Exhibit
4.08

    


    


    AMBAC
FINANCIAL GROUP, INC.

    1997
NON-EMPLOYEE DIRECTORS EQUITY PLAN

    (as
amended through June 3, 2008)

    


    


    1.  Purpose

    


    The
purpose of the Ambac Financial Group, Inc. 1997 Non-Employee Directors Equity
Plan (the “Plan”) is
to promote the long-term growth and financial success of the Company by
attracting, motivating and retaining non-employee directors of outstanding
ability and assisting the Company in promoting a greater identity of interest
between the Company’s non-employee directors and its stockholders.

    


    The Plan
replaces the AMBAC Inc. 1991 Non-Employee Directors Stock Plan (the “Predecessor
Plan”). From and after the effective date of the Plan as provided in
Section 11 below, no further awards shall be made under the Predecessor
Plan.

    


    2.  Definitions

    


    For
purposes of the Plan, the following terms shall be defined as
follows:

    


    “Annual Award”
means an Award of Director Options (made in respect of Annual Meetings up
to and including the 2003 Annual Meeting) or Director Annual Stock Units (made
in respect of Annual Meetings beginning with the 2004 Annual Meeting), in each
case as provided in Section 7 below.

    


    “Annual
Meeting” means an annual meeting of the Company’s
stockholders.

    


    “Award”
means any or all (as the context requires) of Director Annual Stock Units,
Director Five-Year Stock Units and Director Options.

    


    “Board”
means the Board of Directors of the Company.

    


    “Change in
Control” means:

    


    (i) the
acquisition by any Person of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of the Common Stock
then outstanding, but shall not include any such acquisition by:

    


    (A) the
Company;

    


    (B) any
Subsidiary of the Company;

    


    (C) any
employee benefit plan of the Company or of any Subsidiary of the
Company;

    


    (D) any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan;

    


    (E) any
Person who as of January 31, 1996 was the beneficial owner of 15% or more of the
shares of Common Stock outstanding on such date unless and until such Person,
together with all affiliates and associates of such Person, becomes the
beneficial owner of 25% or more of the shares of Common Stock then outstanding
whereupon a Change in Control shall be deemed to have occurred; or

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    (F) any
Person who becomes the beneficial owner of 20% or more, or, with respect to a
Person described in clause (E) above, 25% or more, of the shares of Common Stock
then outstanding as a result of a reduction in the number of shares of Common
Stock outstanding due to the repurchase of shares of Common Stock by the Company
unless and until such Person, after becoming aware that such Person has become
the beneficial owner of 20% or more, or 25% or more, as the case may be, of the
then outstanding shares of Common Stock, acquires beneficial ownership of
additional shares of Common Stock representing 1% or more of the shares of
Common Stock then outstanding, whereupon a Change in Control shall be deemed to
have occurred or

    


    (ii)
individuals who, as of the date this Plan is approved by the Board, constitute
the Board, and subsequently elected members of the Board whose election is
approved or recommended by at least a majority of such current members or their
successors whose election was so approved or recommended (other than any
subsequently elected members whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board), cease for any reason
to constitute at least a majority of such Board; or

    


    (iii)
approval by the stockholders of the Company of (A) a merger or consolidation of
the Company with any other corporation, (B) the issuance of voting securities of
the Company in connection with a merger or consolidation of the Company (or any Subsidiary) pursuant
to applicable stock exchange requirements, or (C) sale or other disposition of
all or substantially all of the assets of the Company or the acquisition of
assets of another corporation (each, a “Business
Combination”), unless, in each case, immediately following such Business
Combination, all or substantially all of the individuals and entities who were
the beneficial owners of the Common Stock outstanding immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 70% of
the then outstanding shares of common stock and 70% 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 corporation resulting from
such Business Combination (including, without limitation, a
corporation 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 Common
Stock.

    


    “Common
Stock” means the Common Stock of the Company, par value $.01 per share,
or such other class or kind of shares or other securities as may be applicable
under Section 13 below.

