Exhibit 10.9 


SCHOLASTIC CORPORATION 2001 STOCK INCENTIVE PLAN
(Amended and Restated as of September 23,
2008)


ARTICLE I

PURPOSE


          The
purpose of this Scholastic Corporation 2001 Stock Incentive Plan is to enhance
the profitability and value of the Company for the benefit of its stockholders
by enabling the Company to offer employees of, and Consultants to, the Company
and its Affiliates stock-based incentives in the Company, thereby creating a
means to raise the level of stock ownership by employees and Consultants in
order to attract, retain and reward such individuals and strengthen the
mutuality of interests between such individuals and the Company’s stockholders.



ARTICLE II

DEFINITIONS


          For
purposes of this Plan, the following terms shall have the following meanings: 


2.1 “ACQUISITION
EVENT” has the meaning set forth in Section 4.2(d). 


2.2 “AFFILIATE”
means each of the following: (i) any Subsidiary; (ii) any Parent; (iii) any
corporation, trade or business (including, without limitation, a partnership or
limited liability company) which is directly or indirectly controlled 50% or
more (whether by ownership of stock, assets or an equivalent ownership interest
or voting interest) by the Company or one of its Affiliates; (iv) any
corporation, trade or business (including, without limitation, a partnership or
limited liability company) which directly or indirectly controls 50% or more
(whether by ownership of stock, assets or an equivalent ownership interest or
voting interest) of the Company or a Parent; and (v) any other entity in which the
Company or any of its Affiliates has a material equity interest and which is
designated as an “Affiliate” by resolution of the Committee. 


2.3 “AWARD”
means any award under this Plan of any (a) Stock Option; (b) Restricted Stock;
(c) Other Stock-Based Award; or (d) other award providing benefits similar to
(a) through (c) designed to meet the requirements of a Foreign Jurisdiction. 


2.4 “AWARD
AGREEMENT” means, with respect to each Award, a written agreement between the
Company and the Participant setting forth the terms and conditions of the
Award, including, without limitation, a Stock Option Agreement and Restricted
Stock Agreement. 


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


2.6 “CAUSE”
shall mean, with respect to the Termination of Employment of an employee or
Termination of Consultancy of a Consultant, (1) in the case where there is no
employment agreement or consultancy agreement between the Company or an
Affiliate and the Participant in effect at the time of the relevant grant or where
there is an employment agreement or consultancy agreement in effect at such
time, but such agreement does not define “cause” (or words of like import),
termination due to a Participant’s dishonesty, fraud, insubordination, willful
misconduct, refusal to perform services (for any reason other than illness or
incapacity) or materially unsatisfactory performance of his or her duties for
the Company or an Affiliate, as determined by 


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the Committee in its sole
discretion; or (2) in the case where there is an employment agreement or
consultancy agreement between the Company or an Affiliate and the Participant
in effect at the time of grant that defines cause (or words of like import),
termination that is or would be deemed to be “for cause” (or words of like
import) as defined under such employment agreement or consultancy agreement at
the time of grant, as determined by the Committee in its sole discretion. 


2.7 “CODE”
means the Internal Revenue Code of 1986, as amended. Any reference to any
section of the Code shall also be a reference to any successor provision. 


2.8 “COMMITTEE”
means a committee or subcommittee of the Board appointed from time to time by
the Board, which committee or subcommittee shall consist of two or more
non-employee directors, each of whom is intended to be, to the extent required
by Rule 16b-3, a “non-employee director” as defined in Rule 16b-3 and, to the
extent required by Section 162(m) of the Code and any regulations thereunder,
an “outside director” as defined under Section 162(m) of the Code; provided,
however, that if and to the extent that no Committee exists which has the
authority to administer this Plan, the functions of the Committee shall be
exercised by the Board and all references herein to the Committee shall be deemed
to be references to the Board. 


2.9 “COMMON
STOCK” means the Common Stock, $.01 par value per share, of the Company. 


2.10 “COMPANY”
means Scholastic Corporation, a Delaware corporation, and its successors by
operation of law. 


2.11 “CONSULTANT”
means any advisor or consultant to the Company or its Affiliates. 


2.12 “DISABILITY”
means (1) in the case where there is no employment agreement or consultancy
agreement between the Company or an Affiliate and the Participant in effect at
the time of the relevant grant, or where there is an employment agreement or
consultancy agreement in effect at such time, but such agreement does not
define disability, total and permanent disability, as defined in Section
22(e)(3) of the Code, as determined by the Committee in its sole discretion; or
(2) in the case where there is an employment agreement or consultancy agreement
between the Company or an Affiliate and the Participant at the time of the
relevant grant that defines disability, disability as defined under such employment
agreement or consultancy agreement, as determined by the Committee in its sole
discretion. 


2.13 “EFFECTIVE
DATE” means the effective date of this Plan as defined in Article XIV. 


2.14 “ELIGIBLE
EMPLOYEE” means each employee of the Company or an Affiliate. 


2.15 “EXCHANGE
ACT” means the Securities Exchange Act of 1934, as amended. Any references to
any section of the Exchange Act shall also be a reference to any successor
provision. 


2.16 “FAIR
MARKET VALUE” means, unless otherwise required by any applicable provision of
the Code or any regulations issued thereunder, as of any date, the mean between
the high and low sales prices of a share of Common Stock on the applicable
date: (i) as reported on the principal national securities exchange on which it
is then traded or The Nasdaq Stock Market, Inc. (“NASDAQ”) or (ii) if not
traded on any such national securities exchange or NASDAQ the mean of the
closing bid and asked prices of a share of Common Stock as reported by an
automated quotation system sponsored by the National Association of Securities
Dealers, Inc. If 


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the Common Stock is not
readily tradable on a national securities exchange, NASDAQ or any automated
quotation system sponsored by the National Association of Securities Dealers,
Inc., its Fair Market Value shall be set in good faith by the Committee.
Notwithstanding anything herein to the contrary, with respect to Incentive
Stock Options, “Fair Market Value” means the price for Common Stock set by the
Committee in good faith based on reasonable methods set forth under Section 422
of the Code and the regulations thereunder including, without limitation, a
method utilizing the average of prices of the Common Stock reported on the
principal national securities exchange on which it is then traded during a
reasonable period designated by the Committee. For purposes of the grant of any
Stock Option, the applicable date shall be the date for which a mean sales
price is available at the time of grant. 


2.17 “FAMILY
MEMBER” means, solely to the extent provided for in Securities Act Form S-8,
any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the employee’s household (other than
a tenant or employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the employee)
control the management of assets, and any other entity in which these persons
(or the employee) own more than 50% of the voting interests or as otherwise
defined in Securities Act Form S-8. 


2.18 “FOREIGN
JURISDICTION” means any jurisdiction outside of the United States including,
without limitation, countries, states, provinces and localities. 


2.19 “INCENTIVE
STOCK OPTION” means any Stock Option awarded to an Eligible Employee under this
Plan intended to be, and designated as, an “Incentive Stock Option” within the
meaning of Section 422 of the Code. 


2.20 “NON-QUALIFIED
STOCK OPTION” means any Stock Option awarded under this Plan that is not an
Incentive Stock Option. 


