be made under this Plan to
eligible persons: (i) options to purchase shares of Common Stock in the form
of Incentive Stock Options or Non-Statutory Stock Options, (ii) SARs in the
form of Tandem SARs or Free-Standing SARs, (iii) Stock Awards in the form of
Restricted Stock or Bonus Stock and (iv) Performance Shares. The Committee
shall, subject to the terms of this Plan, select eligible persons for
participation in this Plan and determine the form, amount and timing of each
award to such persons and, if applicable, the number of shares of Common Stock,
the number of SARs and the number of Performance Shares subject to such an
award, the exercise price or base price associated with the award, the time and
conditions of exercise or settlement of the award and all other terms and
conditions of the award, including, without limitation, the form of the
Agreement evidencing the award. The Committee may, in its sole discretion and
for any reason at any time, take action such that (i) any or all outstanding
options and SARs shall become exercisable in part or in full, (ii) all or a
portion of the Restriction Period applicable to any outstanding Restricted
Stock Award shall lapse, (iii) all or a portion of the Performance Period
applicable to any outstanding Performance Share Award shall lapse and (iv) the
Performance Measures applicable to any outstanding award (if any) shall be
deemed to be satisfied at the maximum or any other level. The Committee shall,
subject to the terms of this Plan, interpret this Plan and the application
thereof, establish rules and regulations it deems necessary or desirable for
the administration of this Plan and may impose, incidental to the grant of an
award, conditions with respect to the award, such as limiting competitive
employment or other activities. All such interpretations, rules, regulations
and conditions shall be final, binding and conclusive.


      The Committee may delegate some or all of its power and authority
hereunder to the Board or either of the Co-Chief Executive Officers or other
executive officer of the Company as the Committee deems appropriate; provided,
however, that the Committee may not delegate its power and authority to either
of the Co-Chief Executive Officers or other executive officer of the Company
with regard to the selection for participation in this Plan of an officer or
other person subject to Section 16 of the Exchange Act or decisions concerning
the timing, pricing or amount of an award to such an officer or other person.


      No member of the Board or Committee, and neither a Co-Chief Executive
Officer nor any other executive officer to whom the Committee delegates any of
its power and authority hereunder, shall be liable for any act, omission,
interpretation, construction or determination made in connection with this Plan
in good faith, and the members of the Board and the Committee and the Co-Chief
Executive Officers or other executive officer shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage or expense (including attorneys’ fees) arising therefrom to the full
extent permitted by law, except as otherwise may be provided in the Company’s
Certificate of Incorporation and/or By-laws, and under any directors’ and
officers’ liability insurance that may be in effect from time to time.


4









      A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the
Committee present at any meeting at which a quorum is present or (ii) acts
approved in writing by all of the members of the Committee without a meeting.


      1.4 Eligibility. Participants in this Plan shall consist of such
officers, other employees and consultants, and persons expected to become
officers, other employees and consultants, of the Company and its Affiliates,
as the Committee in its sole discretion may select from time to time, and such
other persons designated by the Committee pursuant to Section 6.13. For
purposes of this Plan, references to employment also shall mean a consulting
relationship and references to employment by the Company also shall mean
employment by an Affiliate. The Committee’s selection of a person to
participate in this Plan at any time shall not require the Committee to select
such person to participate in this Plan at any other time. Non-Employee
Directors of the Company shall be eligible to participate in this Plan in
accordance with Article V.


      1.5 Shares Available.


      (a) Shares Available. The number of shares of Common Stock that are
authorized for grants or awards under this Plan (the “Authorized Shares”) shall
at all times be equal to the greater of (i) subject to adjustment as provided
in Section 6.7, 177,000,000 shares and (ii) 25% of the sum of (x) the number of
issued and outstanding shares of Common Stock of the Company plus (y) the
Authorized Shares, provided, however, that the number of Authorized Shares
shall never be reduced below the number of shares that are then issuable under
all outstanding grants or awards. The number of shares of Common Stock that
shall be available for grants or awards under this Plan (the “Available
Shares”) shall be equal to the number of Authorized Shares reduced by the sum
of the aggregate number of shares of Common Stock, adjusted as provided in
Section 6.7, which become subject to outstanding options, including
Discretionary Director Options, outstanding Free-Standing SARs, outstanding
Stock Awards and outstanding Performance Share Awards.