    


    “Company”
means Ambac Financial Group, Inc., a Delaware corporation, or any successor to
substantially all its business.

    


    “Director
Account” means the bookkeeping record established for each Non-Employee
Director. A Director Account is established only for purposes of measuring the
value of the Company’s obligation to a Non-Employee Director in respect of
Director Stock Units and earnings thereon and not to segregate assets or to
identify assets that may be used to settle Director Stock Units.

    


    “Director Annual
Stock Unit” means a restricted stock unit granted to a Non-Employee
Director pursuant to Section 7 hereof.

    


    “Director
Five-Year Stock Unit” means a restricted stock unit granted to a
Non-Employee Director pursuant to Section 6 hereof.

    


    “Director
Option” means a right to purchase shares of Common Stock granted to a
Non-Employee Director pursuant to Section 7 hereof.

    


    “Director Stock
Unit” means either a Director Five-Year Stock Unit or a Director Annual
Stock Unit.  A Director Stock Unit shall represent the right to
receive one share of Common Stock upon satisfaction of the conditions to vesting
and settlement specified in the Plan.  Director Stock Units shall be
settled exclusively in Common Stock.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Effective
Date” means the effective date of the Plan provided for in Section 11
below.

    


    “Fair Market
Value” means, with respect to a share of Common Stock, the fair market
value thereof as of the relevant date of determination, as determined in
accordance with a valuation methodology approved by the Committee. In the
absence of any alternative valuation methodology approved by the Committee, the
Fair Market Value of a share of Common Stock shall equal the closing price of a
share of Common Stock as reported on the composite tape for securities listed on
the New York Stock Exchange, or such other national securities exchange as may
be designated by the Committee, or in the event that the Common Stock is not
listed for trading on a national securities exchange but is quoted on an
automated quotation system, on such automated quotation system, in any such case
on the valuation date (or if there were no sales on the valuation date, the
closing price as reported on such composite tape or automated quotation system
for the most recent day during which a sale occurred).

    


    “Non-Employee
Director” means a member of the Board who is not an employee of the
Company or any of its subsidiaries.

    


    “Permanent
Disability” means a physical or mental impairment rendering a
Non-Employee Director substantially unable to function as a member of the Board
for any period of six consecutive months. Any dispute as to whether a
Non-Employee Director is Permanently Disabled shall be resolved by a physician
mutually acceptable to the Non-Employee Director and the Company, whose decision
shall be final and binding upon the Non-Employee Director and the
Company.

    


    “Person”
means any individual, firm, corporation, partnership or other
entity.

    


    “Predecessor
Plan” has the meaning set forth in Section 1 above.

    


    “Subsidiary”
means (i) a corporation or other entity with respect to which the Company,
directly or indirectly, has the power, whether through the ownership of voting
securities, by contract or otherwise, to elect at least a majority of the
members of such corporation’s board of directors or analogous governing body, or
(ii) any other corporation or other entity in which the Company, directly or
indirectly, has an equity or similar interest and which the Committee designates
as a Subsidiary for purposes of the Plan.

    


    3.  Administration

    


    (a)  Administration
by the Board.  The Plan shall be administered by the Board,
which may adopt rules and regulations it considers necessary or appropriate to
carry out the Plan’s purposes.  The Board’s interpretation and
construction of any Plan provision shall be final and conclusive. The Board may,
but need not, from time to time delegate some or all of its authority under the
Plan to a committee consisting of one or more members of the Board, any such
delegation to be subject to the restrictions and limits that the Board specifies
at the time of such delegation or thereafter. References in the Plan to the
“Board” shall, to the extent consistent with the terms and limitations of any
such delegation, be deemed to include a reference to any such committee to which
the Board’s authority hereunder has been delegated.