2.21 “OTHER
STOCK-BASED AWARD” means an Award of Common Stock and other Awards made
pursuant to Article VIII that are valued in whole or in part by reference to,
or are payable in or otherwise based on, Common Stock, including, without
limitation, an Award valued by reference to performance of an Affiliate. 


2.22 “PARENT”
means any parent corporation of the Company within the meaning of Section
424(e) of the Code. 


2.23 “PARTICIPANT”
means any Eligible Employee or Consultant to whom an Award has been made under
this Plan. 


2.24 “PERFORMANCE
GOALS” has the meaning set forth in Section 9.1. 


2.25 “PLAN”
means this Scholastic Corporation 2001 Stock Incentive Plan, as amended from
time to time. 


2.26 “RESTRICTED
STOCK” means an Award of shares of Common Stock under this Plan that is subject
to restrictions under Article VII. 


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2.27 “RESTRICTION
PERIOD” has the meaning set forth in Section 7.3(a) with respect to Restricted
Stock or Other Stock-Based Awards. 


2.28 “RULE
16B-3” means Rule 16b-3 under Section 16(b) of the Exchange Act as then in
effect or any successor provisions. 


2.29 “SECTION
162(M) OF THE CODE” means Section 162(m) of the Code and any Treasury
regulations thereunder. 


2.30 “SECURITIES
ACT” means the Securities Act of 1933, as amended. Any reference to any section
of the Securities Act shall also be a reference to any successor provision. 


2.31 “STOCK
OPTION” or “OPTION” means any option to purchase shares of Common Stock granted
to Eligible Employees or Consultants under Article VI. 


2.32 “SUBSIDIARY”
means any subsidiary corporation of the Company within the meaning of Section
424(f) of the Code. 


2.33 “TEN
PERCENT STOCKHOLDER” means a person owning stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company, its
Subsidiaries or its Parent. 


2.34 “TERMINATION
OF CONSULTANCY” means (i) the expiration of the contract (or in the case of
more than one contract, all contracts) under which services are performed by
the Consultant for the Company or an Affiliate; or (ii) when an entity which is
retaining a Participant as a Consultant ceases to be an Affiliate unless the
Participant otherwise is, or thereupon becomes, a Consultant to the Company or
another Affiliate at the time the entity ceases to be an Affiliate. In the
event that a Consultant becomes an Eligible Employee or a non-employee director
upon the termination of his or her consultancy, the Committee, in its sole and
absolute discretion, may determine that no Termination of Consultancy shall be
deemed to occur until such time as such individual is no longer a Consultant,
an Eligible Employee or a non-employee director. Notwithstanding the foregoing,
the Committee may otherwise define Termination of Consultancy in the Award
Agreement or, if no rights of a Participant are reduced, may otherwise define
Termination of Consultancy thereafter. 


2.35 “TERMINATION
OF EMPLOYMENT” means: (i) a termination of employment (for reasons other than a
military or personal leave of absence granted by the Company) of a Participant
from the Company and its Affiliates; or (ii) when an entity which is employing
a Participant ceases to be an Affiliate, unless the Participant otherwise is,
or thereupon becomes, employed by the Company or another Affiliate at the time
the entity ceases to be an Affiliate. In the event that an Eligible Employee
becomes a Consultant or non-employee director upon the termination of his or
her employment, the Committee, in its sole and absolute discretion, may
determine that no Termination of Employment shall be deemed to occur until such
time as such individual is no longer an Eligible Employee, a Consultant or a
non-employee director. Notwithstanding the foregoing, the Committee may
otherwise define Termination of Employment in the Award Agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Employment thereafter. 


2.36 “TRANSFER”
means (a) when used as a noun, any direct or indirect transfer, sale,
assignment, pledge, hypothecation, encumbrance or other disposition (including
the issuance of 


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equity in a Person), whether
for value or no value and whether voluntary or involuntary (including by
operation of law), and (b) when used as a verb, to directly or indirectly
transfer, sell, assign, pledge, hypothecate, encumber, or otherwise dispose of
(including the issuance of equity in a Person), whether for value or no value
and whether voluntarily or involuntarily (including by operation of law). 


ARTICLE III

ADMINISTRATION


3.1 THE
COMMITTEE. The Plan shall be administered and interpreted by the Committee. If
for any reason the appointed Committee does not meet the requirements of Rule
16b-3 or Section 162(m) of the Code, such noncompliance with the requirements
of Rule 16b-3 or Section 162(m) of the Code shall not affect the validity of
Awards, grants, interpretations or other actions of the Committee. 


3.2 GRANTS
OF AWARDS. The Committee shall have full authority to grant to Eligible
Employees and Consultants, pursuant to the terms of this Plan, (i) Stock
Options, (ii) Restricted Stock, (iii) Other Stock-Based Awards or (iv) other
awards providing benefits similar to (i) through (iii) designed to meet the
requirements of Foreign Jurisdictions. All Awards shall be granted by,
confirmed by, and subject to the terms of, a written Award Agreement executed
by the Company and the Participant. In particular, the Committee shall have the
authority: 


          (a)
to select the Eligible Employees and Consultants to whom Awards may from
time to time be granted hereunder; 


          (b)
to determine whether and to what extent Awards, including any
combination of two or more Awards, are to be granted hereunder to one or more
Eligible Employees or Consultants; 


          (c)
to determine, in accordance with the terms of this Plan, the number of
shares of Common Stock to be covered by each Award granted hereunder; 


          (d)
to determine the terms and conditions, not inconsistent with the terms
of this Plan, of any Award granted hereunder (including, but not limited to,
the exercise or purchase price (if any), any restriction or limitation, any
vesting schedule or acceleration thereof and any forfeiture restrictions or
waiver thereof, regarding any Award and the shares of Common Stock relating
thereto, based on such factors, if any, as the Committee shall determine, in
its sole discretion); 


          (e)
to determine whether and under what circumstances or method a Stock
Option may be settled; 


          (f)
to determine whether a Stock Option is an Incentive Stock Option or
Non-Qualified Stock Option or whether an Award is intended to satisfy Section
162(m) of the Code; 


          (g)
to determine whether to require an Eligible Employee or Consultant, as a
condition of the granting of any Award, not to sell or otherwise dispose of
shares of Common Stock acquired pursuant to the exercise of an Option or an
Award for a period of time as determined by the Committee, in its sole
discretion, following the date of the acquisition of such Option or Award; 


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          (h)
to modify, extend or renew an Award, subject to Articles XI and XV
herein, provided, however, that if an Award is modified, extended or renewed
and thereby deemed to be the issuance of a new Award under the Code or the
applicable accounting rules, the exercise price of an Award may continue to be
the original exercise price even if less than the Fair Market Value of the Common
Stock at the time of such modification, extension or renewal; and 


          (i)
to offer to buy out an Option previously granted, based on such terms
and conditions as the Committee shall establish and communicate to the
Participant at the time such offer is made. 