      (b) Maximum Grants of Incentive Stock Options. Subject to adjustment as
provided in Section 6.7, the maximum number of shares that may be granted as
Incentive Stock Options shall be 177,000,000.


      (c) Restoration of Available Shares. To the extent that shares of Common
Stock subject to an outstanding option (except to the extent shares of Common
Stock are issued or delivered by the Company in connection with the exercise of
a Tandem SAR), Free-Standing SAR, Stock Award or Performance Share Award are
not issued or delivered by reason of the expiration, termination, cancellation
or forfeiture of such award or by reason of the delivery or withholding of
shares of Common Stock to pay all or a portion of the purchase price of an
award, if any, or to satisfy all or a portion of the tax withholding
obligations relating to an award, then such shares of Common Stock shall again
be available under this Plan.


      (d) Available Common Stock. Shares of Common Stock shall be made
available from authorized and unissued shares of Common Stock, or authorized
and issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.


5









II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS


      2.1 Stock Options. The Committee may, in its discretion, grant options to
purchase shares of Common Stock to such eligible persons as may be selected by
the Committee. Each option, or portion thereof, that is not an Incentive Stock
Option shall be a Non-Statutory Stock Option. An Incentive Stock Option may
not be granted to any person who is not an employee of the Company or any
parent or subsidiary (as defined in Section 424 of the Code). Each Incentive
Stock Option shall be granted within ten years of the date this Plan is adopted
by the Board. To the extent that the aggregate Fair Market Value (determined
as of the date of grant) of shares of Common Stock with respect to which
options designated as Incentive Stock Options are exercisable for the first
time by a participant during any calendar year (under this Plan or any other
plan of the Company or any parent or subsidiary as defined in Section 424 of
the Code) exceeds the amount (currently $100,000) established by the Code, such
options shall constitute Non-Statutory Stock Options.


      Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms
of this Plan, as the Committee shall deem advisable:


      (a) Number of Shares and Purchase Price. The number of shares of Common
Stock subject to an option and the purchase price per share of Common Stock
purchasable upon exercise of the option shall be determined by the Committee;
provided, however, that the purchase price per share of Common Stock
purchasable upon exercise of the option shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the date of grant of such option;
and provided further, that if an Incentive Stock Option shall be granted to any
person who, at the time such option is granted, owns capital stock possessing
more than ten percent of the total combined voting power of all classes of
capital stock of the Company (or of any parent or subsidiary as defined in
Section 424 of the Code) (a “Ten Percent Holder”), the purchase price per share
of Common Stock shall not be less than the price (currently 110% of Fair Market
Value) required by the Code in order to constitute an Incentive Stock Option.


      (b) Exercise Period and Exercisability. The period during which an option
may be exercised shall be determined by the Committee; provided, however, that
no Incentive Stock Option shall be exercised later than ten years after its
date of grant; and provided further, that if an Incentive Stock Option shall be
granted to a Ten Percent Holder, such option shall not be exercised later than
five years after its date of grant. The Committee may, in its discretion,
establish Performance Measures which shall be satisfied or met as a condition
to the grant of an option or to the exercisability of all or a portion of an
option. The Committee shall determine whether an option shall become
exercisable in cumulative or non-cumulative installments and in part or in full
at any time. An exercisable option, or portion thereof, may be exercised only
with respect to whole shares of Common Stock.


      (c) Method of Exercise. An option may be exercised (i) by giving written
notice to the Company specifying the number of whole shares of Common Stock to
be purchased and by accompanying such notice with payment therefor in full (or
by arranging for such payment to the Company’s satisfaction) either (A) in
cash, (B) by delivery (either actual delivery or by attestation procedures
established by the Company) of Mature Shares having an aggregate Fair


6








Market Value, determined as of the date of exercise, equal to the
aggregate purchase price payable by reason of such exercise, (C) in cash by a
broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (D) a combination of (A) and (B), in each
case to the extent set forth in the Agreement relating to the option, (ii) if
applicable, by surrendering to the Company any Tandem SARs which are cancelled
by reason of the exercise of the option and (iii) by executing such documents
as the Company may reasonably request. The Company shall have sole discretion
to disapprove of an election pursuant to any of clauses (i)(B)-(D). Any
fraction of a share of Common Stock which would be required to pay such
purchase price shall be disregarded and the remaining amount due shall be paid
in cash by the optionee. No certificate representing Common Stock shall be
delivered until the full purchase price therefor and any withholding taxes
thereon, as described in Section 6.5, have been paid (or arrangement made for
such payment to the Company’s satisfaction).