    


    (b)  Award
Certificate.  The terms and conditions of each grant of
Director Stock Units and Director Options under the Plan shall be embodied in an
award agreement or award certificate which shall incorporate the Plan by
reference, shall indicate the date on which the Director Stock Units or Director
Options were granted and the number of Director Stock Units or Director Options
granted on such date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.  Shares
Available

    


    Subject
to the provisions of Section 13 below, the maximum number of shares of Common
Stock which may be issued under the Plan (the “Section 4
Limit”) shall be 560,000 shares plus the number of shares of Common Stock
that remain available for issuance under the Predecessor Plan as of the date the
Plan is approved by the stockholders of the Company (increased by any shares of
Common Stock subject to any Award (or portion thereof) outstanding under the
Predecessor Plan on such date which lapses, expires or is otherwise terminated
without the issuance of such shares or is settled by the delivery of
consideration other than shares). Subject to Section 13 below, of the shares of
Common Stock available for issuance under the Plan, no more than 425,000 shares
may be issued upon settlement of Director Stock Units.  For purposes
of determining the number of shares of Common Stock that remain available for
issuance, there shall be added back to the Section 4 Limit and again be
available under the Plan any shares of Common Stock tendered to pay the exercise
price of a Director Option. Either authorized and unissued shares of Common
Stock or treasury shares may be delivered pursuant to the Plan.

    


    5.  Eligibility

    


    Director
Stock Units and Director Options shall be granted only to Non-Employee
Directors.

    


    6.  Director
Five-Year Stock Units

    


    (a) Grants of
Director Five-Year Stock Units.  Director Five-Year Stock Units
shall be awarded under the Plan as follows:

    


    (i) On
the date of the Annual Meeting coincident with or first succeeding a
Non-Employee Director’s initial election to the Board (or re-election to the
Board after a period during which the Non-Employee Director did not serve on the
Board), the Non-Employee Director shall receive a grant of a number of Director
Five-Year Stock Units calculated by dividing (x) $210,000, by (y) the Fair
Market Value of one share of Common Stock on the date of the relevant Annual
Meeting.

    


    (ii) As
of the date of the Annual Meeting that is closest in time to the applicable
vesting date of any Director Five-Year Stock Units in accordance with Section
6(b)(i) below, or the vesting date of any restricted shares under the
Predecessor Plan in accordance with Section 6(c)(i) thereof, a Non-Employee
Director shall receive an additional grant of Director Five-Year Stock Units (an
“Additional
Grant”), provided that (A) the Annual
Meeting as of which the Additional Grant is to be made occurs during the term of
the Plan as set forth in Section 11 below, and (B) the Non-Employee
Director is standing for re-election at such Annual Meeting.  The
number of Director Five-Year Stock Units included in such Additional Grant shall
be calculated by dividing (x) $210,000, by (y) the Fair Market Value of one
share of Common Stock on the date of the relevant Annual Meeting in connection
with which the Additional Grant is made.

    


    
      (b)
Vesting; Accelerated Vesting; Deferral.

    

    


    (i)
Director Five-Year Stock Units granted in respect of a given Annual Meeting, and
any additional Director Five-Year Stock Units credited to a Director Account in
respect of earnings or other distributions on such Director Five-Year Stock
Units as provided in Section 6(c), shall vest on the fifth anniversary of the
date of grant and shall be settled as soon as practicable thereafter, provided that the
Non-Employee Director shall have remained a member of the Board continuously
from the date of grant until the earlier of (A) such fifth anniversary or
(B) if the Non-Employee Director declines to stand for re-election to the
Board at the Annual Meeting held in the fifth calendar year following the date
of grant, the date of such Annual Meeting.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    (ii)
Notwithstanding the provisions of Section 6(b)(i) above, all Director Five-Year
Stock Units granted to a Non-Employee Director shall immediately vest upon the
first to occur of (A) a Non-Employee Director ceasing to be a member of the
Board as a result of retirement from the Board in accordance with the retirement
policy then applicable to Board members, (B) a Non-Employee Director ceasing to
be a member of the Board as a result of death or Permanent Disability or (C)
subject to the following sentence, a Change in Control of the Company, and shall
be settled as soon as practicable thereafter.  Notwithstanding the
preceding sentence, if any Person commences a tender offer for shares of Common
Stock which, if successfully completed, would result in a Change in Control,
then all Director Five-Year Stock Units granted to a Non-Employee Director shall
vest and be settled immediately prior to the scheduled expiration of such tender
offer, and the Company shall have instituted procedures to enable the
Non-Employee Director, if he so desires, to tender the shares issued upon
settlement of such Director Five-Year Stock Units into such offer.