3.3 GUIDELINES.
Subject to Articles XI and XV hereof, the Committee shall have the authority to
adopt, alter and repeal such administrative rules, guidelines and practices
governing this Plan and perform all acts, including the delegation of its
administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Award issued under this Plan (and any agreements relating thereto); and to
otherwise supervise the administration of this Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in this Plan or
in any Award Agreement relating thereto in the manner and to the extent it
shall deem necessary to effectuate the purpose and intent of this Plan. The
Committee may adopt special guidelines and provisions for persons who are
residing in, or subject to the taxes of, Foreign Jurisdictions to comply with
applicable tax, securities and other laws and may impose any limitations and restrictions
that it deems necessary to comply with the applicable tax, securities and other
laws of such Foreign Jurisdictions. To the extent applicable, this Plan is
intended to comply with Section 162(m) of the Code and the applicable
requirements of Rule 16b-3 and shall be limited, construed and interpreted in a
manner so as to comply therewith. 


3.4 DECISIONS
FINAL. Any decision, interpretation or other action made or taken in good faith
by or at the direction of the Company, the Board or the Committee (or any of
its members) arising out of or in connection with this Plan shall be within the
absolute discretion of all and each of them, as the case may be, and shall be
final, binding and conclusive on the Company and all employees and Participants
and their respective heirs, executors, administrators, successors and assigns. 


3.5 RELIANCE
ON COUNSEL. The Company, the Board or the Committee may consult with legal
counsel, who may be counsel for the Company or other counsel, with respect to
its obligations or duties hereunder, or with respect to any action or
proceeding or any question of law, and shall not be liable with respect to any
action taken or omitted by it in good faith pursuant to the advice of such
counsel. 


3.6 PROCEDURES.
If the Committee is appointed, the Board shall designate one of the members of
the Committee as chairman and the Committee shall hold meetings, subject to the
By-Laws of the Company, at such times and places as it shall deem advisable. A
majority of the Committee members shall constitute a quorum. All determinations
of the Committee shall be made by a majority of its members. Any decision or
determination reduced to writing and signed by all the Committee members, in
accordance with the By-Laws of the Company, shall be fully as effective as if
it had been made by a vote at a meeting duly called and held. The Committee
shall keep minutes of its meetings and shall make such rules and regulations
for the conduct of its business as it shall deem advisable. 


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3.7 DESIGNATION
OF CONSULTANTS/LIABILITY. 


          (a)
The Committee may designate employees of the Company and Affiliates and
professional advisors to assist the Committee in the administration of this
Plan and may grant authority to officers to execute Award Agreements or other
documents on behalf of the Committee. 


          (b)
The Committee may employ such legal counsel, consultants and agents as
it may deem desirable for the administration of this Plan and may rely upon any
opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by the Committee
in the engagement of any such counsel, consultant or agent shall be paid by the
Company. The Committee, its members and any employee of the Company or Affiliate
designated pursuant to Paragraph (a) above shall not be liable for any action
or determination made in good faith with respect to this Plan. To the maximum
extent permitted by applicable law, no officer of the Company or Affiliate or
member or former member of the Committee shall be liable for any action or
determination made in good faith with respect to this Plan or any Award granted
under it. To the maximum extent permitted by applicable law or the Certificate
of Incorporation or By-Laws of the Company (or if applicable, of an Affiliate)
and to the extent not covered by insurance, each officer and member or former
member of the Committee shall be indemnified and held harmless by the Company
(or if applicable, an Affiliate) against any cost or expense (including
reasonable fees of counsel reasonably acceptable to the Company) or liability
(including any sum paid in settlement of a claim with the approval of the
Company), and shall be advanced amounts necessary to pay the foregoing at the
earliest time and to the fullest extent permitted, arising out of any act or
omission to act in connection with this Plan, except to the extent arising out
of such officer’s, member’s or former member’s own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the
officers, directors or members or former officers, directors or members may
have under applicable law or under the Certificate of Incorporation or By-Laws
of the Company or any Affiliate. Notwithstanding anything else herein, this
indemnification will not apply to the actions or determinations made by an
individual with regard to Awards granted to him or her under this Plan. 


ARTICLE IV

SHARE AND OTHER LIMITATIONS


4.1 SHARES.



          (a) GENERAL
LIMITATION. The aggregate number of shares of Common Stock which may be issued
or used for reference purposes under this Plan or with respect to which Awards
may be granted shall not exceed 6,000,000 shares of Common Stock (subject to
any increase or decrease pursuant to Section 4.2) with respect to all types of
Awards. The shares of Common Stock available under this Plan may be either
authorized and unissued Common Stock or Common Stock held in or acquired for
the treasury of the Company. If any Stock Option granted under this Plan expires,
terminates or is canceled for any reason without having been exercised in full
or, with respect to Stock Options, the Company repurchases any Stock Option,
the number of shares of Common Stock underlying such unexercised or repurchased
Stock Option shall again be available for the purposes of Awards under this
Plan. If any shares of Restricted Stock awarded under this Plan to a
Participant are forfeited or repurchased by the Company for any reason, the
number of forfeited or repurchased shares of Restricted Stock shall again be
available for the purposes of Awards under this Plan. If Common Stock has been 


7






delivered or exchanged by a
Participant as full or partial payment to the Company of an exercise price or
the price of the purchase of an Award other than an Incentive Stock Option, the
number of shares of Common Stock exchanged as payment in connection with the
exercise or purchase shall again be available for purposes of determining the
number of shares of Common Stock available for Awards other than Incentive
Stock Options. If Common Stock has been delivered by a Participant for payment
of withholding taxes, or if the number of shares of Common Stock otherwise
deliverable has been reduced for payment of withholding taxes, the number of
shares of Common Stock delivered by such Participant or reduced for payment of
withholding taxes shall again be available for purposes of determining the
number of shares of Common Stock available for Awards other than Incentive
Stock Options. 


          (b)
INDIVIDUAL PARTICIPANT LIMITATIONS. 


                    (i)
The maximum number of shares of Common Stock subject to any Stock Option
or other Award intended to comply with Section 162(m) of the Code which may be
granted under this Plan during any fiscal year of the Company to each Eligible
Employee or Consultant shall be 250,000 shares per type of Award (subject to
any increase or decrease pursuant to Section 4.2). 


                    (ii)
There are no annual individual Eligible Employee or Consultant share limitations
on Restricted Stock awards unless the grant of such Award or the lapse of the
relevant Restriction Period is subject to attainment of Performance Goals in
accordance with Article IX hereof. 


                    (iii)
The individual Participant limitations set forth in this Section 4.1(b)
shall be cumulative; that is, to the extent that shares of Common Stock for
which Awards are permitted to be granted to an Eligible Employee or a
Consultant during a fiscal year are not covered by an Award to such Eligible
Employee or Consultant in a fiscal year, the number of shares of Common Stock
available for Awards to such Eligible Employee or Consultant shall
automatically increase in the subsequent fiscal years during the term of the
Plan until used. 


4.2 CHANGES.



          (a)
The existence of this Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization
or other change in the Company’s capital structure or its business, any merger
or consolidation of the Company or any Affiliate, any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting Common
Stock, the dissolution or liquidation of the Company or any Affiliate, any sale
or transfer of all or part of the assets or business of the Company or any
Affiliate or any other corporate act or proceeding. 


