Novelos
Therapeutics, Inc.

    2006
Stock Incentive Plan

    (as
Amended November 3, 2009)

    


    SECTION
1.  General Purpose of the Plan; Definitions

     

    The
purpose of this 2006 Stock Incentive Plan (the “Plan”) is to encourage and
enable officers and employees of, and other persons providing services to,
Novelos Therapeutics, Inc. (the “Company”) and its Affiliates to acquire a
proprietary interest in the Company.  It is anticipated that providing
such persons with a direct stake in the Company’s welfare will assure a closer
identification of their interests with those of the Company and its
shareholders, thereby stimulating their efforts on the Company’s behalf and
strengthening their desire to remain with the Company.

     

    The
following terms shall be defined as set forth below:

     

    “Affiliate” means a parent
corporation, if any, and each subsidiary corporation of the Company, as those
terms are defined in Section 424 of the Code.

     

    “Award”
or “Awards”, except where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Statutory Stock Options,
Restricted Stock Awards, Unrestricted Stock Awards, Performance Share Awards and
Stock Appreciation Rights.  Awards shall be evidenced by a written
agreement (which may be in electronic form and may be electronically
acknowledged and accepted by the recipient) containing such terms and conditions
not inconsistent with the provisions of this Plan as the Committee shall
determine.

     

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

     

    “Cause”
shall mean, with respect to any Award holder, a determination by the Company
(including the Board) or any Affiliate that the Holder’s employment or other
relationship with the Company or any such Affiliate should be terminated as a
result of (i) a material breach by the Award holder of any agreement to which
the Award holder and the Company (or any such Affiliate) are parties, (ii) any
act (other than retirement) or omission to act by the Award holder that may have
a material and adverse effect on the business of the Company, such Affiliate or
any other Affiliate or on the Award holder’s ability to perform services for the
Company or any such Affiliate, including, without limitation, the proven or
admitted commission of any crime (other than an ordinary traffic violation), or
(iii) any material misconduct or material neglect of duties by the Award holder
in connection with the business or affairs of the Company or any such
Affiliate.

     

    “Change
of Control” shall have the meaning set forth in Section 15.

     

    “Code”
means the Internal Revenue Code of 1986, as amended, and any successor Code, and
related rules, regulations and interpretations.

     

    “Committee”
shall have the meaning set forth in Section 2.

     

    “Disability”
means disability as set forth in Section 22(e)(3) of the Code.

     

    “Effective
Date” means the date on which the Plan is approved by the Board of Directors as
set forth in Section 17.


    
      
         


      

      
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    “Eligible
Person” shall have the meaning set forth in Section 4.

     

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

     

    “Fair
Market Value” on any given date means the closing price per share of the Stock
on such date as reported by such registered national securities exchange on
which the Stock is listed, or, if the Stock is not listed on such an exchange,
as quoted on NASDAQ; provided, that, if there is no trading on such date, Fair
Market Value shall be deemed to be the closing price per share on the last
preceding date on which the Stock was traded.  If the Stock is not
listed on any registered national securities exchange or quoted on NASDAQ, the
Fair Market Value of the Stock shall be determined in good faith by the
Committee.

     

    “Incentive
Stock Option” means any Stock Option designated and qualified as an “incentive
stock option” as defined in Section 422 of the Code.

     

    “Non-Employee
Director” means any director who: (i) is not currently an officer of the Company
or an Affiliate, or otherwise currently employed by the Company or an Affiliate,
(ii) does not receive compensation, either directly or indirectly, from the
Company or an Affiliate, for services rendered as a consultant or in any
capacity other than as a director, except for an amount that does not exceed the
dollar amount for which disclosure would be required pursuant to Rule 404(a) of
Regulation S-K promulgated by the SEC, (iii) does not possess an interest in any
other transaction for which disclosure would be required pursuant to Rule 404(a)
of  Regulation S-K, and (iv) is not engaged in a business relationship
for which disclosure would be required pursuant to Rule 404(b) of Regulation
S-K.

     

    “Non-Statutory
Stock Option” means any Stock Option that is not an Incentive Stock
Option.

     

    “Normal
Retirement” means retirement in good standing from active employment with the
Company and its Affiliates in accordance with the retirement policies of the
Company and its Affiliates then in effect.

     

    “Option”
or “Stock Option” means any option to purchase shares of Stock granted pursuant
to Section 5.