      2.2 Stock Appreciation Rights. The Committee may, in its discretion,
grant SARs to such eligible persons as may be selected by the Committee. The
Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a
Free-Standing SAR.


      SARs shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms
of this Plan, as the Committee shall deem advisable:


      (a) Number of SARs and Base Price. The number of SARs subject to an
award shall be determined by the Committee. Any Tandem SAR related to an
Incentive Stock Option shall be granted at the same time that such Incentive
Stock Option is granted. The base price of a Tandem SAR shall be the exercise
price per share of Common Stock of the related option. The base price of a
Free-Standing SAR shall be determined by the Committee; provided, however, that
such base price shall not be less than 100% of the Fair Market Value of a share
of Common Stock on the date of grant of such SAR.


      (b) Exercise Period and Exercisability. The Agreement relating to an
award of SARs shall specify whether such award may be settled in shares of
Common Stock (including shares of Restricted Stock) or cash or a combination
thereof. The period for the exercise of an SAR shall be determined by the
Committee; provided, however, that no Tandem SAR shall be exercised later than
the expiration, cancellation, forfeiture or other termination of the related
option. The Committee may, in its discretion, establish Performance Measures
which shall be satisfied or met as a condition to the grant of an SAR or to the
exercisability of all or a portion of an SAR. The Committee shall determine
whether an SAR may be exercised in cumulative or non-cumulative installments
and in part or in full at any time. An exercisable SAR, or portion thereof,
may be exercised, in the case of a Tandem SAR, only with respect to whole
shares of Common Stock and, in the case of a Free-Standing SAR, only with
respect to a whole number of SARs. If an SAR is exercised for shares of
Restricted Stock, a certificate or certificates representing such Restricted
Stock shall be issued in accordance with Section 3.2(c) and the holder of such
Restricted Stock shall have such rights of a stockholder of the Company as
determined pursuant to Section 3.2(d). Prior to the exercise of an SAR for
shares of Common Stock, including Restricted Stock, the holder of such SAR
shall have no rights as a stockholder of the Company with respect to the shares
of Common Stock subject to such SAR.


7









      (c) Method of Exercise. A Tandem SAR may be exercised (i) by giving
written notice to the Company specifying the number of whole SARs which are
being exercised, (ii) by surrendering to the Company any options which are
cancelled by reason of the exercise of the Tandem SAR and (iii) by executing
such documents as the Company may reasonably request. A Free-Standing SAR may
be exercised (i) by giving written notice to the Company specifying the whole
number of SARs which are being exercised and (ii) by executing such documents
as the Company may reasonably request.


      2.3 Termination of Employment or Service. Subject to the requirements of
the Code, all of the terms relating to the exercise, cancellation or other
disposition of an option or SAR upon a termination of employment with or
service to the Company of the recipient of such option or SAR, as the case may
be, whether by reason of Disability, Retirement, death or any other reason,
shall be determined by the Committee.


III. STOCK AWARDS


      3.1 Stock Awards. The Committee may, in its discretion, grant Stock
Awards to such eligible persons as may be selected by the Committee. The
Agreement relating to a Stock Award shall specify whether the Stock Award is a
Restricted Stock Award or Bonus Stock Award.


      3.2 Terms of Stock Awards. Stock Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions,
not inconsistent with the terms of this Plan, as the Committee shall deem
advisable.


      (a) Number of Shares and Other Terms. The number of shares of Common
Stock subject to a Restricted Stock Award or Bonus Stock Award and the
Performance Measures (if any) and Restriction Period applicable to a Restricted
Stock Award shall be determined by the Committee. Bonus Stock Awards shall not
be subject to any Performance Measures or Restriction Periods.


      (b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock
Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of the
shares of Common Stock subject to such award (i) if specified Performance
Measures are satisfied or met during the specified Restriction Period or (ii)
if the holder of such award remains continuously in the employment of or
service to the Company during the specified Restriction Period and for the
forfeiture of all or a portion of the shares of Common Stock subject to such
award (x) if specified Performance Measures are not satisfied or met during the
specified Restriction Period or (y) if the holder of such award does not remain
continuously in the employment of or service to the Company during the
specified Restriction Period.