          (b)
Subject to the provisions of Section 4.2(d), in the event of any change
in the capital structure or business of the Company by reason of any stock
split, reverse stock split, stock dividend, combination or reclassification of
shares, recapitalization, or other change in the capital structure of the
Company, non-cash distribution with respect to its outstanding Common Stock or
capital stock other than Common Stock, merger, consolidation, spin-off,
reorganization, partial or complete liquidation, issuance of rights or warrants
to purchase any Common Stock or securities convertible into Common Stock, or
any other corporate transaction or event having an effect similar to any of the
foregoing and effected, then the aggregate number and kind of shares which
thereafter may be issued under this Plan, the number and kind of shares or other
property (including cash) to be issued upon exercise of an outstanding Stock
Option or other Award 


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granted under this Plan and
the purchase price thereof shall be appropriately adjusted consistent with such
change in such manner as, and to the extent that, the Committee may deem
equitable to prevent substantial dilution or enlargement of the rights granted
to, or available for, Participants under this Plan, and any such adjustment
determined by the Committee in good faith shall be final, binding and conclusive
on the Company and all Participants and employees and their respective heirs,
executors, administrators, successors and assigns. 


          (c)
Fractional shares of Common Stock resulting from any adjustment in
Options or Awards pursuant to Section 4.2(b) shall be aggregated until, and
eliminated at, the time of exercise by rounding-down for fractions less than
one-half and rounding-up for fractions equal to or greater than one-half. No
cash settlements shall be made with respect to fractional shares eliminated by
rounding. Notice of any adjustment shall be given by the Committee to each
Participant whose Award has been adjusted and such adjustment (whether or not
such notice is given) shall be effective and binding for all purposes of this
Plan. 


          (d)
In the event of a merger or consolidation in which the Company is not
the surviving entity or in the event of any transaction that results in the
acquisition of substantially all of the Company’s outstanding Common Stock by a
single person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of all or substantially all of
the Company’s assets (all of the foregoing being referred to as “Acquisition
Events”), then the Committee may, in its sole discretion, terminate, effective
as of the date of the Acquisition Event, all outstanding Stock Options and
Other Stock-Based Awards with respect to which a Participant has a right to
exercise, by delivering notice of termination to each Participant at least 30
days prior to the date of consummation of the Acquisition Event, in which case
during the period from the date on which such notice of termination is
delivered to the consummation of the Acquisition Event, each such Participant
shall have the right to exercise in full all of such Awards held by the
Participant that are then outstanding (without regard to any limitations on
exercisability otherwise contained in the Stock Option or Award Agreements),
but any such exercise shall be contingent upon and subject to the occurrence of
the Acquisition Event, and, provided that, if the Acquisition Event does not
take place within a specified period after giving such notice for any reason
whatsoever, the notice and exercise pursuant thereto shall be null and void. 


          If
an Acquisition Event occurs but the Committee does not terminate the
outstanding Stock Options pursuant to this Section 4.2(d), then the provisions
of Section 4.2(b) shall apply. 


4.3 MINIMUM
PURCHASE PRICE. Notwithstanding any provision of this Plan to the contrary, if
authorized but previously unissued shares of Common Stock are issued under this
Plan, such shares shall not be issued for a consideration which is less than as
permitted under applicable law. 


ARTICLE V

ELIGIBILITY


5.1 GENERAL
ELIGIBILITY. All Eligible Employees and Consultants and prospective employees
of and Consultants to the Company and its Affiliates are eligible to be granted
Non-Qualified Stock Options, Restricted Stock, Other Stock-Based Awards and
awards providing benefits similar to each of the foregoing designed to meet the
requirements of Foreign Jurisdictions under this Plan. Eligibility for the
grant of an Award and actual participation in this Plan shall be determined by
the Committee in its sole discretion. The vesting and exercise of 


9






Awards granted to a
prospective employee or Consultant are conditioned upon such individual
actually becoming an Eligible Employee or Consultant. 


5.2 INCENTIVE
STOCK OPTIONS. All Eligible Employees of the Company, its Subsidiaries and its
Parent (if any) are eligible to be granted Incentive Stock Options under this
Plan. Eligibility for the grant of an Award and actual participation in this
Plan shall be determined by the Committee in its sole discretion. 


ARTICLE VI

STOCK OPTIONS


6.1 STOCK
OPTIONS. Each Stock Option granted hereunder shall be one of two types: (i) a
Non-Qualified Stock Option; or (ii) an Incentive Stock Option intended to
satisfy the requirements of Section 422 of the Code. 


6.2 GRANTS.
The Committee shall have the authority to grant to any Eligible Employee one or
more Non-Qualified Stock Options, Incentive Stock Options or both types of
Stock Options. To the extent that any Stock Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Stock Option, or the portion thereof which
does not qualify, shall constitute a separate Non-Qualified Stock Option. The
Committee shall have the authority to grant to any Consultant one or more
Non-Qualified Stock Options. Notwithstanding any other provision of this Plan
to the contrary or any provision in an Award Agreement evidencing the grant of
a Stock Option to the contrary, any Stock Option granted to an Eligible
Employee of an Affiliate (other than an Affiliate which is a Parent or a
Subsidiary) shall be a Non-Qualified Stock Option. 


6.3 TERMS
OF STOCK OPTIONS. Stock Options granted under this Plan shall be subject to the
following terms and conditions, and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee shall deem desirable: 


          (a)
EXERCISE PRICE. The exercise price per share of Common Stock shall be
determined by the Committee, but shall not be less than 100% of the Fair Market
Value of a share of Common Stock at the time of grant; provided, however, that
if an Incentive Stock Option is granted to a Ten Percent Stockholder, the
exercise price shall be no less than 110% of the Fair Market Value of the
Common Stock at the time of grant. 


          (b)
STOCK OPTION TERM. The term of each Stock Option shall be fixed by the
Committee; provided, however, that no Stock Option shall be exercisable more
than 10 years after the date such Stock Option is granted; and further provided
that the term of an Incentive Stock Option granted to a Ten Percent Stockholder
shall not exceed 5 years. 


          (c)
EXERCISABILITY. Stock Options shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the
Committee at grant. If the Committee provides, in its discretion, that any
Stock Option is exercisable subject to certain limitations (including, without
limitation, that such Stock Option is exercisable only in installments or
within certain time periods), the Committee may waive such limitations on
exercisability at any time at or after grant in whole or in part (including,
without limitation, waiver of the installment exercise provisions or
acceleration of the time at which such Stock 


10






Option may be exercised),
based on such factors, if any, as the Committee shall determine, in its sole
discretion. 


          (d)
METHOD OF EXERCISE. Subject to whatever installment exercise and waiting
period provisions apply under Paragraph (c) above, Stock Options may be
exercised in whole or in part at any time and from time to time during the
Stock Option term by giving written notice of exercise to the Company
specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price as follows: 


                    (i)
in cash or by check, bank draft or money order payable to the order of
the Company; 


                    (ii)
if the Common Stock is traded on a national securities exchange, The
Nasdaq Stock Market, Inc. or quoted on a national quotation system sponsored by
the National Association of Securities Dealers, through a “cashless exercise”
procedure whereby the Participant delivers irrevocable instructions to a broker
to deliver promptly to the Company an amount equal to the purchase price; or 


                    (iii)
on such other terms and conditions as may be acceptable to the Committee
(including, without limitation, the relinquishment of Stock Options or by payment
in full or in part in the form of Common Stock owned by the Participant for any
minimum period necessary to avoid an accounting charge to the Company’s
earnings on its financial statements (and for which the Participant has good
title free and clear of any liens and encumbrances) based on the Fair Market
Value of the Common Stock on the payment date as determined by the Committee).
No shares of Common Stock shall be issued until payment therefor, as provided
herein, has been made or provided for. 