     

    “Outside
Director” means any director who (i) is not an employee of the Company or of any
“affiliated group,” as such term is defined in Section 1504(a) of the Code,
which includes the Company (an “Affiliated Group Member”), (ii) is not a former
employee of the Company or any Affiliated Group Member who is receiving
compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the Company’s or any Affiliated Group Member’s taxable
year, (iii) has not been an officer of the Company or any Affiliated Group
Member and (iv) does not receive remuneration from the Company or any Affiliated
Group Member, either directly or indirectly, in any capacity other than as a
director.  “Outside Director” shall be determined in accordance with
Section 162(m) of the Code and the Treasury regulations issued
thereunder.

     

    “Performance
Share Award” means an Award pursuant to Section 8.

     

    “Restricted
Stock Award” means an Award granted pursuant to Section 6.

     

    “SEC”
means the Securities and Exchange Commission or any successor
authority.

     

    “Stock”
means the common stock, $0.00001 par value per share, of the Company, subject to
adjustments pursuant to Section 3.


    
      
         


      

      
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    “Stock
Appreciation Right” means an Award granted pursuant to Section 9.

     

    “Unrestricted
Stock Award” means Awards granted pursuant to Section 7.

     

    
      SECTION
2.  Administration of Plan; Committee Authority to Select Participants
and Determine Awards.

    

     

    (a)           Committee.  It is
intended that the Plan shall be administered by the Compensation Committee of
the Board (the “Committee”), consisting of not less than two (2) persons each of
whom qualifies as an Outside Director and a Non-Employee Director, but the
authority and validity of any act taken or not taken by the Committee shall not
be affected if any person administering the Plan is not an  Outside
Director or a Non-Employee Director.  Except as specifically reserved
to the Board under the terms of the Plan, and subject to any limitations set
forth in the charter of the Committee, the Committee shall have full and final
authority to operate, manage and administer the Plan on behalf of the
Company.

     

    (b)           Powers of
Committee.  The Committee shall have the power and authority to
grant and modify Awards consistent with the terms of the Plan, including the
power and authority:

     

    (i)          
 to select the persons to whom Awards may from time to time be
granted;

     

    (ii)           to
determine the time or times of grant, and the extent, if any, of Incentive Stock
Options, Non-Statutory Stock Options, Restricted Stock, Unrestricted Stock,
Performance Shares and Stock Appreciation Rights, or any combination of the
foregoing, granted to any one or more participants;

     

    (iii)          to
determine the number of shares to be covered by any Award;

     

    (iv)          to
determine and modify the terms and conditions, including restrictions, not
inconsistent with the terms of the Plan, of any Award, which terms and
conditions may differ among individual Awards and participants, and to approve
the form of written instruments evidencing the Awards; provided, however, that
no such action shall adversely affect rights under any outstanding Award without
the participant’s consent;

     

    (v)           to
accelerate the exercisability or vesting of all or any portion of any
Award;

     

    (vi)          to
extend the period in which any outstanding Stock Option or Stock Appreciation
Right may be exercised; and

     

    (vii)         to
adopt, alter and repeal such rules, guidelines and practices for administration
of the Plan and for its own acts and proceedings as it shall deem advisable; to
interpret the terms and provisions of the Plan and any Award (including related
written instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in connection with
the Plan; and to otherwise supervise the administration of the
Plan.

     

    All
decisions and interpretations of the Committee shall be binding on all persons,
including the Company and Plan participants.  No member or former
member of the Committee or the Board shall be liable for any action or
determination made in good faith with respect to this Plan.


    
      
         


      

      
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    SECTION
3.  Shares Issuable under the Plan; Mergers;
Substitution.

     

    (a)           Shares
Issuable.  The maximum number of shares of Stock which may be
issued in respect of Awards (including Stock Appreciation Rights) granted under
the Plan, subject to adjustment upon changes in capitalization of the Company as
provided in this Section 3, shall be 10,000,000 shares, subject to adjustment
upon changes in capitalization of the Company as provided in this Section
3.  For purposes of this limitation, the shares of Stock underlying
any Awards which are forfeited, cancelled, reacquired by the Company or
otherwise terminated (other than by exercise) shall be added back to the shares
of Stock with respect to which Awards may be granted under the
Plan.  Shares issued under the Plan may be authorized but unissued
shares or shares reacquired by the Company.