    


    (c) Forfeiture of
Grant.  Except as provided in Section 6(b)(ii) above, all
Director Five-Year Stock Units shall be forfeited, and all rights of the
Non-Employee Director to or with respect to such Director Stock Units shall
terminate without any obligation on the part of the Company, upon the
termination of a Non-Employee Director’s service as a member of the Board prior
to the date on which such Director Five-Year Stock Units vest in accordance with
Section 6(b)(i) above.

    


    7.  Annual
Awards

    


    (a)
General.  As of the date of each Annual Meeting, commencing
with the 1997 Annual Meeting, each Non-Employee Director shall automatically
receive an Award of Director Options or Director Annual Stock Units as provided
in this Section 7.  A Director Option shall entitle a Non-Employee
Director to purchase a specified number of shares of Common Stock during a
specified period at an exercise price per share of Common Stock determined as
provided below.  All Director Options provided for herein shall have
the general terms and conditions set forth in Section 9 below.

    


    (b) Grants of
Director Options.  As of the date of each Annual Meeting,
commencing with the 1997 Annual Meeting, each Non-Employee Director shall
automatically receive Director Options to purchase 3,750 shares of Common Stock
provided that the Non-Employee Director shall continue to serve as a director of
the Company after such Annual Meeting, provided, however, that beginning with
the 2004 Annual Meeting, no further Awards of Director Options shall be
made.  The exercise price per share of Common Stock of each Director
Option provided for in this Section 7(b) shall be the Fair Market Value of one
share of Common Stock on the date of the relevant Annual Meeting.

    


    (c) Grants of
Director Annual Stock Units.  As of the date of each Annual
Meeting, commencing with the 2004 Annual Meeting, each Non-Employee Director
shall automatically receive a number of Director Annual Stock Units determined
by dividing (i) $100,000 by (ii) the Fair Market Value of one share of Common
Stock on the date of the relevant Annual Meeting.

    


    (d) Grants to New
Directors.  A Non-Employee Director who is initially elected or
appointed to the Board other than in connection with an Annual Meeting shall
receive, as of the date of such initial election or appointment, (i) if such
appointment is made prior to the 2004 Annual Meeting, Director Options to
purchase a number of shares determined by multiplying 3,750 by a fraction (the
“Proration
Fraction”), the numerator of which is the number of full months remaining
until the next Annual Meeting (starting with the month following the date of
election or appointment and counting the month in which the next Annual Meeting
is scheduled to occur as a full month) and the denominator of which is 12 and
(ii) if such appointment is made after the 2004 Annual Meeting, a number of
Director Annual Stock Units calculated by multiplying (x) the number of Director
Annual Stock Units that were awarded to each Non-Employee Director in connection
with the immediately preceding Annual Meeting, times (y) the Proration
Fraction.  (If the date of the next Annual Meeting has not been
scheduled at the time of the Non-Employee Director’s initial election or
appointment, it shall be assumed that the next Annual Meeting will occur in the
same month as the immediately preceding Annual Meeting.)  The exercise
price per share of Common Stock of each Director Option provided for in this
Section 7(d) shall be the

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Fair
Market Value of one share of Common Stock on the date of the Non-Employee
Director’s election or appointment to the Board.