      (c) Share Certificates. During the Restriction Period, a certificate or
certificates representing a Restricted Stock Award may be registered in the
holder’s name or a nominee name at the discretion of the Company and may bear a
legend, in addition to any legend which may be required pursuant to Section
6.6, indicating that the ownership of the shares of Common Stock represented by
such certificate is subject to the restrictions, terms and conditions of this


8








Plan and the Agreement relating to the Restricted Stock Award. As
determined by the Committee, all certificates registered in the holder’s name
shall be deposited with the Company, together with stock powers or other
instruments of assignment (including a power of attorney), each endorsed in
blank with a guarantee of signature if deemed necessary or appropriate by the
Company, which would permit transfer to the Company of all or a portion of the
shares of Common Stock subject to the Restricted Stock Award in the event such
award is forfeited in whole or in part. Upon termination of any applicable
Restriction Period (and the satisfaction or attainment of applicable
Performance Measures), or upon the grant of a Bonus Stock Award, in each case
subject to the Company’s right to require payment of any taxes in accordance
with Section 6.5, a certificate or certificates evidencing ownership of the
requisite number of shares of Common Stock shall be delivered to the holder of
such award.


      (d) Rights with Respect to Restricted Stock Awards. Unless otherwise set
forth in the Agreement relating to a Restricted Stock Award, and subject to the
terms and conditions of the Agreement relating to a Restricted Stock Award, the
holder of such award shall have all rights as a stockholder of the Company,
including, but not limited to, voting rights, the right to receive dividends
and the right to participate in any capital adjustment applicable to all
holders of Common Stock; provided, however, that a distribution with respect to
shares of Common Stock, other than a regular cash dividend, shall be deposited
with the Company and shall be subject to the same restrictions as the shares of
Common Stock with respect to which such distribution was made.


      3.3 Termination of Employment or Service. All of the terms relating to
the satisfaction of Performance Measures and the termination of the Restriction
Period relating to a Restricted Stock Award, or any forfeiture and cancellation
of such award upon a termination of employment with or service to the Company
of the recipient of such award, whether by reason of Disability, Retirement,
death or any other reason, shall be determined by the Committee.


IV. PERFORMANCE SHARE AWARDS


      4.1 Performance Share Awards. The Committee may, in its discretion, grant
Performance Share Awards to such eligible persons as may be selected by the
Committee.


      4.2 Terms of Performance Share Awards. Performance Share Awards shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.


      (a) Number of Performance Shares and Performance Measures. The number of
Performance Shares subject to any award and the Performance Measures and
Performance Period applicable to such award shall be determined by the
Committee.


      (b) Vesting and Forfeiture. The Agreement relating to a Performance
Share Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of such
award, if specified Performance Measures are satisfied or met during the
specified Performance Period, and for the forfeiture of all or a portion of
such award, if specified Performance Measures are not satisfied or met during
the specified Performance Period.


9









      (c) Settlement of Vested Performance Share Awards. The Agreement
relating to a Performance Share Award (i) shall specify whether such award may
be settled in shares of Common Stock (including shares of Restricted Stock) or
cash or a combination thereof and (ii) may specify whether the holder thereof
shall be entitled to receive, on a current or deferred basis, dividend
equivalents, and, if determined by the Committee, interest on or the deemed
reinvestment of any deferred dividend equivalents, with respect to the number
of shares of Common Stock subject to such award. If a Performance Share Award
is settled in shares of Restricted Stock, a certificate or certificates
representing such Restricted Stock shall be issued in accordance with Section
3.2(c) and the holder of such Restricted Stock shall have such rights of a
stockholder of the Company as determined pursuant to Section 3.2(d). Prior to
the settlement of a Performance Share Award in shares of Common Stock,
including Restricted Stock, the holder of such award shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock subject
to such award.


      4.3 Termination of Employment or Service. All of the terms relating to
the satisfaction of Performance Measures and the termination of the Performance
Period relating to a Performance Share Award, or any forfeiture and
cancellation of such award upon a termination of employment with or service to
the Company of the recipient of such award, whether by reason of Disability,
Retirement, death or other termination, shall be determined by the Committee.


V. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS


      5.1 Eligibility. Each Non-Employee Director shall be granted options to
purchase shares of Common Stock in accordance with this Article V. All options
granted under this Article V shall constitute Non-Statutory Stock Options.


      5.2 Automatic Grants of Stock Options. Each Non-Employee Director shall
automatically be granted Non-Statutory Stock Options as follows:


      (a) Time of Grant. Automatic grants of Non-Statutory Stock Options shall
be made on the dates specified below:


      (1) Each person who is serving as a Non-Employee Director as of March 20,
2001 shall automatically be granted, on the date that the next Non-Employee
Director is elected, an option to purchase 15,000 shares of Common Stock.