          (e)
INCENTIVE STOCK OPTION LIMITATIONS. To the extent that the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
an Eligible Employee during any calendar year under this Plan and/or any other
stock option plan of the Company, any Subsidiary or any Parent exceeds
$100,000, such Options shall be treated as Non-Qualified Stock Options. In
addition, if an Eligible Employee does not remain employed by the Company, any
Subsidiary or any Parent at all times from the time an Incentive Stock Option
is granted until 3 months prior to the date of exercise thereof (or such other
period as required by applicable law), such Stock Option shall be treated as a
Non-Qualified Stock Option. Should any provision of this Plan not be necessary
in order for the Stock Options to qualify as Incentive Stock Options, or should
any additional provisions be required for such purpose, the Committee may amend
this Plan accordingly, without the necessity of obtaining the approval of the
stockholders of the Company. 


          (f)
FORM, MODIFICATION, EXTENSION AND RENEWAL OF STOCK OPTIONS. Subject to
the terms and conditions and within the limitations of this Plan, Stock Options
shall be evidenced by such form of Award Agreement or grant as is approved by
the Committee, and the Committee may (i) modify, extend or renew outstanding
Stock Options granted under this Plan (provided that the rights of a
Participant are not reduced without his or her consent), and (ii) accept the
surrender of outstanding Stock Options (up to the extent not theretofore
exercised) and authorize the granting of new Stock Options in substitution
therefor (to the extent not theretofore exercised). 


11






         (g)
OTHER TERMS AND CONDITIONS. Options may contain such other provisions, which
shall not be inconsistent with any of the foregoing terms of this Plan, as the
Committee shall deem appropriate including, without limitation, permitting
“reloads” such that the same number of Options are granted as the number of
shares used to pay for the exercise price of Options and/or shares used to pay
withholding taxes (“Reloads”). With respect to Reloads, the exercise price of
the new Stock Option shall be the Fair Market Value on the date of the “reload”
and the term of the Stock Option shall be the same as the remaining term of the
Options that are exercised, if applicable, or such other exercise price and
term as determined by the Committee. 


ARTICLE VII 

RESTRICTED STOCK


7.1 AWARDS OF
RESTRICTED STOCK. Shares of Restricted Stock may be issued to Eligible
Employees or Consultants either alone or in addition to other Awards granted
under this Plan. The Committee shall determine the Eligible Employees or
Consultants to whom, and the time or times at which, grants of Restricted Stock
will be made, the number of shares to be awarded, the price (if any) to be paid
by the recipient (subject to Section 7.2), the time or times within which such
Awards may be subject to forfeiture, the vesting schedule and rights to
acceleration thereof, and all other terms and conditions of the Awards. 


7.2 AWARDS AND
CERTIFICATES. An Eligible Employee or Consultant selected to receive Restricted
Stock shall not have any rights with respect to such Award, unless and until
such Participant has delivered to the Company a fully executed copy of the
applicable Award Agreement relating thereto and has otherwise complied with the
applicable terms and conditions of such Award. Further, such Award shall be
subject to the following conditions: 


          (a)
PURCHASE PRICE. The purchase price of Restricted Stock shall be fixed by the
Committee. Subject to Section 4.3, the purchase price for shares of Restricted
Stock may be zero to the extent permitted by applicable law, and, to the extent
not so permitted, such purchase price may not be less than par value. 


          (b)
ACCEPTANCE. Awards of Restricted Stock must be accepted within a period of 30
days (or such shorter period as the Committee may specify at grant) after the
Award date by executing a Restricted Stock Award Agreement and by paying
whatever price (if any) the Committee has designated thereunder. 


          (c)
CUSTODY. Shares of Restricted Stock shall be recorded by book entry by the transfer
agent, unless the Committee elects to use another system, and no stock
certificates evidencing shares of Common Stock relating to the Restricted Stock
shall be issued until the restrictions thereon shall have lapsed. 


7.3
RESTRICTIONS AND CONDITIONS ON RESTRICTED STOCK AWARDS. Shares of Restricted
Stock awarded pursuant to this Plan shall be subject to Article XIII and the
following restrictions and conditions: 


          (a)
RESTRICTION PERIOD; VESTING AND ACCELERATION OF VESTING. The Participant shall
not be permitted to Transfer shares of Restricted Stock awarded under this Plan
during the period or periods set by the Committee (the “Restriction Period”)
commencing on the date of such Award, as set forth in the Restricted Stock
Award Agreement, and such agreement shall set forth a vesting schedule and any
events which would accelerate vesting of the 


12






shares of
Restricted Stock. Within these limits, based on service, attainment of
Performance Goals pursuant to Article IX below and/or such other factors or
criteria as the Committee may determine in its sole discretion, the Committee
may provide for the lapse of such restrictions in installments in whole or in
part, or may accelerate the vesting of all or any part of any Restricted Stock
Award and/or waive the deferral limitations for all or any part of any
Restricted Stock Award. 


          (b)
RIGHTS AS STOCKHOLDER. Except as provided in this Paragraph (b) and Paragraph
(a) above and as otherwise determined by the Committee, the Participant shall
have, with respect to the shares of Restricted Stock, the rights of a holder of
shares of Common Stock of the Company to receive any dividends and the right to
vote such shares. The Committee may, in its sole discretion, determine at the
time of grant that the payment of dividends shall be deferred until, and
conditioned upon, the expiration of the applicable Restriction Period. 


          (c)
LAPSE OF RESTRICTIONS. If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock subject to such Restriction Period,
the certificates for such shares shall be delivered at the direction of the
Participant. All legends shall be removed from said certificates at the time of
such delivery to the Participant except as otherwise required by applicable law
or other limitations imposed by the Committee. 


ARTICLE VIII 

OTHER STOCK-BASED AWARDS


8.1 OTHER
AWARDS. Other Stock-Based Awards may be granted either alone or in addition to
or in tandem with Stock Options or Restricted Stock. Subject to the provisions
of this Plan, the Committee shall have authority to determine the persons to
whom and the time or times at which such Awards shall be made, the number of
shares of Common Stock to be awarded pursuant to such Awards, and all other
conditions of the Awards. The Committee may also provide for the grant of
Common Stock under such Awards upon the completion of a specified performance
period. 


8.2 TERMS AND
CONDITIONS. Other Stock-Based Awards made pursuant to this Article VIII shall
be subject to the following terms and conditions: 


          (a)
NON-TRANSFERABILITY. Subject to the applicable provisions of the Award
Agreement and this Plan, shares of Common Stock subject to Awards made under
this Article VIII may not be Transferred prior to the date on which the shares
are issued, or, if later, the date on which any applicable restriction,
performance or deferral period lapses. 


          (b)
DIVIDENDS. Unless otherwise determined by the Committee at the time of Award,
subject to the provisions of the Award Agreement and this Plan, the recipient
of an Award under this Article VIII shall be entitled to receive, currently or
on a deferred basis, dividends or dividend equivalents with respect to the
number of shares of Common Stock covered by the Award, as determined at the
time of the Award by the Committee, in its sole discretion. 