     

    (b)           Limitation on
Awards.  In no event may any Plan participant be granted Awards
(including Stock Appreciation Rights) with respect to more than 750,000 shares
of Stock in any calendar year. The number of shares of Stock relating to an
Award granted to a Plan participant in a calendar year that is subsequently
forfeited, cancelled or otherwise terminated shall continue to count toward the
foregoing limitation in such calendar year.  In addition, if the
exercise price of an Award is subsequently reduced, the transaction shall be
deemed a cancellation of the original Award and the grant of a new one so that
both transactions shall count toward the maximum shares issuable in the calendar
year of each respective transaction.

     

    (c)           Stock Dividends, Mergers,
etc.  In the event that after approval of the Plan by the
stockholders of the Company in accordance with Section 17, the Company effects a
stock dividend, stock split or similar change in capitalization affecting the
Stock, the Committee shall make appropriate adjustments in (i) the number and
kind of shares of stock or securities with respect to which Awards may
thereafter be granted (including without limitation the limitations set forth in
Sections 3(a) and (b) above), (ii) the number and kind of shares remaining
subject to outstanding Awards, and (iii) the option or purchase price in respect
of such shares.  In the event of any merger, consolidation,
dissolution or liquidation of the Company, the Committee in its sole discretion
may, as to any outstanding Awards, make such substitution or adjustment in the
aggregate number of shares reserved for issuance under the Plan and in the
number and purchase price (if any) of shares subject to such Awards as it may
determine and as may be permitted by the terms of such transaction, or
accelerate, amend or terminate such Awards upon such terms and conditions as it
shall provide (which, in the case of the termination of the vested portion of
any Award, shall require payment or other consideration which the Committee
deems equitable in the circumstances), subject, however, to the provisions of
Section 15.

     

    (d)           Substitute
Awards.  The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who concurrently become employees of the Company or an Affiliate as
the result of a merger or consolidation of the employing corporation with the
Company or an Affiliate or the acquisition by the Company or an Affiliate of
property or stock of the employing corporation.  The Committee may
direct that the substitute awards be granted on such terms and conditions as the
Committee considers appropriate in the circumstances.

     

    SECTION
4.  Eligibility.

     

    Awards
may be granted to officers, directors and employees of, and consultants and
advisers to, the Company or its Affiliates (“Eligible
Persons”).


    
      
         


      

      
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    SECTION
5.  Stock Options.

     

    The
Committee may grant to Eligible Persons options to purchase stock.

     

    Any Stock
Option granted under the Plan shall be in such form as the Committee may from
time to time approve.

     

    Stock
Options granted under the Plan may be either Incentive Stock Options (subject to
compliance with applicable law) or Non-Statutory Stock
Options.  Unless otherwise so designated, an Option shall be a
Non-Statutory Stock Option.  To the extent that any option does not
qualify as an Incentive Stock Option, it shall constitute a Non-Statutory Stock
Option.

     

    No
Incentive Stock Option shall be granted under the Plan after the tenth
anniversary of the date of adoption of the Plan by the Board.

     

    The
Committee in its discretion may determine the effective date of Stock Options,
provided, however, that grants of Incentive Stock Options shall be made only to
persons who are, on the effective date of the grant, employees of the Company or
an Affiliate.  Stock Options granted pursuant to this Section 5 shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable.

     

    (a)           Exercise
Price.  The exercise price per share for the Stock covered by a
Stock Option granted pursuant to this Section 5 shall be determined by the
Committee at the time of grant but shall be not less than one hundred percent
(100%) of Fair Market Value on the day immediately preceding the date of
grant.  If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than ten
percent (10%) of the combined voting power of all classes of stock of the
Company or any subsidiary or parent corporation and an Incentive Stock Option is
granted to such employee, the option price shall be not less than one hundred
ten percent (110%) of Fair Market Value on the day immediately preceding the
date of grant.

     

    (b)           Option Term.  The
term of each Stock Option shall be fixed by the Committee, but no Incentive
Stock Option shall be exercisable more than ten (10)  years after the
date the option is granted.  If an employee owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code) more than ten
percent (10%) of the combined voting power of all classes of stock of the
Company or any subsidiary or parent corporation and an Incentive Stock Option is
granted to such employee, the term of such option shall be no more than five (5)
years from the date of grant.