      (2) Each person who is first elected or first begins to serve as a
Non-Employee Director on or after March 20, 2001 shall automatically be
granted, on the date of such initial election or service, an option to purchase
15,000 shares of Common Stock.


      (3) Each person who is a Non-Employee Director immediately following any
annual meeting of stockholders of the Company held after 2001 shall
automatically be granted, on the date of such meeting, an option to purchase
4,000 shares of Common Stock.


      (b) Purchase Price. The purchase price per share of Common Stock
purchasable upon exercise of an option granted under this Section 5.2 shall be
100% of the Fair Market Value of a share of Common Stock on the date of grant
of such option.


10








      (c) Exercise Period and Exercisability. Each option granted under
Section 5.2(a)(1) or Section 5.2(a)(2) shall be fully exercisable on and after
the one year anniversary of its date of grant and each option granted under
Section 5.2(a)(3) shall be fully exercisable on and after the day preceding the
day of the next annual meeting of stockholders of the Company following its
date of grant. Each option granted under this Section 5.2 shall expire 10
years after its date of grant. An exercisable option, or portion thereof, may
be exercised in whole or in part only with respect to whole shares of Common
Stock. Options granted under this Section 5.2 shall be exercisable in
accordance with Section 2.1(c).


      5.3 Termination of Directorship. (a) Disability. If the recipient of an
option granted under Section 5.2 ceases to be a director of the Company by
reason of Disability, each such option held by the holder thereof shall be
exercisable only to the extent such option is exercisable on the effective date
of such recipient’s ceasing to be a director and may thereafter be exercised by
such holder (or such holder’s legal representative or similar person) until and
including the earlier to occur of the (i) date which is one year after the
effective date of such recipient’s ceasing to be a director and (ii) the
expiration date of the term of such option.


      (b) Retirement. If the recipient of an option granted under Section 5.2
ceases to be a director of the Company by reason of Retirement, each such
option held by the holder thereof shall be exercisable only to the extent such
option is exercisable on the effective date of such recipient’s ceasing to be a
director and may thereafter be exercised by such holder (or such holder’s legal
representative or similar person) until and including the earlier to occur of
the (i) date which is three months after the effective date of such recipient’s
ceasing to be a director and (ii) the expiration date of the term of such
option.


      (c) Death. If the recipient of an option granted under Section 5.2
ceases to be a director of the Company by reason of death, each such option
held by the holder thereof shall be exercisable only to the extent such option
is exercisable on the effective date of such recipient’s ceasing to be a
director and may thereafter be exercised by such holder’s executor,
administrator, legal representative, beneficiary or similar person until and
including the earlier to occur of the (i) date which is one year after the date
of such recipient’s death and (ii) the expiration date of the term of such
option.


      (d) Other Termination. If the recipient of an option granted under
Section 5.2 ceases to be a director of the Company for any reason other than
Disability, Retirement or death, each such option held by the holder thereof
shall be exercisable only to the extent such option is exercisable on the
effective date of such recipient’s ceasing to be a director and may thereafter
be exercised by such holder (or such holder’s legal representative or similar
person) until and including the earlier to occur of the (i) date which is three
months after the effective date of such recipient’s ceasing to be a director
and (ii) the expiration date of the term of such option.


      (e) Death Following Termination of Directorship. If the recipient of an
option granted under Section 5.2 dies during the period set forth in Section
5.3(a) following such recipient’s ceasing to be a director of the Company by
reason of Disability, or if such recipient dies during the period set forth in
Section 5.3(b) following such recipient’s Retirement, or if such a recipient
dies during the period set forth in Section 5.3(d) following such recipient’s
ceasing to be a director for any reason other than by reason of Disability or
Retirement, each such option held by


11








the holder thereof shall be exercisable only to the extent that such
option is exercisable on the date of the recipient’s death and may thereafter
be exercised by such holder’s executor, administrator, legal representative,
beneficiary or similar person until and including the earlier to occur of the
(i) date which is one year after the date of such recipient’s death and (ii)
the expiration date of the term of such option.