          (c)
VESTING. Any Award under this Article VIII and any Common Stock covered by any
such Award shall vest or be forfeited to the extent so provided in the Award Agreement,
as determined by the Committee, in its sole discretion. 


13






          (d)
WAIVER OF LIMITATION. The Committee may, in its sole discretion, waive in whole
or in part any or all of the limitations imposed hereunder (if any) with
respect to any or all of an Award under this Article VIII. 


          (e)
PRICE. Subject to the next sentence, Common Stock or Other Stock-Based Awards
issued on a bonus basis under this Article VIII may be issued for no cash
consideration; Common Stock or Other Stock-Based Awards purchased pursuant to a
purchase right awarded under this Article VIII shall be priced as determined by
the Committee. Subject to Section 4.3, the purchase price of shares of Common
Stock or Other Stock-Based Awards may be zero to the extent permitted by
applicable law, and, to the extent not so permitted, such purchase price may
not be less than par value. The purchase of shares of Common Stock or Other
Stock-Based Awards may be made on either an after-tax or pre-tax basis, as
determined by the Committee; provided, however, that if the purchase is made on
a pre-tax basis, such purchase shall be made pursuant to a deferred
compensation program established by the Committee, which will be deemed a part
of this Plan. 


ARTICLE IX 

PERFORMANCE GOALS


          9.1
PERFORMANCE GOALS, FORMULAE OR STANDARDS. The Committee may condition the grant
or vesting of Stock Options, Restricted Stock or Other Stock-Based Awards upon
the attainment of specified performance goals (“Performance Goals”), including
established Performance Goals intended to meet the requirements of qualified
performance-based compensation under Section 162(m) of the Code (“Qualified
Performance-Based Compensation”), or such other factors as the Committee may
determine, in its sole discretion. If the grant of shares pursuant to an Award
or the lapse of restrictions of an Award is intended to constitute Qualified
Performance-Based Compensation, the Committee shall establish the Performance
Goals and the applicable vesting percentage of the Award applicable to each
Participant or class of Participants in writing prior to the beginning of the
applicable fiscal year or at such later date as otherwise determined by the
Committee and while the outcome of the Performance Goals are substantially uncertain.
Such Performance Goals may incorporate provisions for disregarding (or
adjusting for) changes in accounting methods, corporate transactions
(including, without limitation, dispositions and acquisitions) and other
similar type events or circumstances. With regard to an Award that is intended
to constitute Qualified Performance-Based Compensation, to the extent any such
provision would create impermissible discretion under Section 162(m) of the
Code or otherwise violate Section 162(m) of the Code, such provision shall be
of no force or effect. The applicable Performance Goals shall be based on one
or more of the Performance Criteria set forth in Exhibit A hereto. Qualified
Performance-Based Compensation does not include any amount or portion of any
amount that will be paid either regardless of performance, or based upon a
level of performance that is substantially certain to be met at the time the
criteria is established. Compensation may be Qualified Performance-Based
Compensation where the amount will be paid regardless of satisfaction of the
performance criteria due to the Participant’s death, Disability, or a Change in
Control event (as defined in Treasury Regulations § l.409A-3(i)(5)(i)),
provided that a payment made under such circumstances without regard to the
satisfaction of the performance criteria will not constitute Qualified
Performance-Based Compensation. Restricted Stock Awards or Other Stock-Based
Awards intended to be Qualified Performance-Based Compensation under Code
Section 162(m)(4)(C) shall not be payable prior to attainment of the relevant
Performance Goals; provided, however, that (i) the Committee may provide,
either in connection with the grant of an Award of Restricted Stock or Other
Stock-Based Award or by amendment thereafter, that 


14






achievement of
such performance goals will be waived upon the death or disability (within the
meaning of Code Section 162(m)) of the Participant, or in connection with a
change in ownership or control of the Company (within the meaning of Code Section
162(m)) and, (ii) solely with respect to performance periods commencing on or
prior to December 31, 2008, the Committee may also provide for such waiver upon
Termination of Employment or Termination of Consultancy (as applicable) by
reason of retirement on or after age 55 in accordance with the Company’s
standard retirement policies, involuntary termination without Cause, or
resignation for good reason, as may be determined by the Committee. 


ARTICLE X 

NON-TRANSFERABILITY AND TERMINATION OF 

EMPLOYMENT/CONSULTANCY


10.1
NON-TRANSFERABILITY. Except as otherwise provided herein, no Stock Option shall
be Transferable by the Participant otherwise than by will or by the laws of
descent and distribution. Except as otherwise provided herein, all Stock
Options shall be exercisable, during the Participant’s lifetime, only by the
Participant. Shares of Restricted Stock under Article VII may not be
Transferred prior to the date on which shares are issued, or, if later, the
date on which any applicable restriction, performance or deferral period
lapses. No Award shall, except as otherwise specifically provided by law or
herein, be Transferable in any manner, and any attempt to Transfer any such
Award shall be void, and no such Award shall in any manner be liable for or
subject to the debts, contracts, liabilities, engagements or torts of any
person who shall be entitled to such Award, nor shall it be subject to
attachment or legal process for or against such person. Notwithstanding any
provision herein to the contrary, the Committee may determine at the time of
grant or thereafter that a Non-Qualified Stock Option that is otherwise not
Transferable pursuant to this Section 10.1 is Transferable to, and exercisable
by, a Family Member in whole or in part and in such circumstances, and under
such conditions, as specified by the Committee. A Non-Qualified Stock Option
that is Transferred to a Family Member during the pursuant to the preceding
sentence (i) may not be subsequently Transferred during the employee’s lifetime
other than to the employee or another Family Member and (ii) remains subject to
the terms of this Plan and the Award Agreement. 


10.2
TERMINATION OF EMPLOYMENT OR TERMINATION OF CONSULTANCY. The following rules
apply with regard to the Termination of Employment or Termination of
Consultancy of a Participant: 


          (a)
RULES APPLICABLE TO STOCK OPTIONS. Unless otherwise determined by the Committee
at grant or, if no rights of the Participant are reduced, thereafter: 


                    (i)
TERMINATION BY REASON OF DEATH OR DISABILITY. If a Participant’s Termination of
Employment or Termination of Consultancy is by reason of death, or Disability,
all Stock Options held by such Participant shall become fully exercisable on
the date of such Termination of Employment or Termination of Consultancy and
may be exercised by the Participant (or, in the case of death, by the legal
representative of the Participant’s estate) at any time within a period of one
year from the date of such Termination of Employment or Termination of
Consultancy, but in no event beyond the expiration of the stated terms of such
Stock Options. 


                    (ii)
TERMINATION BY REASON OF RETIREMENT. In the event of a Participant’s
Termination of Employment on or after age 55 in accordance with the Company’s 


15






standard
retirement policies, all Stock Options held by such Participant may be
exercised, to the extent exercisable at the Participant’s Termination of
Employment, by the Participant at any time within a period of three years from
the date of such Termination of Employment, but in no event beyond the
expiration of the stated terms of such Stock Options. 


                    (iii)
INVOLUNTARY TERMINATION WITHOUT CAUSE. If a Participant’s Termination of
Employment or Termination of Consultancy is by involuntary termination without
Cause, all Stock Options held by such Participant may be exercised, to the
extent exercisable at Termination of Employment or Termination of Consultancy,
by the Participant at any time within a period of 90 days from the date of such
Termination of Employment or Termination of Consultancy, but in no event beyond
the expiration of the stated term of such Stock Options. 