    


    (e)
Vesting.  Annual Awards shall vest as of the first anniversary
of the date of grant, assuming that the Non-Employee Director has continued to
serve as a member of the Board until the earlier of (A) such first anniversary
or (B) if the Non-Employee Director declines to stand for reelection to the
Board at the Annual Meeting held in the calendar year following the date of
grant, the date of such Annual Meeting.  Notwithstanding the preceding
sentence, all Annual Awards shall be considered fully vested upon the earlier to
occur of (X) termination of the Non-Employee Director’s service on the Board by
reason of death or Permanent Disability or (Y) a Change in Control, provided, however, that if any Person
commences a tender offer for shares of Common Stock which, if successfully
completed, would result in a Change in Control, then all Annual Awards granted
to a Non-Employee Director shall vest and, in the case of Director Annual Stock
Units, be settled, immediately prior to the scheduled expiration of such tender
offer, and the Company shall have instituted procedures to enable the
Non-Employee Director, if he so desires, to tender the shares issued upon the
exercise of Director Options or upon the settlement of Director Annual Stock
Units into such offer.

    


    8.  General
Terms and Conditions of Director Stock Units

    


    (a)
Accounts.  As of any date as of which a Non-Employee Director
is granted Director Stock Units, the Director Account of such Non-Employee
Director will be credited with the number of Director Stock Units so
granted.  In the event that the Company pays any cash or other
dividend or makes any other distribution in respect of the Common Stock, each
Director Account will be credited with an additional number of Director Stock
Units (including fractions thereof) determined by dividing (A) the amount of
cash, or the value (as determined by the Board) of any securities or other
property, paid or distributed in respect of one outstanding share of Common
Stock by (B) the Fair Market Value of a share of Common Stock for the date of
such payment or distribution, and multiplying the result of such division by (C)
the number of Director Stock Units that were credited to the Director Account
immediately prior to the date of the dividend or other distribution. Credits
shall be made effective as of the date of the dividend or other distribution in
respect of the Common Stock.

    


    (b)
Notwithstanding the provisions of Sections 6(b)(i), 6(b)(ii) and 7(e)
above, a Non-Employee Director may elect to defer settlement of any or all
Director Stock Units to a date subsequent to the vesting date of such Director
Stock Units, provided
that no such deferral may extend beyond the earlier of (i) the Non-Employee
Director’s termination of service on the Board or (ii) the Non-Employee’s
death.  Settlement of any deferred Director Stock Units shall be made
on or as soon as practicable following the date specified by the Non-Employee
Director in the relevant deferral election or, if applicable, the earlier of the
dates specified in clauses (i) and (ii) of the preceding sentence.

    


    (c) Delivery of
Share Certificates.  As soon as practicable following the
vesting of Director Stock Units as provided in Sections 6(b)(i), 6(b)(ii) or
7(e) above, or the date for deferred settlement as provided in Section 8(b)
above, Director Stock Units shall be settled
either by: (i) delivery to the Non-Employee Director of a share certificate for
the number of shares corresponding to such Director Stock Units (any fractional
Director Stock Unit shall be rounded up to the next whole Director Stock Unit)
or (ii) the transfer of the corresponding number of shares equal to the number
of Director Stock Units being settled (any fractional Director Stock Unit shall
be rounded up to the next whole Director Stock Unit) to the brokerage account
designated by the Non-Employee Director to the Company in writing prior to
settlement.  Shares delivered in settlement of Director Stock
Units shall be free of all such restrictions, except any that may be imposed
under applicable law or the Company’s trading policy.

    


    (d) No
Stockholder Rights.  The crediting of
Director Stock Units to a Director Account shall not confer on the relevant
Non-Employee Director any rights as a stockholder of the Company.

    


    9.  General
Terms and Conditions Director Options

    


    (a) Option
Term.  Each Director Option shall expire on the date of the
Annual Meeting held in the seventh calendar year following the date of grant,
subject to earlier expiration as provided herein, provided, however,
that

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Director
Options granted to a Non-Employee Director whose initial election occurs other
than in connection with an Annual Meeting shall be treated for this purpose as
though they had been granted at the first Annual Meeting following such initial
election.

    


    (b)
Vesting; Accelerated Vesting; Effect of Termination of Service.

    


    (i) Exercisability.  Director
Options shall become exercisable upon vesting.