     

    (c)           Exercisability; Rights of a
Shareholder.  Stock Options shall become vested and exercisable
at such time or times, whether or not in installments, as shall be determined by
the Committee.  The Committee may at any time accelerate the
exercisability of all or any portion of any Stock Option.  An optionee
shall have the rights of a shareholder only as to shares acquired upon the
exercise of a Stock Option and not as to unexercised Stock Options.

     

    (d)           Method of Exercise. Stock
Options may be exercised in whole or in part, by delivering written notice of
exercise to the Company, specifying the number of shares to be
purchased.  Payment of the purchase price may be made by delivery of
cash or bank check or other instrument acceptable to the Committee in an amount
equal to the exercise price of such Options, or, to the extent provided in the
applicable Option Agreement, by one or more of the following
methods:

     

    (i)        
   by delivery to the Company of shares of Stock of the Company
having a Fair Market Value equal in amount to the aggregate exercise price of
the Options being exercised; or


    
      
         


      

      
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    (ii)      
    if the class of Stock is registered under the Exchange
Act at such time, by delivery to the Company of a properly executed exercise
notice along with irrevocable instructions to a broker to deliver promptly to
the Company cash or a check payable and acceptable to the Company for the
purchase price; provided that in the event that the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and other agreements
as the Committee shall prescribe as a condition of such payment procedure
(including, in the case of an optionee who is an executive officer of the
Company, such procedures and agreements as the Committee deems appropriate in
order to avoid any extension of credit in the form of a personal loan to such
officer).  The Company need not act upon such exercise notice until
the Company receives full payment of the exercise price; or

     

    (iii)     
    by reducing the number of Option shares otherwise
issuable to the optionee upon exercise of the Option by a number of shares of
Common Stock having a Fair Market Value equal to such aggregate exercise price
of the Options being exercised; or

     

    (iv)      
   by any combination of such methods of payment.

     

    The
delivery of certificates representing shares of Stock to be purchased pursuant
to the exercise of a Stock Option will be contingent upon receipt from the
Optionee (or a purchaser acting in his stead in accordance with the provisions
of the Stock Option) by the Company of the full purchase price for such shares
and the fulfillment of any other requirements contained in the Stock Option or
imposed by applicable law.

     

    (e)           Non-transferability of
Options.  Except as the Committee may provide with respect to a
Non-Statutory Stock Option, no Stock Option shall be transferable other than by
will or by the laws of descent and distribution and all Stock Options shall be
exercisable, during the optionee’s lifetime, only by the optionee.

     

    (f)           Annual Limit on Incentive Stock
Options.  To the extent required for “incentive stock option”
treatment under Section 422 of the Code, the aggregate Fair Market Value
(determined as of the time of grant) of the Stock with respect to which
Incentive Stock Options granted under this Plan and any other plan of the
Company or its Affiliates become exercisable for the first time by an optionee
during any calendar year shall not exceed $100,000.

     

    SECTION
6. Restricted Stock Awards.

     

    (a)           Nature of Restricted Stock
Award.  The Committee in its discretion may grant Restricted
Stock Awards to any Eligible Person, entitling the recipient to acquire, for
such purchase price, if any, as may be determined by the Committee, shares of
Stock subject to such restrictions and conditions as the Committee may determine
at the time of grant (“Restricted Stock”), including continued employment and/or
achievement of pre-established performance goals and objectives.

     

    (b)           Acceptance of
Award.  A participant who is granted a Restricted Stock Award
shall have no rights with respect to such Award unless the participant shall
have accepted the Award within sixty (60) days (or such shorter date as the
Committee may specify) following the award date by making payment to the Company
of the specified purchase price, if any, of the shares covered by the Award and
by executing and delivering to the Company a written instrument that sets forth
the terms and conditions applicable to the Restricted Stock in such form as the
Committee shall determine.


    
      
         


      

      
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    (c)           Rights as a
Shareholder.  Upon complying with Section 6(b) above, a
participant shall have all the rights of a shareholder with respect to the
Restricted Stock, including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase or forfeiture rights
described in this Section 6 and subject to such other conditions contained in
the written instrument evidencing the Restricted Award.  Unless the
Committee shall otherwise determine, certificates evidencing shares of
Restricted Stock Award shall remain in the possession of the Company until such
shares are vested as provided in Section 6(e) below.

     

    (d)           Restrictions.  Shares
of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as specifically provided herein.  In
the event of termination of employment by the Company and its Affiliates for any
reason (including death, Disability, Normal Retirement and for Cause), any
shares of Restricted Stock which have not then vested  shall
automatically be forfeited to the Company.