                    (iv)
TERMINATION FOR CAUSE OR FOR ANY REASON OTHER THAN DEATH, DISABILITY,
RETIREMENT OR INVOLUNTARY TERMINATION WITHOUT CAUSE. If a Participant’s
Termination of Employment or Termination of Consultancy is for Cause, all Stock
Options held by such Participant shall thereupon terminate and expire as of the
date of such Termination of Employment or Termination of Consultancy. If a
Participant’s Termination of Employment or Termination of Consultancy is for
any reason other than Cause, death, Disability, retirement (as described in
clause (ii) above), or other than an involuntary Termination of Employment or
Termination of Consultancy without Cause, including, without limitation, a
voluntary Termination of Employment or Termination of Consultancy, all Stock
Options held by such Participant may be exercised, to the extent exercisable at
Termination of Employment or Termination of Consultancy, by the Participant at
any time within a period of 90 days from the date of such Termination of
Employment or Termination of Consultancy, but in no event beyond the expiration
of the stated term of such Stock Options. 


10.3 RULES
APPLICABLE TO RESTRICTED STOCK AND OTHER STOCK-BASED AWARDS. Subject to the
applicable provisions of the Award Agreement and this Plan and except as
provided in Section 9.1 hereof with respect to Qualified Performance-Based
Compensation, upon a Participant’s Termination of Employment or Termination of
Consultancy for any reason during the relevant Restriction Period or other
period specified in the Award Agreement, all unvested Restricted Stock and
Other Stock-Based Awards will vest or be forfeited in accordance with the terms
and conditions established by the Committee at grant or thereafter. 


ARTICLE XI 

TERMINATION OR AMENDMENT OF PLAN


          Notwithstanding
any other provision of this Plan, the Board or the Committee may at any time,
and from time to time, amend, in whole or in part, any or all of the provisions
of this Plan (including any amendment deemed necessary to ensure that the
Company may comply with any regulatory requirement referred to in Article XIII),
or suspend or terminate it entirely, retroactively or otherwise; provided,
however, that, unless otherwise required by law or specifically provided
herein, the rights of a Participant with respect to Awards granted prior to
such amendment, suspension or termination may not be impaired without the
consent of such Participant and, provided further, without the approval of the
stockholders of the Company in accordance with the Company’s Certificate of
Incorporation and the laws of the State of Delaware, to the extent required by
the applicable provisions of Rule 16b-3 or Section 162(m) of the Code or, to
the extent applicable to Incentive Stock Options, Section 422 of the Code, no
amendment may be made which would (i) increase the aggregate number of shares of
Common 


16






Stock that may
be issued under this Plan; (ii) increase the maximum individual Participant
limitations for a fiscal year under Section 4.1(b); (iii) change the
classification of employees or Consultants eligible to receive Awards under
this Plan; (iv) decrease the minimum option price of any Stock Option; (v)
extend the maximum option period under Section 6.3; (vi) materially alter the
Performance Criteria for Awards as set forth in Exhibit A; or (vii) require
stockholder approval in order for this Plan to continue to comply with the
applicable provisions of Section 162(m) of the Code or, to the extent
applicable to Incentive Stock Options, Section 422 of the Code. 


          The
Committee may amend the terms of any Award theretofore granted, prospectively
or retroactively, but, subject to Article IV above or as otherwise specifically
provided herein, no such amendment or other action by the Committee shall
impair the rights of any holder without the holder’s consent. 


ARTICLE XII 

UNFUNDED PLAN


12.1 UNFUNDED
STATUS OF PLAN. This Plan is intended to constitute an “unfunded” plan for
incentive and deferred compensation. With respect to any payments as to which a
Participant has a fixed and vested interest but which are not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company. 


ARTICLE XIII 

GENERAL PROVISIONS


13.1 LEGEND.
The Committee may require each person receiving shares pursuant to an Award
under this Plan to represent to and agree with the Company in writing that the
Participant is acquiring the shares without a view to distribution thereof. In
addition to any legend required by this Plan, the certificates for any shares issued
under the Plan shall include any legend which the Committee deems appropriate
to reflect any restrictions on Transfer if the shares of Common Stock available
under Plan are no longer registered under a Securities Act Form S-8 or any
successor form. All certificates for shares of Common Stock delivered under
this Plan shall be subject to such stock transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed or any national securities association
system upon whose system the Common Stock is then quoted, any applicable
Federal or state securities law, and any applicable corporate law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions. 


13.2 OTHER
PLANS. Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. 


13.3 NO RIGHT
TO EMPLOYMENT/CONSULTANCY. Neither this Plan nor the grant of any Award hereunder
shall give any Participant or other employee or Consultant any right with
respect to continuance of employment or Consultancy by the Company or any
Affiliate, nor shall they be a limitation in any way on the right of the
Company or any Affiliate by which an 


17






employee is
employed or a Consultant is retained to terminate his or her employment or
Consultancy at any time. 


13.4
WITHHOLDING OF TAXES. The Company shall have the right to deduct from any
payment to be made to a Participant, or to otherwise require, prior to the
issuance or delivery of any shares of Common Stock or the payment of any cash
hereunder, payment by the Participant of, any minimum Federal, state or local
taxes required by law to be withheld. Upon the vesting of Restricted Stock, or
upon making an election under Code Section 83(b), a Participant shall pay all
required withholding to the Company. 


          Any
such withholding obligation with regard to any Participant may be satisfied,
subject to the consent of the Committee, by reducing the number of shares of
Common Stock otherwise deliverable by the Company or by delivering shares of
Common Stock already owned by the Participant. Any fraction of a share of
Common Stock required to satisfy such tax obligations shall be disregarded and
the amount due shall be paid instead in cash by the Participant. 


13.5 LISTING
AND OTHER CONDITIONS. 


          (a)
Unless otherwise determined by the Committee, as long as the Common Stock is
listed on a national securities exchange or system sponsored by a national
securities association, the issue of any shares of Common Stock pursuant to an
Award shall be conditioned upon such shares being listed on such exchange or
system. The Company shall have no obligation to issue such shares unless and until
such shares are so listed, and the right to exercise any Stock Option with
respect to such shares shall be suspended until such listing has been effected.



          (b)
If at any time counsel to the Company shall be of the opinion that any sale or
delivery of shares of Common Stock pursuant to an Award is or may in the
circumstances be unlawful or result in the imposition of excise taxes on the
Company under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act or otherwise with
respect to shares of Common Stock or Awards, and the right to exercise any
Stock Option shall be suspended until, in the opinion of said counsel, such
sale or delivery shall be lawful or will not result in the imposition of excise
taxes on the Company. 


          (c)
Upon termination of any period of suspension under this Section 13.5, any Award
affected by such suspension which shall not then have expired or terminated
shall be reinstated as to all shares available before such suspension and as to
shares which would otherwise have become available during the period of such
suspension, but no such suspension shall extend the term of any Stock Option. 


          (d)
A Participant shall be required to supply the Company with any certificates,
representations and information that the Company requests and otherwise
cooperate with the Company in obtaining any listing, registration,
qualification, exemption, consent or approval the Company deems necessary or
appropriate. 