      5.4 Discretionary Grants of Stock Options. The Committee may, in its
discretion, grant additional options to purchase shares of Common Stock
(“Discretionary Director Options”) to all Non-Employee Directors or to any one
or more of them. Each Discretionary Director Option shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee
shall deem advisable:


      (a) Number of Shares and Purchase Price. The number of shares of Common
Stock subject to a Discretionary Director Option and the purchase price per
share of Common Stock purchasable upon exercise of the option shall be
determined by the Committee; provided, however, that the purchase price per
share of Common Stock purchasable upon exercise of the option shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the date of
grant of such option.


      (b) Exercise Period and Exercisability. The period during which a
Discretionary Director Option may be exercised shall be determined by the
Committee. The Committee may, in its discretion, establish Performance
Measures which shall be satisfied or met as a condition to the grant of a
Discretionary Director Option or to the exercisability of all or a portion of a
Discretionary Director Option. The Committee shall determine whether a
Discretionary Director Option shall become exercisable in cumulative or
non-cumulative installments and in part or in full at any time. An exercisable
Director Discretionary Option, or portion thereof, may be exercised only with
respect to whole shares of Common Stock. Each Discretionary Director Option
shall be exercisable in accordance with Section 2.1(c).


      (c) Termination of Directorship. All of the terms relating to the
exercise, cancellation or other disposition of a Discretionary Director Option
upon a termination of service as a director of the Company of the recipient of
a Discretionary Director Option, whether by reason of Disability, Retirement,
death or any other reason, shall be determined by the Committee.


VI. GENERAL


      6.1 Effective Date and Term of Plan. This Plan shall be submitted to the
stockholders of the Company for approval within 12 months following its
adoption by the Board and, if approved, shall become effective as of the date
of such adoption by the Board. No option may be exercised prior to the date of
such stockholder approval. This Plan shall terminate 10 years after its
effective date, unless terminated earlier by the Board. Termination of this
Plan shall not affect the terms or conditions of any award granted prior to
such termination.


      6.2 Amendments. The Board or the Committee may amend this Plan as it
shall deem advisable, subject to any requirement of stockholder approval
required by applicable law, rule or regulation, including Section 422 of the
Code; provided, however, that no amendment shall be


12








made without stockholder approval if such amendment would (a) increase the
maximum number of shares of Common Stock available under this Plan (subject to
Section 6.7), (b) effect any change inconsistent with Section 422 of the Code
or (c) extend the term of this Plan. No amendment may impair the rights of a
holder of an outstanding award without the consent of such holder.


      6.3 Agreement. No award shall be valid until an Agreement is executed by
the Company and the recipient of such award and, upon execution by each party
and delivery of the Agreement to the Company, such award shall be effective as
of the effective date set forth in the Agreement.


      6.4 Non-Transferability of Awards. Unless the Committee provides for the
transferability of a particular award and such transferability is specified in
the Agreement relating to such award, no award shall be transferable other than
by will, the laws of descent and distribution or pursuant to beneficiary
designation procedures stated in Section 6.11 or otherwise approved by the
Company. Except to the extent permitted by the foregoing sentence or the
Agreement relating to the Award, each award may be exercised or settled during
the recipient’s lifetime only by the recipient or the recipient’s legal
representative or similar person. Except to the extent permitted by the second
preceding sentence or the Agreement relating to the Award, no award may be
sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise
disposed of (whether by operation of law or otherwise) or be subject to
execution, attachment or similar process. Upon any attempt to so sell,
transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any
such award, such award and all rights thereunder shall immediately become null
and void.


      6.5 Tax Withholding. The Company shall have the right to require, prior
to the issuance or delivery of any shares of Common Stock or the payment of any
cash pursuant to an award made hereunder, payment by the holder of such award
of any federal, state, local or other taxes which may be required to be
withheld or paid in connection with such award. An Agreement may provide that
(i) the Company shall withhold whole shares of Common Stock which would
otherwise be delivered to a holder, having an aggregate Fair Market Value
determined as of the date the obligation to withhold or pay taxes arises in
connection with an award (the “Tax Date”), or withhold an amount of cash which
would otherwise be payable to a holder, in the amount necessary to satisfy any
such obligation or (ii) the holder may satisfy any such obligation by any of
the following means: (A) a cash payment to the Company, (B) delivery (either
actual delivery or by attestation procedures established by the Company) to the
Company of Mature Shares having an aggregate Fair Market Value, determined as
of the Tax Date, equal to the amount necessary to satisfy any such obligation,
(C) authorizing the Company to withhold whole shares of Common Stock which
would otherwise be delivered having an aggregate Fair Market Value, determined
as of the Tax Date, or withhold an amount of cash which would otherwise be
payable to a holder, equal to the amount necessary to satisfy any such
obligation, (D) in the case of the exercise of an option, a cash payment by a
broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (E) any combination of (A), (B) and (C), in
each case to the extent set forth in the Agreement relating to the award;
provided, however, that the Company shall have sole discretion to disapprove of
an election pursuant to any of clauses (ii)(B)-(E). Any fraction of a share of


13








Common Stock which would be required to satisfy such an obligation shall
be disregarded and the remaining amount due shall be paid in cash by the
holder.