     

    (e)           Vesting of Restricted
Stock.  The Committee at the time of grant shall specify the
date or dates and/or the attainment of pre-established performance goals,
objectives and other conditions on which the non-transferability of the
Restricted Stock and the Company’s right of forfeiture shall
lapse.  Subsequent to such date or dates and/or the attainment of such
pre-established performance goals, objectives and other conditions, the shares
on which all restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed “vested.”  The Committee at any time may accelerate
such date or dates and otherwise waive or, subject to Section 13, amend any
conditions of the Award.

     

    (f)           Waiver, Deferral and Reinvestment of
Dividends.  The written instrument evidencing the Restricted
Stock Award may require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.

     

    SECTION
7.  Unrestricted Stock Awards.

     

    (a)           Grant or Sale of Unrestricted
Stock.  The Committee in its discretion may grant or sell to
any Eligible Person shares of Stock free of any restrictions under the Plan
(“Unrestricted Stock”) at a purchase price determined by the
Committee.  Shares of Unrestricted Stock may be granted or sold as
described in the preceding sentence in respect of past services or other valid
consideration.

     

    (b)           Restrictions on
Transfers.  The right to receive unrestricted Stock may not be
sold, assigned, transferred, pledged or otherwise encumbered, other than by will
or the laws of descent and distribution.

     

    SECTION
8.  Performance Share Awards.

     

    A
Performance Share Award is an award entitling the recipient to acquire shares of
Stock upon the attainment of specified performance goals.  The
Committee may make Performance Share Awards independent of or in connection with
the granting of any other Award under the Plan.  Performance Share
Awards may be granted under the Plan to any Eligible Person.  The
Committee in its discretion shall determine whether and to whom Performance
Share Awards shall be made, the performance goals applicable under each such
Award (which may include, without limitation, continued employment by the
recipient or a specified achievement by the recipient, the Company or any
business unit of the Company), the periods during which performance is to be
measured, and all other limitations and conditions applicable to the Award or
the Stock issuable thereunder.  Upon the attainment of the specified
performance goal shares of Stock shall be issued pursuant to the Performance
Share Award as soon as practicable thereafter, but in no event later than two
and one-half months after the calendar year in which such performance goal is
attained.


    
      
         


      

      
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    SECTION
9.  Stock Appreciation Rights.

     

    The
Committee in its discretion may grant Stock Appreciation Rights to any Eligible
Person.  A Stock Appreciation Right shall entitle the participant upon
exercise thereof to receive from the Company, upon written request to the
Company at its principal offices (the “Request”), a number of shares of Stock, a
cash payment, or a combination of shares and cash (as provided in the Stock
Appreciation Right) having an aggregate Fair Market Value equal to the product
of (a) the excess of Fair Market Value, on the date of such Request, over the
exercise price per share of Stock specified in such Stock Appreciation Right
(which exercise price shall be not less than one hundred percent (100%) of Fair
Market Value on the date of grant), multiplied by (b) the number of shares of
Stock for which such Stock Appreciation Right shall be exercised.

     

    SECTION
10.  Termination of Stock Options and Stock Appreciation
Rights.

     

    (a)           Incentive Stock
Options:

     

    (i)        
   Termination
by Death.  If any participant’s employment by the Company and
its Affiliates terminates by reason of death, any Incentive Stock Option owned
by such participant may thereafter be exercised to the extent exercisable at the
date of death, by the legal representative or legatee of the participant, for a
period of one hundred eighty (180) days from the date of death, or until the
expiration of the stated term of the Incentive Stock Option, if
earlier.

     

    (ii)      
     Termination by Reason of Disability
or Normal Retirement.

     

    (A)           Any
Incentive Stock Option held by a participant whose employment by the Company and
its Affiliates has terminated by reason of Disability may thereafter be
exercised, to the extent it was exercisable at the time of such termination, for
a period of ninety (90) days from the date of such termination of employment, or
until the expiration of the stated term of the Option, if earlier.

     

    (B)           Any
Incentive Stock Option held by a participant whose employment by the Company and
its Affiliates has terminated by reason of Normal Retirement may thereafter be
exercised, to the extent it was exercisable at the time of such termination, for
a period of ninety (90) days from the date of such termination of employment, or
until the expiration of the stated term of the Option, if earlier.

     

    (C)           The
Committee shall have sole authority and discretion to determine whether a
participant’s employment has been terminated by reason of Disability or Normal
Retirement.