    


    (ii)
Exercise Following Termination
of Service.  Following termination of a Non-Employee Director’s
service on the Board, the former Non-Employee Director (or the former
Non-Employee Directors’ estate, personal representative or beneficiary, as the
case may be) shall have the right, subject to the other terms and conditions
hereof, to exercise all Director Options that had vested as of or in connection
with the termination of service:

    


    (A) at
any time within three years after the date of termination of service, if such
termination was by reason of death, Permanent Disability or retirement from the
Board in accordance with the retirement policy then in effect for Board members,
or

    


    (B) in
all other cases, at any time within one year after the date of termination of
service; subject, in all case, to earlier expiration of the Director Option
pursuant to Section 9(a) above.

    


    (c) Notice of
Exercise.  Subject to the other terms and conditions of the
Plan, a Non-Employee Director may exercise all or any portion of a vested
Director Option by giving written notice of exercise to the Company or its
designated agent, provided,
however, that no fewer than 10 shares of Common Stock may be purchased
upon any exercise of a Director Option unless the number of shares purchased at
such time is the total number of shares in respect of which the Director Option
is then exercisable, and provided, further, that in no
event shall the Option be exercisable for a fractional share. The date of
exercise of an Option shall be the later of (i) the date on which the Company or
its agent receives such written notice or (ii) the date on which the conditions
provided in Sections 9(d) and 9(e) below are satisfied.

    


    (d)
Payment.  The exercise price of a Director Option may be paid
in cash or previously owned shares or a combination thereof or by any other
method approved by the Board.

    


    (e) Limitation on
Exercise.  A Director Option shall not be exercisable unless
the Common Stock subject thereto has been registered under the Securities Act of
1933, as amended (the “1933
Act”), and qualified under applicable state “blue sky” laws in connection
with the offer and sale thereof, or the Company has determined that an exemption
from registration under the 1933 Act and from qualification under such state
“blue sky” laws is available.

    


    (f) Issuance of
Shares.  Subject to the foregoing conditions, as soon as is
reasonably practicable after its receipt of a proper notice of exercise and
payment of the exercise price for the number of shares with respect to which a
Director Option is exercised, the Company shall deliver to the exercising
Non-Employee Director, at the principal office of the Company or at such other
location as may be acceptable to the Company and the Non-Employee Director, one
or more stock certificates for the appropriate number of shares of Common Stock
issued in connection with such exercise. Such shares shall be fully paid and
nonassessable and shall be issued in the name of the Non-Employee Director.
Notwithstanding the foregoing, the Board in its discretion may, subject to rules
and procedures as it may adopt or impose from time to time, provide Non-Employee
Directors with the opportunity to defer receipt of shares of Common Stock
issuable upon exercise of Director Options.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    10.  Transferability

    


    Director
Stock Units (including interests in a Director Account) and Director Options may
not be transferred, pledged, assigned or otherwise disposed of except by will or
the laws of descent and distribution or pursuant to a domestic relations order,
provided, however, that
Director Options may be transferred to a member or members of a Non-Employee
Director’s immediate family (as defined below) or to one or more trusts or
partnerships established in whole or in part for the benefit of one or more of
such immediate family members (collectively as “Permitted
Transferees”), subject to such rules and procedures as may from time to
time be adopted or imposed by the Board. If a Director Stock Option is
transferred to a Permitted Transferee, it shall be further transferable only by
will or the laws of descent and distribution or, for no consideration, to
another Permitted Transferee of the Non-Employee Director. A Non-Employee
Director shall notify the Company in writing prior to any proposed transfer of a
Director Option to a Permitted Transferee and shall furnish the Company, upon
request, with information concerning such Permitted Transferee’s financial
condition and investment experience. For purposes of the Plan, a Non-Employee
Director’s “immediate family” means any child, stepchild, grandchild, spouse,
son-in-law or daughter-in-law and shall include adoptive relationships; provided, however, that if
the Company adopts a different definition of “immediate family” (or similar
term) in connection with the transferability of employee stock options awarded
to employees of the Company, such definition shall apply, without further action
of the Board, to the Plan.