      6.6 Restrictions on Shares. Each award made hereunder shall be subject to
the requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the exercise or settlement
of such award or the delivery of shares thereunder, such award shall not be
exercised or settled and such shares shall not be delivered unless such
listing, registration, qualification, consent, approval or other action shall
have been effected or obtained, free of any conditions not acceptable to the
Company. The Committee may provide for such restrictions upon the
transferability of shares of Common Stock delivered pursuant to any award made
hereunder as it deems appropriate and such restrictions shall be specified in
the Agreement relating to such award. The Company may require that
certificates evidencing shares of Common Stock delivered pursuant to any award
made hereunder bear a legend indicating that the sale, transfer or other
disposition thereof by the holder is prohibited except in compliance with the
Securities Act of 1933, as amended, and the rules and regulations thereunder
and such other restrictions, if any, specified in the Agreement relating to the
award pursuant to which such shares were delivered.


      6.7 Adjustment. In the event of any stock split, reverse stock split,
stock dividend, recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other similar change
in capitalization or event, or any distribution to holders of Common Stock
other than a regular cash dividend, the class of securities available under
this Plan, the number and class of securities subject to each outstanding
option and the purchase price per security, the number and class of securities
subject to each option to be granted to Non-Employee Directors pursuant to
Section 5.2, the terms of each outstanding SAR, the number and class of
securities subject to each outstanding Stock Award or Performance Share Award,
and the terms of each outstanding Restricted Stock Award or Performance Share
Award shall be appropriately adjusted by the Committee, such adjustments to be
made in the case of outstanding options and SARs without an increase in the
aggregate purchase price or base price. The decision of the Committee
regarding any such adjustment shall be final, binding and conclusive. If any
such adjustment would result in a fractional security being (a) available under
this Plan, such fractional security shall be disregarded, or (b) subject to an
award under this Plan, the Company shall pay the holder of such award, in
connection with the first vesting, exercise or settlement of such award in
whole or in part occurring after such adjustment, an amount in cash determined
by multiplying (i) the fraction of such security (rounded to the nearest
hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the
vesting, exercise or settlement date over (B) the exercise or base price, if
any, of such award.


      6.8 Change in Control.


      (a) (1) Notwithstanding any provision in this Plan or any Agreement, in
the event of a Change in Control in connection with which the holders of Common
Stock receive shares of common stock that are registered under Section 12 of
the Exchange Act, (i) all outstanding options and SARS shall immediately become
exercisable in full, (ii) the Restriction Period applicable to any outstanding
Restricted Stock Award shall lapse, (iii) the Performance Period


14








applicable to any outstanding Performance Share Award shall lapse, (iv)
the Performance Measures applicable to any outstanding award shall be deemed to
be satisfied at the maximum level and (v) there shall be substituted for each
share of Common Stock available under this Plan, whether or not then subject to
an outstanding award, the number and class of shares into which each
outstanding share of Common Stock shall be converted pursuant to such Change in
Control. In the event of any such substitution, the purchase price per share
in the case of an option and the base price in the case of an SAR shall be
appropriately adjusted by the Committee (whose determination shall be final,
binding and conclusive), such adjustments to be made in the case of outstanding
options and SARs without an increase in the aggregate purchase price or base
price.