13.6 GOVERNING
LAW. This Plan shall be governed and construed in accordance with the laws of
the State of Delaware (regardless of the law that might otherwise govern under
applicable Delaware principles of conflict of laws). 


18






13.7
CONSTRUCTION. Wherever any words are used in this Plan in the masculine gender
they shall be construed as though they were also used in the feminine gender in
all cases where they would so apply, and wherever any words are used herein in
the singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply. 


13.8 OTHER
BENEFITS. No Award payment under this Plan shall be deemed compensation for
purposes of computing benefits under any retirement plan of the Company or its
subsidiaries nor affect any benefits under any other benefit plan now or
subsequently in effect under which the availability or amount of benefits is
related to the level of compensation. 


13.9 COSTS.
The Company shall bear all expenses incurred in administering this Plan,
including expenses of issuing Common Stock pursuant to any Awards hereunder. 


13.10 NO RIGHT
TO SAME BENEFITS. The provisions of Awards need not be the same with respect to
each Participant, and such Awards to individual Participants need not be the
same in subsequent years. 


13.11
DEATH/DISABILITY. The Committee may in its discretion require the transferee of
a Participant to supply it with written notice of the Participant’s death or
Disability and to supply it with a copy of the will (in the case of the
Participant’s death) or such other evidence as the Committee deems necessary to
establish the validity of the transfer of an Award. The Committee may also
require the agreement of the transferee to be bound by all of the terms and
conditions of this Plan. 


13.12 SECTION
16(B) OF THE EXCHANGE ACT. All elections and transactions under this Plan by
persons subject to Section 16 of the Exchange Act involving shares of Common
Stock are intended to comply with any applicable exemptive condition under Rule
16b-3. The Committee may establish and adopt written administrative guidelines,
designed to facilitate compliance with Section 16(b) of the Exchange Act, as it
may deem necessary or proper for the administration and operation of this Plan
and the transaction of business hereunder. 


13.13
SUCCESSOR AND ASSIGNS. This Plan shall be binding on all successors and
permitted assigns of a Participant, including, without limitation, the estate
of such Participant and the executor, administrator or trustee of such estate. 


13.14
SEVERABILITY OF PROVISIONS. If any provision of this Plan shall be held invalid
or unenforceable, such invalidity or unenforceability shall not affect any
other provisions hereof, and this Plan shall be construed and enforced as if
such provision had not been included. 


13.15 HEADINGS
AND CAPTIONS. The headings and captions herein are provided for reference and
convenience only, shall not be considered part of this Plan, and shall not be
employed in the construction of this Plan. 


ARTICLE XIV 

EFFECTIVE DATE OF PLAN


          This
Plan became effective upon its adoption by the Board and was approved by the
stockholders of the Company in accordance with the requirements of the
Company’s Certificate of Incorporation and the laws of the State of Delaware.
The Plan is hereby amended and restated 


19






on September
23, 2008, which amendment and restatement is effective January 1, 2005;
provided, however, that the restatement date for such provisions as were
amended prior to the date hereof and after January 1, 2005 shall become
effective as of the effective date of the pertinent amendment. 


ARTICLE XV 

TERM OF PLAN


          No
Award shall be granted pursuant to this Plan on or after, July 18, 2011 (the
tenth anniversary) of the date this Plan was adopted by the Board, but Awards
granted prior to such tenth anniversary may extend beyond that date. 


20






EXHIBIT A TO THE 2001 STOCK INCENTIVE PLAN


PERFORMANCE CRITERIA


          Performance
Goals established for purposes of conditioning the grant of an Award based on
performance or the vesting of performance-based Awards shall be based on one or
more of the following performance criteria (“Performance Criteria”): (i) the
attainment of certain target levels of, or a specified percentage increase in,
revenues, income before income taxes and extraordinary items, net income,
earnings before income tax, earnings before interest, taxes, depreciation and
amortization or a combination of any or all of the foregoing; (ii) the
attainment of certain target levels of, or a percentage increase in, after-tax
or pre-tax profits including, without limitation, that attributable to continuing
and/or other operations; (iii) the attainment of certain target levels of, or a
specified increase in, operational cash flow; (iv) the achievement of a certain
level of, reduction of, or other specified objectives with regard to limiting
the level of increase in, all or a portion of the Company’s bank debt or other
long-term or short-term public or private debt or other similar financial
obligations of the Company, which may be calculated net of such cash balances
and/or other offsets and adjustments as may be established by the Committee;
(v) the attainment of a specified percentage increase in earnings per share or
earnings per share from continuing operations; (vi) the attainment of certain
target levels of, or a specified increase in, return on capital employed or
return on invested capital; (vii) the attainment of certain target levels of,
or a percentage increase in, after-tax or pre-tax return on stockholders’
equity; (viii) the attainment of certain target levels of, or a specified
increase in, economic value added targets based on a cash flow return on
investment formula; (ix) the attainment of certain target levels in the fair
market value of the shares of the Company’s Common Stock; and (x) the growth in
the value of an investment in the Company’s Common Stock assuming the
reinvestment of dividends. For purposes of item (i) above, “extraordinary
items” shall mean all items of gain, loss or expense for the fiscal year
determined to be extraordinary or unusual in nature or infrequent in occurrence
or related to a corporate transaction (including, without limitation, a
disposition or acquisition) or related to a change in accounting principle, all
as determined in accordance with standards established by Opinion No. 30 of the
Accounting Principles Board.


          In
addition, such Performance Criteria may be based upon the attainment of
specified levels of Company (or subsidiary, division or other operational unit
of the Company) performance under one or more of the measures described above
relative to the performance of other corporations. To the extent permitted
under Code Section 162(m), but only to the extent permitted under Code Section
162(m) (including, without limitation, compliance with any requirements for
stockholder approval), the Committee may: (i) designate additional business
criteria on which the Performance Criteria may be based or (ii) adjust, modify
or amend the aforementioned business criteria.






AMENDMENT NO. 1 TO THE


SCHOLASTIC CORPORATION 2001 STOCK INCENTIVE
PLAN


          WHEREAS,
Scholastic Corporation (the “Company”) maintains the Scholastic 


Corporation
2001 Stock Incentive Plan (the “Plan”); and 


          WHEREAS,
pursuant to Article XI of the Plan, the Company reserved the right, by action
of its Board of Directors or its Human Resources and Compensation Committee
(the “Committee”), to amend the Plan from time to time; and 


          WHEREAS,
the Committee desires to amend the Plan. 


          NOW,
THEREFORE, effective with respect to Stock Options
granted on or after July 21, 2009, the Plan is amended as follows: 


Section
10.2(a)(ii) of the Plan is amended in its entirety with the following: 


Termination by Reason of Retirement.
In the event of a Participant’s Termination of Employment or Termination of
Consultancy on or after age 55 with at least ten years of continuous
employment, in accordance with the Company’s standard retirement policies, all
Stock Options held by such Participant shall become fully exercisable on the
date of the Participant’s Termination of Employment or Termination of
Consultancy, and may be exercised by the Participant at any time within a
period of three years from the date of such Termination of Employment or
Termination of Consultancy, but in no event beyond the expiration of the stated
terms of such Stock Options. 


2. Except as otherwise provided
herein, the Plan is ratified and confirmed and shall continue in full force and
effect.