    


    11.  Term

    


    (a) Effective
Date; Expiration.  The Effective Date shall be the date of the
1997 Annual Meeting, assuming the Plan is approved by the stockholders of the
Company at such Annual Meeting.  Unless earlier terminated in
accordance with Section 12 below, the Plan shall expire on the date of the
Annual Meeting held in 2013.  Grants of Director Five-Year Stock Units
and Director Annual Stock Units shall be made in connection with the Annual
Meeting held in 2013, and shall be the last grants made under the
Plan.  Expiration of the Plan in connection with the Annual Meeting
held in 2013 shall not affect Awards made prior to such Annual Meeting, which
Awards shall remain outstanding subject to the terms hereof.

    


    (b) Coordination
with Predecessor Plan.  Awards of “Directors Shares” (as such
term is defined in the Predecessor Plan) shall be made under the Predecessor
Plan in connection with the 1997 Annual Meeting. Assuming the Plan is approved
by the stockholders of the Company at the 1997 Annual Meeting, no further Awards
shall be made under the Predecessor Plan after the Effective
Date.  Awards outstanding under the Predecessor Plan (including Awards
made in connection with the 1997 Annual Meeting) shall remain outstanding after
the Effective Date subject to the terms thereof.

    


    12.  Amendments

    


    Subject
to the requirements of Section 13, the Board may at any time and from time to
time alter, amend, suspend or terminate the Plan in whole of in part, including
without limitation to amend the provisions for determining the amount of
Director Stock Units or Directors Options to be issued to a Non-Employee
Director, provided,
however, that:

    


    (i) any
amendment which under the requirements of applicable law or stock exchange rule
must be approved by the stockholders of the Company shall not be effective
unless and until such stockholder approval has been obtained in compliance with
such law or rule;

    


    (ii)
except as provided in Section 13 below, the Board may not, without the approval
of the Company’s stockholders, increase the number of shares available for
issuance under the Plan pursuant to Section 4 above or the number of Director
Stock Units or Director Options to be issued to any Non-Employee Director
pursuant to Section 6 or Section 7 above or reduce the exercise price of a
Director Option.

    


    No
termination or amendment of the Plan that would adversely affect a Non-Employee
Director’s rights under the Plan with respect to any Award made prior to such
action shall be effective as to such Non-Employee Director unless he or she
consents thereto.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    13.  Adjustment
of and Changes in Shares

    


    In the
event of any merger, consolidation, recapitalization, reclassification, stock
split, stock dividend, distribution of property, special cash dividend,
split-up, spin-off or other transaction or change in corporate structure
affecting the shares, the Board, shall make (i) such equitable adjustments as it
considers appropriate in the number and kind of shares authorized for issuance
hereunder in order to preserve, but not increase, the benefits or potential
benefits intended to be made available hereunder and/or (ii) such other
adjustments as it deems appropriate. The Board’s determination as to what, if
any, adjustments shall be made shall be final and binding on the Company and all
Non-Employee Directors who receive grants under the Plan.

    


    14.  No
Right to Re-election

    


    Nothing
in the Plan shall be deemed to create any obligation on the part of the Board to
nominate any of its members for re-election by the Company’s stockholders, nor
confer upon any Non-Employee Director the right to remain a member of the Board
for any period of time, or at any particular rate of compensation.

    


    15.  Governing
Law

    


    The Plan
and all agreements entered into under the Plan shall be construed in accordance
with and governed by the laws of the State of Delaware.

    


    16.  No
Restriction on Right of Company to Effect Corporate Changes

    


    The Plan
shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its
business, or any merger or consolidation of the Company, or any issue of stock
or of options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to or affect the
Common Stock or the rights thereof or which are convertible into or exchangeable
for Common Stock, or the dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.

    


    17.  Unfunded
Plan

    


    The Plan
is unfunded. Prior to the payment or settlement of any Award of Director Stock
Units or the exercise of any Director Options, nothing contained herein shall
give any non-Employee Director any rights that are greater than those of a
general creditor of the Company.  In its sole discretion, the Board
may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Common Stock with respect to
Awards hereunder.