      (2) Notwithstanding any provision in this Plan or any Agreement, in the
event of any Change in Control other than a Change in Control in connection
with which the holders of Common Stock receive shares of common stock that are
registered under Section 12 of the Exchange Act, each outstanding award shall
be surrendered to the Company by the holder thereof, and each such award shall
immediately be cancelled by the Company, and the holder shall receive, within
ten days of the occurrence of a Change in Control, a cash payment from the
Company in an amount equal to (i) in the case of an option, the number of
shares of Common Stock then subject to such option, multiplied by the excess,
if any, of the greater of (A) the highest per share price offered to
stockholders of the Company in any transaction whereby the Change in Control
takes place or (B) the Fair Market Value of a share of Common Stock on the date
of occurrence of the Change in Control, over the purchase price per share of
Common Stock subject to the option, (ii) in the case of a Free-Standing SAR,
the number of shares of Common Stock then subject to such SAR, multiplied by
the excess, if any, of the greater of (A) the highest per share price offered
to stockholders of the Company in any transaction whereby the Change in Control
takes place or (B) the Fair Market Value of a share of Common Stock on the date
of occurrence of the Change in Control, over the base price of the SAR, (iii)
in the case of a Restricted Stock Award or Performance Share Award, the number
of shares of Common Stock or the number of Performance Shares, as the case may
be, then subject to such award, multiplied by the greater of (A) the highest
per share price offered to stockholders of the Company in any transaction
whereby the Change in Control takes place or (B) the Fair Market Value of a
share of Common Stock on the date of occurrence of the Change in Control. In
the event of such a Change in Control, each Tandem SAR shall be surrendered by
the holder thereof and shall be cancelled simultaneously with the cancellation
of the related option. The Company may, but is not required to, cooperate with
any person who is subject to Section 16 of the Exchange Act to assure that any
cash payment in accordance with the foregoing to such person is made in
compliance with Section 16 and the rules and regulations thereunder.


      (b) “Change in Control” shall mean:


      (1) a sale or transfer of all or substantially all of the assets of the
Company on a consolidated basis in any transaction or series of related
transactions;


      (2) any merger, consolidation or reorganization to which the Company is a
party, except for a merger, consolidation or reorganization in which the
Company is the surviving corporation and, after giving effect to such merger,
consolidation or reorganization, the holders of the Company’s outstanding
equity (on a fully diluted basis) immediately prior to the merger,


15








consolidation or reorganization will own in the aggregate immediately
following the merger, consolidation or reorganization the Company’s outstanding
equity (on a fully diluted basis) either (i) having the ordinary voting power
to elect a majority of the members of the Company’s board of directors to be
elected by the holders of Common Stock and any other class which votes together
with the Common Stock as a single class or (ii) representing at least 50% of
the equity value of the Company as reasonably determined by the Board;


      (3) individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
such Board; provided, however, that any individual who becomes a director of
the Company subsequent to the date hereof whose election, or nomination for
election by the holders of the Company’s equity, was approved by the vote of at
least a majority of the directors then comprising the Incumbent Board shall be
deemed to have been a member of the Incumbent Board; and provided further, that
no individual who was initially elected as a director of the Company as a
result of an actual or threatened solicitation by any individual, entity or
group (a “Person”) other than the Board, including any “person” within the
meaning of Section 13(d) of the Exchange Act , for the purpose of opposing a
solicitation by any other Person with respect to the election or removal of
directors, or any other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board shall be deemed to
have been a member of the Incumbent Board; or


      (4) any Person other than KPMG LLP or its affiliates, acquires beneficial
ownership of 30% or more of the outstanding equity of the Company generally
entitled to vote on the election of directors.


      6.9 No Right of Participation or Employment. No person shall have any
right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment by the
Company or any Affiliate of the Company or affect in any manner the right of
the Company or any Affiliate of the Company to terminate the employment of any
person at any time without liability hereunder.


      6.10 Rights as Stockholder. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock or other
equity security of the Company which is subject to an award hereunder unless
and until such person becomes a stockholder of record with respect to such
shares of Common Stock or equity security.


      6.11 Designation of Beneficiary. If permitted by the Company, a holder of
an award may file with the Committee a written designation of one or more
persons as such holder’s beneficiary or beneficiaries (both primary and
contingent) in the event of the holder’s death. To the extent an outstanding
option or SAR granted hereunder is exercisable, such beneficiary or
beneficiaries shall be entitled to exercise such option or SAR. Each
beneficiary designation shall become effective only when filed in writing with
the Committee during the holder’s lifetime on a form prescribed by the
Committee. The spouse of a married holder domiciled in a community property
jurisdiction shall join in any designation of a beneficiary other than such
spouse. The filing with the Committee of a new beneficiary designation shall
cancel all previously filed beneficiary designations. If a holder fails to
designate a beneficiary, or if all designated beneficiaries of a holder
predecease the holder, then each outstanding option and SAR hereunder


16