     

    (iii)           Involuntary Termination without
Cause.  If any participant’s employment by the Company and its
Affiliates has been terminated by the Company without Cause, as determined by
the Committee in its sole discretion, any Incentive Stock Option held by such
participant may thereafter be exercised, to the extent it was exercisable on the
date of termination of employment, for ninety (90) days from the date of
termination of employment or until the expiration of the stated term of the
Option, if earlier.

     

    (iv)           Termination for
Cause.  If any participant’s employment by the Company and its
Affiliates has been terminated for Cause, as determined by the Committee in its
sole discretion, any Incentive Stock Option held by such participant shall
immediately terminate and be of no further force and effect.


    
      
         


      

      
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    (v)           Other
Termination.  Unless otherwise determined by the Committee, if
a participant’s employment by the Company and its Affiliates terminates for any
reason other than death, Disability, or Normal Retirement, involuntary
termination without Cause, or termination for Cause, any Incentive Stock Option
held by such participant may thereafter be exercised, to the extent it was
exercisable on the date of termination of employment, for thirty (30) days from
the date of termination of employment or until the expiration of the stated term
of the Option, if earlier.

     

    (b)           Non-Statutory Stock Options and
Stock Appreciation Rights.  Any Non-Statutory Stock Option or
Stock Appreciation Right granted under the Plan shall contain such terms and
conditions with respect to its termination as the Committee, in its discretion,
may from time to time determine.

     

    SECTION
11.  Tax Withholding and Notice.

     

    (a)           Payment by
Participant.  Each participant shall, no later than the date as
of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of any Federal, state, local
and/or payroll taxes of any kind required by law to be withheld with respect to
such income.  The Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the participant.

     

    (b)           Payment in
Shares.  A Participant may elect, with the consent of the
Committee, to have such tax withholding obligation satisfied, in whole or in
part, by (i) authorizing the Company to withhold from shares of Stock to be
issued pursuant to an Award a number of shares with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due with respect to such Award, or (ii) delivering to the
Company a number of shares of Stock with an aggregate Fair Market Value (as of
the date the withholding is effected) that would satisfy the withholding amount
due.

     

    (c)           Notice of Disqualifying
Disposition.  Each holder of an Incentive Option shall agree to
notify the Company in writing immediately after making a disqualifying
disposition (as defined in Section 421(b) of the Code) of any Stock purchased
upon exercise of an Incentive Stock Option.

     

    SECTION
12.  Transfer and Leave of Absence.

     

    For
purposes of the Plan, the following events shall not be deemed a termination of
employment:

     

    (a)           a
transfer to the employment of the Company from an Affiliate or from the Company
to an Affiliate, or from one Affiliate to another;

     

    (b)           an
approved leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the employee’s right to re-employment is
guaranteed either by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Committee otherwise so provides
in writing; provided, that the vesting date or dates of any unvested Award held
by such employee shall automatically be extended by a period of time equal to
the period of such approved leave of absence.

     

    SECTION 13.  Amendments and
Termination.

     

    The Board
may at any time amend or discontinue the Plan and the Committee may at any time
amend or cancel any outstanding Award for the purpose of satisfying changes in
law or for any other lawful purpose, but no such action shall adversely affect
rights under any outstanding Award without the holder’s
consent.  Notwithstanding the foregoing, neither the Board nor the
Committee shall have the power or authority to decrease the exercise price of
any outstanding Stock Option or Stock Appreciation Right, whether through
amendment, cancellation and regrant, exchange or any other means, except for
changes made pursuant to Section 3(c).


    
      
         


      

      
        B-9

        
          

        

      

      
         


      

    


    This Plan
shall terminate as of the tenth anniversary of its effective
date.  The Board may terminate this Plan at any earlier time for any
reason.  No Award may be granted after the Plan has been
terminated.  No Award granted while this Plan is in effect shall be
adversely altered or impaired by termination of this Plan, except upon the
consent of the holder of such Award.  The power of the Committee to
construe and interpret this Plan and the Awards granted prior to the termination
of this Plan shall continue after such termination.

     

    SECTION 14.  Status of
Plan.

     

    With
respect to the portion of any Award which has not been exercised and any
payments in cash, Stock or other consideration not received by a participant, a
participant shall have no rights greater than those of a general creditor of the
Company unless the Committee shall otherwise expressly determine in connection
with any Award or Awards.

     

    SECTION 15.  Change of
Control Provisions.

     

    (a)           Upon
the occurrence of a Change of Control as defined in this Section
15:

     

    (i)      
     subject to the provisions of clause (iii) below,
after the effective date of such Change of Control, each holder of an
outstanding Stock Option, Restricted Stock Award, Performance Share Award or
Stock Appreciation Right shall be entitled, upon exercise of such Award, to
receive, in lieu of shares of Stock (or consideration based upon the Fair Market
Value of Stock), shares of such stock or other securities, cash or property (or
consideration based upon shares of such stock or other securities, cash or
property) as the holders of shares of Stock received in connection with the
Change of Control;

     

    (ii)           the
Committee may accelerate, fully or in part, the time for exercise of, and waive
any or all conditions and restrictions on, each unexercised and unexpired Stock
Option, Restricted Stock Award, Performance Share Award and Stock Appreciation
Right, effective upon a date prior or subsequent to the effective date of such
Change of Control, as specified by the Committee; or

     

    (iii)          each
outstanding Stock Option, Restricted Stock Award, Performance Share Award and
Stock Appreciation Right may be cancelled by the Committee as of the effective
date of any such Change of Control provided that (x) prior written notice of
such cancellation shall be given to each holder of such an Award and (y) each
holder of such an Award shall have the right to exercise such Award to the
extent that the same is then exercisable or, in full, if the Committee shall
have accelerated the time for exercise of all such unexercised and unexpired
Awards, during the thirty (30) day period preceding the effective date of such
Change of Control.

     

    (b)           “Change
of Control” shall mean the occurrence of any one of the following
events:

     

    (i)    
       any “person” (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) becomes, after the Effective
Date of this Plan, a “beneficial owner” (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, or any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of the
Company’s then outstanding securities; or


    
      
         


      

      
        B-10

        
          

        

      

      
         


      

    


    (ii)           the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation or other entity, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or

     

    (iii)          the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.

     

    SECTION 16.  General
Provisions.

     

    (a)           No Distribution; Compliance with
Legal Requirements.  The Committee may require each person
acquiring shares pursuant to an Award to represent to and agree with the Company
in writing that such person is acquiring the shares without a view to
distribution thereof.

     

    No shares
of Stock shall be issued pursuant to an Award until all applicable securities
laws and other legal and stock exchange requirements have been
satisfied.  The Committee may require the placing of such stop orders
and restrictive legends on certificates for Stock and Awards as it deems
appropriate.

     

    (b)           Delivery of Stock
Certificates.  Delivery of stock certificates to participants
under this Plan shall be deemed effected for all purposes when the Company or a
stock transfer agent of the Company shall have delivered such certificates in
the United States mail, addressed to the participant, at the participant’s last
known address on file with the Company.

     

    (c)           Other Compensation Arrangements; No
Employment Rights.  Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
including trusts, subject to stockholder approval if such approval is required;
and such arrangements may be either generally applicable or applicable only in
specific cases.  The adoption of the Plan or any Award under the Plan
does not confer upon any employee any right to continued employment with the
Company or any Affiliate.

     

    (d)           Lock-Up
Agreement.   By accepting any Award, the recipient shall be
deemed to have agreed that, if so requested by the Company or by the
underwriters managing any underwritten offering of the Company’s securities, the
recipient will not, without the prior written consent of the Company or such
underwriters, as the case may be, sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any shares subject to any
such Award during the Lock-up Period, as defined below. The “Lock-Up Period”
shall mean a period of time not exceeding 180 days or, if greater, such number
of days as shall have been agreed to by each director and executive officer of
the Company in connection with such offering in a substantially similar lock-up
agreement by which each such director and executive officer is bound. If
requested by the Company or such underwriters, the recipient shall enter into an
agreement with such underwriters consistent with the foregoing.


    
      
         


      

      
        B-11

        
          

        

      

      
         


      

    


    SECTION 17.  Effective Date of
Plan.

     

    This Plan
shall become effective upon its adoption by the Company’s Board of Directors. If
the Plan shall not be approved by the shareholders of the Company within twelve
months following its adoption, this Plan shall terminate and be of no further
force or effect.

     

    SECTION
18.  Governing Law.

     

    This Plan
shall be governed by, and construed and enforced in accordance with, the
substantive laws of the State of Delaware without regard to its principles of
conflicts of laws.

    


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        B-12